Rule 24 of the General Financial Rules 2017 Consultation with Financial Advisers
Original Rule Text
Visual Summary
Ministries must consult their Financial Adviser before circulating major financial proposals.
Applies to proposals for top bodies like the Cabinet, EFC, and CCEA.
The proposal document must explicitly state that the consultation has occurred.
Executive Summary
Rule 24 establishes a crucial financial checkpoint for the government. It mandates that before any Ministry or Department sends a major financial proposal (memorandum) to high-level decision-making bodies like the Cabinet or the Expenditure Finance Committee, it must first consult with its designated Financial Adviser. Furthermore, the proposal document must include a formal statement confirming that this consultation has taken place. This ensures that every significant expenditure plan is vetted by a financial expert before it reaches the final approval stage, promoting fiscal discipline and accountability.
In-Depth Analysis of the Rule
Introduction
Rule 24 of the General Financial Rules, 2017, serves as a gatekeeper for major government expenditure proposals. Its primary purpose is to integrate expert financial scrutiny early in the decision-making process, ensuring that proposals are financially sound, viable, and compliant with regulations before they are considered by the highest levels of government.
Breakdown of the Rule
The rule can be broken down into three key components:
- The Trigger: The rule applies when a Ministry or Department prepares a ‘draft memorandum’. This is a formal document outlining a proposal for consideration by a high-level committee.
- The Mandatory Action: Before circulating this memorandum, the Ministry must consult its ‘concerned Financial Adviser’. A Financial Adviser (FA) is an officer from the finance services assigned to a ministry to provide expert guidance on all financial matters. This consultation is not optional; it is a mandatory step.
- The Proof of Compliance: The draft memorandum must contain a ‘confirmation’ that the consultation with the Financial Adviser has been completed. This serves as a formal record and ensures that the receiving committee (e.g., the Cabinet) is aware that the proposal has undergone the required financial vetting.
The rule specifically names the bodies for which this process is required: Expenditure Finance Committee (EFC), Public Investment Bureau (PIB), Committee on Establishment Expenditure, Cabinet Committee for Economic Affairs (CCEA), and the Cabinet. These are the apex bodies that approve large-scale projects, schemes, and significant expenditures.
Practical Example
Imagine the Ministry of Health wants to launch a new nationwide vaccination program that will cost ₹10,000 crores. This proposal needs approval from the Cabinet Committee on Economic Affairs (CCEA).
Before the Health Ministry can send its proposal (the draft memorandum) to the CCEA, Rule 24 requires them to first present the entire plan to their Financial Adviser. The FA will scrutinize the budget, funding sources, cost-effectiveness, and overall financial implications. After this consultation, when the Health Ministry finalizes the memorandum for the CCEA, they must include a sentence like, ‘This proposal has been circulated after consultation with the Financial Adviser of the Ministry of Health & Family Welfare.’ Without this confirmation, the proposal would be considered incomplete.
Conclusion
Rule 24 is a simple yet powerful tool for enforcing financial propriety. By making consultation with a Financial Adviser a non-negotiable step for all major proposals, it ensures a layer of expert financial oversight, helps prevent wasteful expenditure, and promotes sound economic decision-making at the highest levels of the Indian government.
Related Provisions
Rule 24 is part of a broader framework for financial management. Understanding the following related rules provides a better context:
- Rule 22: Expenditure from Public Funds – This rule states that no expenditure can be incurred without sanction from a competent authority. Rule 24 is a key part of the process for obtaining that sanction for high-value proposals.
- Rule 23: Delegation of Financial Powers – This rule details how financial powers are distributed. The proposals covered by Rule 24 typically exceed the delegated powers of a ministry, necessitating approval from higher committees.
- Rule 4: Departmental Regulations of financial character – This rule requires that all departmental financial regulations must be approved by the Ministry of Finance. The Financial Adviser in Rule 24 acts as the representative of the Ministry of Finance, ensuring alignment with this principle.
Learning Aids
Mnemonics
- ADVISER: All Drafts Via Internal Scrutiny Ensures Responsibility. This helps remember that all draft proposals must go through the internal scrutiny of the Financial Adviser.
- MEMO: Must Ensure Money Oversight. This links the ‘memorandum’ (proposal) to the mandatory financial oversight required by the rule.
Mindmap
Multiple Choice Questions (MCQs)
1. What is the primary requirement of Rule 24 before a ministry circulates a draft memorandum for a high-level committee?
- A) Approval from the Prime Minister’s Office.
- B) Consultation with the concerned Financial Adviser.
- C) Publication in the official gazette.
- D) Approval from the State Government.
Show Answer
Correct Answer: B) Consultation with the concerned Financial Adviser.
2. Which of the following is NOT a committee explicitly mentioned in Rule 24 for which consultation with a Financial Adviser is mandatory?
- A) Expenditure Finance Committee (EFC).
- B) Public Accounts Committee (PAC).
- C) Public Investment Bureau (PIB).
- D) Cabinet Committee for Economic Affairs (CCEA).
Show Answer
Correct Answer: B) Public Accounts Committee (PAC). (The PAC is a parliamentary committee that examines expenditure after it has been incurred, whereas Rule 24 deals with the pre-sanction stage.)
3. According to Rule 24, what specific action must be taken within the draft memorandum itself after the Financial Adviser has been consulted?
- A) The FA’s signature must be on the first page.
- B) A detailed report of the consultation must be attached as an annexure.
- C) A confirmation stating that the consultation has occurred must be included in the draft.
- D) The memorandum must be re-written by the Financial Adviser’s office.
Show Answer
Correct Answer: C) A confirmation stating that the consultation has occurred must be included in the draft.
Frequently Asked Questions
Who is a Financial Adviser?
A Financial Adviser (FA) is an officer, typically from the finance and accounts services of the government, who is attached to a specific ministry. Their primary role is to provide expert financial advice, ensure compliance with financial rules, and act as a representative of the Ministry of Finance to promote fiscal discipline.
What happens if a ministry circulates a proposal without consulting the Financial Adviser?
The process would be considered a violation of the General Financial Rules. Since the rule requires a confirmation to be included in the memorandum, a proposal lacking this would likely be flagged as incomplete and returned by the secretariat of the high-level committee (like the Cabinet Secretariat) before it is even considered for approval. It is a mandatory checkpoint.
Does this rule apply to all government spending?
No, this rule is specific to proposals for high-level bodies like the Cabinet, CCEA, EFC, and PIB. These committees handle very large and significant financial proposals. Routine, smaller expenditures are managed under different rules and the delegated financial powers of the ministry or department.
Key Takeaways
- Before sending a major financial proposal to top committees, a ministry must consult its Financial Adviser.
- This rule applies to proposals for powerful bodies like the Cabinet, EFC, and PIB.
- The proposal document must contain a written confirmation that the Financial Adviser was consulted.
- This step ensures an expert financial review occurs before any high-level approval is sought.