The document summarizes the key aspects of the Delegation of Financial Powers Rules, 1978. The rules delegate financial powers to incur expenditures from public funds to subordinate government authorities. It lays out the powers of various government officers and functionaries to approve expenditures. The rules also provide general limitations on expenditures and guidelines for re-appropriating funds between budget heads with necessary approvals. It discusses concepts like appropriation, contingent expenditures, and the powers of heads of departments.

1. Delegation of Financial
Powers
Rules, 1978

2. Session Overview
• In the previous session we discussed the
General Financial Rules, 2005 and their
application in disciplining the financial and
budgetary control in government spending
etc.
• Another tool of public exchequer control is
well defined powers of different functionaries
in the Government for incurring expenditure
from public funds.

3. Contd..
• The General Financial Rules, 2005 are
supplemented by the Delegation of Financial
Powers Rules, 1978, which lay down the
financial powers of different functionaries for
incurring expenditure of public funds for
better and effective control and monitoring of
Government spending out of the allotted
funds.
• In this session we will discuss the main
features of delegation of financial powers as
laid down in the Delegation of Financial
Powers Rules, 1978.

4. Learning Objective
• At the end of the session the trainees will
be able to state the powers of various
Government Officers and other
functionaries as laid down in the
Delegation of Financial Powers Rules,
1978.

5. Delegation of Financial Powers
Rules, 1978
• All powers to incur expenditure out of
public funds (Consolidated Fund of India)
vest with the Government in the Ministry of
Finance.
• The structure of governance in India and
the area of governance is so vast that it is
not possible for the Ministry of Finance to
authorize all the expenditure of
Government of India.

6. Contd..
• It was necessary to delegate financial powers
to incur expenditure out of public funds to
subordinate authorities of various other
Ministries/Departments of Government of
India.
• The Delegation of Financial Powers Rules,
1978 is the compendium containing all the
orders delegating powers to authorities other
than the Ministry of Finance.

7. Contd..
• These Rules came in to force with effect
from the 1st August, 1978 repealing the
Delegation of Financial Powers Rules,
1958
• The Rules have been amended from time-
to-time since their publication in the
Gazette of India, dated the 22nd July,
1978.

8. Contd.
• The President has the powers under Rule 2
of these rules to:
 relax all or any provisions of these rules in
relation to any authority;
 delegate to any authority powers in addition to
the powers delegated under these rules;
 reduce the powers delegated to any authority to
the extent specified in the order;
 impose conditions in addition to those specified
by these rules ;and
 for specified reasons withdraw from any
authority all/any of the powers delegated under
these rules.

9. Basic Concepts
• The definitions of some of the frequently
used terms in the Rules are as under;
• Appropriation: means the assignment to meet
specified expenditure of funds included in a
primary unit of appropriation
• Contingent Expenditure: means all incidental
and other expenditure including expenditure on
stores which is incurred for the management of
an office, for the working of technical
establishment, office expenses and the like but
does not include any expenditure which has
been specifically classified as falling under some
other Head of expenditure, such as 'Works',
‘Tools and Plant'.

10. Contd..
• Head of the Department: in relation to an office or offices
under his administrative control, means an authority/person
as the concerned department in the Central Government
may, by order, specify, as a Head of the Department.
He/she should not be lower than that of a Deputy Secretary
to Government of India.
• Head of Office: means a Gazetted Officer declared as
such under Rule 14 of these rules (Rule 14 specifies that
the Central Government, Administrators and Heads of
Departments shall have power to declare any Gazetted
Officer subordinate to them as Head of an Office for the
purpose of theses rules, and not more than one Gazetted
Officer shall be declared as Head of Office in respect of the
same office/establishment, unless such
office/establishment is distinctly separated from one
another).

11. Contd..
• Recurring expenditure: means the expenditure
which is incurred at periodical intervals.
Expenditure other than recurring expenditure is
Non-recurring expenditure.
• Primary unit of Appropriation: means a primary
unit of Appropriation referred to in Rule 8.
• Re-appropriation: means the transfer of funds
from one primary unit of appropriation to another
such unit.
• Subordinate Authority: means a Department of
the Central Government or any authority
subordinate to the President

12. General limitations on power to
sanction expenditure
• No expenditure shall be incurred from the public revenue
except on legitimate objects of public expenditure,
• The financial powers not specifically delegated to any
authority (known as Residuary Financial Powers) vest in
the Finance Ministry. (Vide Rules 4 and 5).

