Rule 65 of The General Financial Rules 2017 Reappropriation of Funds
Original Rule Text
Visual Summary
Transfer funds between appropriation units.
Anticipated savings, not for restoring diverted funds.
Sanction by competent authority, copy to Accounts Officer.
Executive Summary
Rule 65 of The General Financial Rules, 2017, outlines the procedures for re-appropriation of funds, allowing a competent authority to transfer funds between different primary units of appropriation within a grant or appropriation before the financial year closes. This is permissible only when savings are anticipated in the source unit and not for restoring previously diverted funds. Applications for re-appropriation must detail how excesses will be met and reasons for significant savings or excesses, with a copy endorsed to the Accounts Officer.
In-Depth Analysis of the Rule
Rule 65 provides essential guidelines for managing budgetary allocations efficiently by allowing the reallocation of funds within a sanctioned grant or appropriation. This flexibility is crucial for government departments to adapt to changing financial needs and optimize resource utilization throughout the financial year.
Breakdown of the Rule:
- Rule 65 (1) – Sanctioning Authority and Scope: Re-appropriation of funds between primary units of appropriation (Object heads) within a grant can be sanctioned by a competent authority before the financial year ends. This is subject to Rule 10 of the Delegation of Financial Powers Rules and any Finance Ministry restrictions.
- Rule 65 (2) – Conditions for Re-appropriation: Funds can only be re-appropriated if it’s known or anticipated that the original appropriation for the source unit won’t be fully utilized, or if savings can be achieved in that unit.
- Rule 65 (3) – Prohibition on Restoration: Funds cannot be re-appropriated from a unit with the intent of restoring the diverted amount later in the year, even if other units generate savings. This prevents a cyclical transfer of funds.
- Rule 65 (4) – Application and Documentation: An application for re-appropriation must typically be supported by a statement (Form GFR 1 or other authorized form) explaining how any excess expenditure will be met. Orders sanctioning re-appropriation must detail reasons for savings and excesses (especially for amounts of ₹1 lakh or more) and specify affected primary units. A copy of the order must be sent to the Accounts Officer.
Practical Example:
Imagine a government department has an allocation for ‘Office Expenses’ (Object Head A) and ‘Professional Services’ (Object Head B). Mid-year, due to efficient management, they realize they will have significant savings in ‘Office Expenses’. Simultaneously, an unforeseen need arises for additional ‘Professional Services’ that exceeds their current allocation. Under Rule 65, the competent authority can sanction the re-appropriation of funds from ‘Office Expenses’ to ‘Professional Services’ to cover the deficit, provided the conditions of anticipated savings are met and proper documentation (like Form GFR 1) is submitted to the Accounts Officer.
Related Provisions
Understanding Rule 65 is enhanced by examining its connections to other financial regulations:
- Rule 10 of The General Financial Rules 2017 Controlling Officer Duties: This rule outlines the responsibilities of controlling officers in monitoring accounts and ensuring proper credit of funds, which is foundational to identifying potential savings for re-appropriation.
- Rule 64 of The General Financial Rules 2017 Additional Allotment for Excess Expenditure: This rule addresses situations where excess expenditure is apprehended, requiring additional allotment, which can sometimes be facilitated by re-appropriation.
- Rule 66 of The General Financial Rules 2017 Supplementary Grants: This rule deals with obtaining supplementary grants when savings are not available within the existing grant or for ‘New Service’, providing an alternative mechanism for funding needs that cannot be met by re-appropriation.
Learning Aids
Mnemonics:
- Re-appropriate Funds: Savings Allowed, Not Restoring, Application Endorsed. (Rule 65, Funds, Savings, Allowed, Not Restoring, Application, Endorsed)
Process Flowchart:
Multiple Choice Questions
1. According to Rule 65 of The General Financial Rules, 2017, when can re-appropriation of funds be sanctioned?
- A) Only at the beginning of the financial year.
- B) At any time before the close of the financial year.
- C) After the financial year has closed, with special permission.
- D) Only by the Finance Ministry.
Show Answer
Correct Answer: B) At any time before the close of the financial year.
2. Under Rule 65 of The General Financial Rules, 2017, what is the primary condition for re-appropriating funds?
- A) The funds must be used for a ‘New Service’.
- B) It must be known or anticipated that the source appropriation will not be fully utilized.
- C) The re-appropriation must restore previously diverted funds.
- D) Only capital expenditure can be re-appropriated.
Show Answer
Correct Answer: B) It must be known or anticipated that the source appropriation will not be fully utilized.
3. Rule 65 (3) of The General Financial Rules, 2017, explicitly prohibits re-appropriation for which purpose?
- A) To meet unforeseen expenditure.
- B) To transfer funds to a different grant.
- C) To restore diverted appropriation to the original unit when savings become available elsewhere.
- D) To cover excesses of less than ₹1 lakh.
Show Answer
Correct Answer: C) To restore diverted appropriation to the original unit when savings become available elsewhere.
4. What document typically supports an application for re-appropriation of funds under Rule 65 of The General Financial Rules, 2017?
- A) An Annual Financial Statement.
- B) A statement in Form GFR 1.
- C) A detailed audit report.
- D) A parliamentary approval resolution.
Show Answer
Correct Answer: B) A statement in Form GFR 1.
5. For re-appropriation orders under Rule 65 of The General Financial Rules, 2017, what is required to be stated for savings and excesses of ₹1 lakh or over?
- A) Only the total amount of savings.
- B) Only the affected primary units.
- C) The reasons for both saving and excess, and the affected primary units.
- D) No specific details are required for amounts under ₹5 lakh.
Show Answer
Correct Answer: C) The reasons for both saving and excess, and the affected primary units.
Frequently Asked Questions
What is the ‘primary unit of appropriation’ in the context of Rule 65?
As per Rule 65 (1) of The General Financial Rules, 2017, the primary unit of appropriation is the final unit of appropriation, specifically the Object head of account. This refers to the most detailed level of classification for expenditure, such as salaries, office expenses, or professional services.
Can funds be re-appropriated to cover an anticipated deficit in another unit if savings are expected later?
No, Rule 65 (3) of The General Financial Rules, 2017, explicitly states that funds shall not be re-appropriated from a unit with the intention of restoring the diverted appropriation to that unit when savings become available under other units later in the year. Re-appropriation must be based on current anticipated savings.
Who needs to be informed about a re-appropriation order?
The authority sanctioning the re-appropriation must endorse a copy of the order to the Accounts Officer, as specified in Rule 65 (4) of The General Financial Rules, 2017, to ensure proper accounting and record-keeping.
Key Takeaways
- Rule 65 permits re-appropriation of funds between primary units within a grant before the financial year ends.
- Re-appropriation is only allowed when savings are anticipated in the source unit.
- It explicitly prohibits re-appropriation for the purpose of restoring previously diverted funds.
- Applications must be documented (e.g., Form GFR 1) with reasons for significant variations and endorsed to the Accounts Officer.
Conclusion
Rule 65 of The General Financial Rules, 2017, is a cornerstone of flexible financial management within government departments. By enabling the strategic reallocation of funds based on real-time needs and anticipated savings, it ensures that public money is utilized efficiently and effectively, adapting to operational realities while maintaining strict accountability and transparency through proper documentation and oversight by the Accounts Officer.