Rule 240 of The General Financial Rules 2017 State Government Utilization Certificate for Local Body Expenditure
Original Rule Text
Visual Summary
Ensures accountability for Central Grants used by local bodies.
State Government must provide Utilization Certificates.
Covers funds disbursed via local bodies or private institutions.
Executive Summary
Rule 240 of The General Financial Rules, 2017 mandates that when Central Government grants are provided to State Governments for expenditure through local bodies or private institutions, the concerned State Government is responsible for furnishing the Utilization Certificates. This ensures proper accountability and oversight of how central funds are ultimately spent by sub-state entities.
In-Depth Analysis of the Rule
Rule 240 addresses a critical aspect of financial governance: the accountability of Central Grants when their final expenditure is managed by entities subordinate to the State Government. It clarifies the responsibility for submitting Utilization Certificates (UCs) in such scenarios.
Breakdown of the Rule:
- Central Grants to State Governments: The rule applies specifically to funds disbursed by the Central Government to State Governments.
- Expenditure through Local Bodies/Private Institutions: The key condition is that the expenditure of these Central Grants is to be incurred by the State Governments through local bodies or private institutions. This highlights the multi-tiered nature of fund flow.
- State Government’s Responsibility: The rule explicitly places the onus on the State Government concerned to furnish the Utilization Certificates. This means the State cannot delegate this reporting responsibility further down to the local bodies or private institutions themselves for direct reporting to the Centre.
- Purpose of Utilization Certificates: UCs serve as crucial documents to confirm that funds have been used for the intended purpose and in accordance with prescribed norms, ensuring transparency and preventing misuse.
Practical Example:
Imagine the Central Government provides a grant to the State of Maharashtra for a rural sanitation project. The State Government then allocates these funds to various Gram Panchayats (local bodies) and a few NGOs (private institutions) for implementation. According to Rule 240, it is the State Government of Maharashtra that must collect the necessary expenditure details from the Gram Panchayats and NGOs, consolidate them, and then furnish the comprehensive Utilization Certificates to the Central Government. The Gram Panchayats or NGOs do not directly submit UCs to the Centre under this rule.
Related Provisions
Understanding Rule 240 is enhanced by considering other rules governing grants and financial accountability:
- Rule 238 of The General Financial Rules, 2017 Utilization Certificates: Details the general requirements for submitting Utilization Certificates for grants.
- Rule 239 of The General Financial Rules, 2017 State Government Utilization Certificate for Scheme Grants: Specifies the submission of UCs by State Governments for Central Schemes.
- Rule 230 of The General Financial Rules, 2017 Principles and Procedure for Award of Grants-in-aid: Outlines the broader framework and conditions for sanctioning grants.
Learning Aids
Mnemonics:
- UC-SGLP: Utilization Certificate for State Government Local Partners.
Process Flowchart:
Multiple Choice Questions
1. According to Rule 240 of The General Financial Rules, 2017, who is responsible for furnishing Utilization Certificates when Central Grants are spent by State Governments through local bodies?
- A) The Central Government
- B) The local bodies directly
- C) The private institutions
- D) The State Government concerned
Show Answer
Correct Answer: D) The State Government concerned
2. Rule 240 of The General Financial Rules, 2017 applies to Central Grants given to State Governments for expenditure incurred through which entities?
- A) Only Central Public Sector Undertakings
- B) Only State Government departments
- C) Local bodies or private institutions
- D) Foreign Governments
Show Answer
Correct Answer: C) Local bodies or private institutions
3. What is the primary purpose of the Utilization Certificates mentioned in Rule 240 of The General Financial Rules, 2017?
- A) To request additional funds from the Central Government
- B) To provide a detailed project plan for future grants
- C) To confirm that funds have been used for the intended purpose
- D) To report on the physical progress of the project only
Show Answer
Correct Answer: C) To confirm that funds have been used for the intended purpose
4. Can local bodies directly submit Utilization Certificates to the Central Government under Rule 240 of The General Financial Rules, 2017?
- A) Yes, if they are large enough
- B) Yes, with prior approval from the State Government
- C) No, the State Government concerned must furnish them
- D) Only if the project is centrally sponsored
Show Answer
Correct Answer: C) No, the State Government concerned must furnish them
5. What type of grants are covered by Rule 240 of The General Financial Rules, 2017?
- A) Only State-funded grants
- B) Only grants from international organizations
- C) Central Grants given to State Governments
- D) Grants for capital expenditure only
Show Answer
Correct Answer: C) Central Grants given to State Governments
Frequently Asked Questions
Q1: What is the main responsibility of the State Government under Rule 240?
A1: The State Government is primarily responsible for furnishing the Utilization Certificates (UCs) to the Central Government when Central Grants are disbursed through local bodies or private institutions for expenditure.
Q2: Does Rule 240 apply if a State Government spends Central Grants directly?
A2: Rule 240 specifically addresses scenarios where Central Grants are given to State Governments for expenditure to be incurred by them through local bodies or private institutions. If the State Government incurs the expenditure directly, other rules regarding UCs would apply, such as Rule 239 for scheme-related grants.
Q3: Why is the State Government responsible for UCs, not the local bodies?
A3: The rule places responsibility on the State Government to ensure a single point of accountability to the Central Government. This streamlines the reporting process and holds the State accountable for the oversight of funds it further disburses to sub-state entities.
Key Takeaways
- Rule 240 clarifies accountability for Central Grants passed through State Governments to local bodies or private institutions.
- The State Government is explicitly mandated to furnish the Utilization Certificates in such cases.
- This rule ensures a clear chain of financial responsibility and oversight for multi-tiered fund disbursement.
- It prevents direct reporting from sub-state entities to the Central Government, streamlining accountability.
Conclusion
Rule 240 of The General Financial Rules, 2017 is fundamental for maintaining financial discipline and transparency in the federal structure of India. By clearly assigning the responsibility for Utilization Certificates to the State Government, it ensures that Central Grants, even when spent at local levels, are properly accounted for, fostering trust and efficient resource allocation across different tiers of governance.