13. Effect of Sanction
• Expenditure against a sanction shall be incurred only when
funds to meet the expenditure/liability are made available by
valid Appropriation/Re-appropriation
• In the case of a recurring expenditure/liability, sanction
becomes operative when funds for the first year are made
available by valid Appropriation/re- appropriation or by an
advance from the Contingency Fund, as the case may be,
and it remains effective for each subsequent year subject to
appropriation in such years and subject to the terms of the
sanction.
• It is not within the competence of a Department of the Central
Government to order/agree to re-appropriation without the
concurrence of the Ministry of Finance from the funds
provided for new items in the budget. (Govt. of India
decision(1) under Rule 9)
•

14. General restrictions on Appropriation /Re-
appropriation(Rule 10)
• No funds will be appropriated/ re- appropriated to
meet expenditure which has not been sanctioned by
an authority competent to sanction it.
• Funds provided for charged expenditure shall not be
appropriated/re-appropriated to meet votable
expenditure and vice versa.
• Re-appropriation from one Grant/Appropriation for
Charged Expenditure to another Grant/Appropriation
for Charged Expenditure is also not permissible.
• Funds shall not be appropriated /re-appropriated to
meet expenditure on a new service/new instrument of
service not contemplated in the budget as approved
by Parliament.

15. Contd..
• Prior approval of the Parliament for expenditure from
the Consolidated Fund is required :-
 for setting up a new undertaking
 taking up a new activity by an existing departmental
undertaking and involving Capital Expenditure
 for setting up a new public sector company
 for splitting up of an existing company/amalgamation
of two or more companies
 for taking up a new activity by an existing company
 in respect of investments to be made for the first time
in private sector companies/private institutions except
in units coming under Government Management
(with the approval of Parliament).

16. Contd..
• Approval of the Parliament is also required :
 in the cases of additional investments above rupees
one crore in an existing undertaking/private sector
companies/private institutions
 and in the case of additional investments in loans
above rupees twenty lakhs to an existing public
sector company, where there is no Budget Provision.
 In the cases where there is budget provision and
paid up capital of the company is between Rupees
one crore to rupees 100 crore, the limit for seeking
approval of the Parliament ranges between above
twenty lakh to rupees 15 crores.

17. Contd..
• The expenditure below the limits of Parliament for
approval can be met from the re-appropriation of
savings in a grant subject to report to the
Parliament.
• Expenditure above Rs.10 lakhs and upto Rs.50
lakhs, on new Works (Land, Buildings and/or
Machinery) can be met from savings in a grant by
re-appropriation subject to report to Parliament and
with the prior approval of the Parliament if it
exceeds Rs.50 lakhs.

18. Contd..
• In the case of Grant-in aid to statutory and other public/private
institutions under Revenue Expenditure, the prior approval of
the Parliament for meeting the expenditure out of the
Consolidated Fund of India is required above the following
limits:-
 For the Institutions in receipt of grant-in-aid above Rs.one
crore-----Rs.10 lakh, (limits apply with reference to money
disbursed by an individual Ministry/ Department and not by the
Government as a whole.
 Institutions in receipt of grant-in-aid above Rs.1 crore------10%
of the Budget provision or Rs. 2 crores, whichever is less.
 Grants-in-aid to private institutions other than for Export
Promotions Schemes (Recurring)----Above Rs.5 lakhs
 Grants-in-aid to private institutions other than for Export
Promotions Schemes,(Non-Recurring)---- Above Rs.10 lakhs
 Write off of Government loans above Rs.1 lakh (individual case)

19. Ministries/Departments have full powers for re-
appropriation
• Funds from one plan head to another plan head in a
Grant, except in cases involving foreign exchange
provided that no re-appropriation from Capital to Revenue
and vice versa is made.
• Commitments are not made beyond the allocations for the
schemes during the plan period.
• Savings in Revenue Section are not available for re-
appropriation in Capital Section and vice versa in the
same Demand for Grants.
• The Financial Advisors have not to allow diversion of funds
/re-appropriation of funds to augment provisions for travel
expenses.
• The Administrative Ministries/Departments may enhance
provision under travel Expenses up to 10%. Funds from
'salary' cannot be re-appropriated to any other head.

