Rule 25 of the General Financial Rules 2017 Provision of funds for sanction

Rule 25 of the General Financial Rules 2017 Provision of funds for sanction

Visual Summary

Executive Summary

Rule 25 of the General Financial Rules, 2017, establishes a fundamental principle of financial discipline: every government order (sanction) to spend money must be explicitly linked to a source of funds. It requires that all spending proposals confirm the availability of money in the budget. In special cases where an expense must be approved before the budget is finalized, the sanction must clearly state that the expenditure is conditional upon the funds being provided in the year’s budget. This rule ensures that no expenditure is authorized without a clear financial plan, preventing spending beyond budgeted amounts.

In-Depth Analysis of the Rule

Introduction
Rule 25 acts as a crucial gatekeeper in the government’s financial system. It ensures that every decision to spend public money is not made in isolation but is directly tied to a pre-approved budget allocation. This rule prevents unauthorized expenditure and enforces fiscal responsibility at every level of government.

Breakdown of the Rule

• Rule 25(1): Linking Sanction to Source: This sub-rule mandates complete transparency. When an authority sanctions an expenditure, the order must specify the exact source of the funds. This means naming the ‘grant’ or ‘appropriation’ (the specific budget head) from which the money will be drawn. It’s like ensuring every cheque written has the correct account number on it, preventing funds from being drawn from the wrong place.
• Rule 25(2): Pre-Sanction Fund Check: This part of the rule acts as a preliminary check. Before a proposal for expenditure is even submitted for approval, it must state whether the funds are available. This can be through a ‘valid appropriation’ (money already allocated for that purpose) or ‘re-appropriation’ (moving funds from another head within the same grant where there is a surplus). This ensures that proposals are financially viable from the outset.
• Rule 25(3): Handling Urgent Sanctions: This sub-rule provides a mechanism for situations where an expenditure needs to be sanctioned urgently, even before the budget funds are formally communicated. In such cases, the sanction is conditional. The order must explicitly state that the expenditure is ‘subjected to funds being communicated in the budget of the year.’ This allows necessary work to be approved without delay, while still maintaining the link to the eventual budget allocation.

Practical Example
Imagine a district administration needs to urgently procure medical supplies due to a sudden disease outbreak. The annual budget has been passed by Parliament, but the detailed fund allocations have not yet been communicated to the district level.

• The District Health Officer prepares a proposal to buy the supplies. As per Rule 25(2), the proposal indicates that the expenditure will be met from the ‘Public Health’ grant once funds are communicated.
• The District Collector, being the competent authority, issues a sanction. Because the funds are not yet formally available, the sanction order, as per Rule 25(3), includes the clause: ‘This expenditure is sanctioned subject to funds being communicated in the budget for this year.’
• The sanction order, as per Rule 25(1), also specifies that the cost will be debited to the ‘Medical and Public Health’ grant.

This allows the procurement process to begin immediately, while ensuring the expenditure is properly accounted for once the budget is formally allocated.

Conclusion
Rule 25 is a simple yet powerful tool for financial control. By mandating that every expenditure sanction is backed by a specified budget provision—or is explicitly conditional on one—it reinforces the integrity of the budgetary process and ensures that public funds are spent in a planned and accountable manner.

Related Provisions

This rule works in conjunction with other financial regulations to ensure a robust system of expenditure control. Key related provisions include:

• Rule 22: Expenditure from Public Funds – This rule establishes the basic requirement that no expenditure can be incurred without a sanction from a competent authority. Rule 25 builds on this by detailing the funding requirements for such sanctions.
• Rule 26: Responsibility of Controlling Officer in respect of Budget allocation – This rule outlines the duties of the officer managing the budget allocation, making them responsible for ensuring expenditure does not exceed the funds provided, a process directly supported by the checks in Rule 25.
• Rule 65: Re-appropriation of Funds – Directly referenced in Rule 25(2), this rule provides the mechanism for moving funds from one budget head to another, which is a key way to meet expenditure when the original allocation is insufficient.

Learning Aids

Mnemonics

• F.A.C.T. Check: Before any spending, check the FACTS: Funds must be specified, Availability confirmed, Conditional if not yet allocated, and Tied to a budget.
• Tag the Fund: Every sanction must ‘tag’ the specific fund it comes from. No tag, no spending.

Mindmap

Multiple Choice Questions (MCQs)

Frequently Asked Questions

Key Takeaways

• Every order to spend money must name the exact budget source.
• Before seeking approval, you must confirm that funds are available in the budget.
• If you approve spending before funds are officially allocated, the approval must be conditional on the budget.
• This rule is a fundamental check to prevent spending without a clear financial plan.