20. Creation and abolition of posts. (Rule 11to 13)
• Rule 11 provides that no post shall be created in the Secretariat
office/department of the Central Government unless the
scale/rate of pay on which the post is created has been
approved by the President.
• No post on permanent basis can be created without the
previous consent of the Finance Ministry.
• The subordinate authority authorized to create a permanent
post may create similar supernumerary post for the purpose
of accommodating the lien of a Government servant who,
though entitled to hold a lien against regular permanent post
cannot be so accommodated because of non-availability of
such a post.
• The supernumerary post has to be created only if another
vacant permanent post is not available to provide lien.
• Abolition of posts is covered under Rule 12. which states that a
subordinate authority may sanction the abolition of post which it
is competent to create.

21. Contd..
• Rule 13 :The powers vested in the departments of the Central
Government/Administrators and Heads of Departments in
relation to, creation of permanent posts, temporary posts,
Appropriation and re-appropriation, incurring of contingent or
miscellaneous expenditure, write off of losses are specified in
Schedules II to VII of these Rules.
• No powers can be delegated to any subordinate authority in
respect of:
 Creation of posts;
 Write off of losses; and
 Re-appropriation of funds exceeding 10 percent of the original
budget provision for either of the primary units of
appropriation/sub head.

22. • Rule 16 provides that a Head of Office may
have power to authorize a Gazetted Officers
serving under him to incur
contingent/miscellaneous expenditure on his
behalf subject to restrictions as may be laid
down by him.
• The Administrator/Head of the Department shall,
however, continue to be responsible for the
correctness, regularity and propriety of the
decisions taken by the Gazetted Officer to whom
powers have been delegated.
• The rules provide that the powers cannot be
delegated to a Non-Gazetted Officer.

23. Insurance of Government Property
• Government property both movable and immovable is
not to be insured and no expenditure has to be
incurred/liability undertaken in connection with the
insurance of such property without the previous consent
of the Finance Ministry.
• Motor vehicles owned by the Central Government used
for purposes not connected with any commercial
enterprise, are exempt from compulsory insurance
against thirds party risk .
• In cases where it has been decided to insure
properties/goods under the direct/indirect control of the
Central Government, the departments shall affect the
insurance only with a Nationalized Insurance
Organization and follow the procedure that may be laid
down by the Ministry of Finance from time to time.

24. Remission of disallowances by audit and writing off of
overpayments made to government servants:
• Rule 17 specifies the principles for remission of disallowances
by audit and writing off of overpayments made to government
servants:-
• A Department of the Central Government/an Administrator/or
any other subordinate authority, to whom powers may be
delegated by or under special order of the President, may
waive the recovery of an amount disallowed by an Audit
Officer/ Accounts Officer, or otherwise found to have been
overpaid to a Government servant subject to specified
conditions

25. Expenditure on Schemes or
Projects
• A Department of the Central Government may sanction
expenditure on any scheme/ project, the total outlay on which
does not exceed rupees one crore fifty lakhs,if the scheme has
been approved by the Finance Ministry.
• The limit includes the entire cost of the scheme upto the date
of completion, both recurring/ non-recurring), cost of the
works, even where the provision for such work is made in a
demand under the control of another Department
• Approval of the Finance Ministry shall not be required to
sanction excess expenditure over the original estimates of a
sanctioned scheme up to ten per cent or rupees five crores
which ever is less (in the case of plan scheme), and ten
percent or rupees three crores which ever is less (in the case
of non-plan scheme)

26. Contd..
• The powers to sanction expenditure on schemes in respect of
the Departments of Central Government having Integrated
Finance Advice System under plan schemes have been
enhanced to schemes costing less than Rs.100 crores
(provided the scheme has been accepted by the Ministry of
Finance at the pre-budget stage)-Rule 18
• The increase in the cost will be approved by the Administrative
Ministry/Department in consultation with the (Planning
Commission)* Budget Division of Ministry of Finance, where
such increases are due to:
(a) Increase in statutory levies;
(b) Exchange rate variations and price escalation within the
originally approved project time scale. Government of India's
decision 4(A)3 below Rule 18
* Planning commission has been dissolved w.e.f 01.01.2015

27. • Sanction of Non-Plan expenditure;
A department with Integrated Finance Scheme can
sanction Non-plan expenditure on schemes costing
less than Rs.300 crores with specified financial limit
by the prescribed authority , but no Non-plan post
would be created under this power.(GID 4(B) below
rule 18)
• Ministries/Departments of the Central Government
may issue expenditure sanction in respect of Major
Works costing up to Rs.5 lakhs without consulting the
Ministry of Finance.(GID(7) below rule 18)

28. • Power to Release Funds:
The Departments of the Central Government have
powers to release funds for investment as equity
capital of statutory corporations/ companies wholly
owned by the Central Government, within the
allotment in the Budget/Appropriation/Re-
appropriation of funds or advance sanctioned for the
purpose from the Contingency Fund. (Rule 19).
• Grants and loans :
Rule 20 prescribes the principles as regards powers
to sanction grants-in-aid including scholarships and
loans.

29. Indents, Contract and Purchases
• A department of the Central Government
shall have full powers to sanction expenditure
for purchase and execution of contracts
including agreements subject to the:
• Provision of GFR-2005
• Delegation of financial powers in the DFP
Rules, 1978;
• Purchasing powers delegated from time-to-
time to the indenting departments for making
purchases .

30. Contd..
• Delegation to Secretary of Department concerned is as
under vide GIMOF Notification no. 1(11)/E.II (A)/03 dated
16.09.2003-(Rule-21(b)
 Open / Limited tender contracts upto rupees twenty crores.
 Negotiated /Single Tender or Proprietary contracts upto
rupees five crores.
 Agreements or contracts for technical collaboration and
consultancy services upto rupees two crores.
 Contracts or purchases exceeding these values in
categories above require approval of the Minister in charge
of the Department.
 In the case of Department of Commerce, Secretary of the
Department has the power to approve rate contract of
DGS&D of value upto Rupees 100 crores in each case.

31. Contd..
• Power of Administrator.
As per GIMF OM No.F.1 (4)-E II (A)/93, dated 23/02/1995, (GI
decision below Rule 21) consent of the GOI shall be required in
the following cases:
 Any purchase or contract the value of which exceeds Rs. 5
crore in the case of Administrators of Delhi and Pondicherry
and rupees twenty lakhs in case of other Administrators of
UTs , if a contract extends over a period of time, the total
value over the entire period of its currency shall be taken as
the value for the purpose of applying the limit;
 Any negotiated or single tender contract exceeding Rs. 1
crore in value in the case of Administrators of Delhi and
Pondicherry and rupees two lakhs in case of other
Administrators of UTs, a limited or open tender which results
in only one effective offer shall be treated as a single tender
contact for this purpose;

32. Contd..
• Any indent for stores of a propriety nature , the value of
which exceeds Rs. 60 lakh; in the case of Administrators of
Delhi and Pondicherry and rupees two lakhs in case of
other Administrators of UTs
• Any agreement or contract for technical collaboration or
consultancy services with firms or foreign governments;
and
• Any purchase which has normally to be affected through
the Central Purchasing Organization, but which is proposed
to be made direct on the grounds of emergency, if the value
exceeds Rs. 50 lakh. in the case of Administrators of Delhi
and Pondicherry and rupees two lakhs in case of other
Administrators of UTs.

33. Sale, etc. of public buildings
• Rule 24 gives full powers to the Departments of the
Central Government/ Administrators to sanction sale
dismantle of public buildings (subject to specified
conditions) provided these powers are exercised with
the concurrence of their Financial Advisers

34. Delegation of Financial Powers in IA&AD
• Under Article 148(5) of the Constitution of India, the
conditions of service of persons serving in the Indian Audit
and Accounts Department and the administrative powers of
the Comptroller and Auditor General shall be such as may be
prescribed by rules made by the President after consultation
with the Comptroller and Auditor General.
• The financial and administrative powers of the Comptroller
and Auditor General of India under the provisions of the
'Delegation of Financial powers Rules, 1978', and the
'General Financial Rules, 2005 and the powers delegated to
the subordinate authorities in the Indian Audit and Accounts
Department are compiled in the 'Comptroller and Auditor
General's Manual of Standing Orders (Administrative) Volume
II.

35. Contd..
• This manual also includes powers of the
Comptroller and Auditor General of India and
other authorities in Indian Audit and Accounts
Department relating to 'Civil Pension
(Commutation) Rules', 'Classification, Control
and Appeal Rules', 'Conduct Rules', 'General
Provident Fund (Central Service )Rules', etc.
Application of many of these rules have financial
bearing.