CHAPTER XV

1501. General Rules on Budget.-The general rules on budget are contained, in Chapter Ill, IV and V of the Indian Railway Financial Code to which reference may be made.

1502. Responsibility with regard to expenditure.-No expenditure shall be incurred by any authority without the allotment of funds. The expenditure on each work shall be limited to sum allotted for it. If for exceptional reasons expenditure in excess of Budget allotments has to be incurred and if the authority incurring expenditure is either not empowered to sanction a reappropriation therefor application for additional funds shall be made to the next higher authority stating how the expenditure is proposed to be met. In doing so it should invariably be explained why the need for the expenditure was not foreseen in time for inclusion in the Budget and why the outlay could not be postponed to the next financial year. (c f. 367 F, 368 F).

1503. The authorities to whom the funds are allotted are responsible to report at once to the next higher authority, the probability of any lapses of excesses over the sums placed dt their disposal. No liability may be incurred in one year against anticipated grants of a succeeding year, except that advance commitments for procurement of stores for works may be made as provided in para 812-S to the extent authorised by the Railway Board from time to time. (c f. 371 -F).

1504. It should be the duty of the administration to see that the allotments made to them are fully expanded, in so far as is consistent with economy and the prevention of large expenditure in the last months of year for the sole purpose of avoiding lapses. They shall be responsible for ensuring that money which is not likely to be needed during the year is promptly surrendered as to allow its appropriation for other purpose, (c f. 372+).

1505. Mixed Works:- In the case of mixed works involving more than one department, the department to which major portion of the estimated cost relates will co-ordinate the budgetary and expenditure control. On receipt of allotment of funds for the year, the co-ordinating departments shall arrange to distribute funds to other departments connected with the execution of such works.

Budgetary Control

1506. Budgetary Control over Revenue Demands: --For exercising control over Revenue expenditure, Revenue Allocation Registers (refer para 512+) serve as an important management tool. All revenue expenditure is recorded in this Register by various heads of accounts as prescribed in the Revenue Expenditure Classification. A monthly comparison is made of the expenditure, with Budget Allotment and for this purpose the sanctioned Budget Allotment for a year is distributed among the various months after taking in to account various known factors of disturbance keeping the guidelines outlined in para 508-F in view. The proportionate budget allotment for each month, for each sub-head of grant is worked out by the Accounts Officer at the beginning of each financial year in consultation with the officers responsible for the control of expenditure. The progress of expenditure is monitored through monthly Financial Reviews prepared by the Accounts Officers in Form 513-F, and furnished to the controlling authorities every month by such dates as may be fixed in consultation with them. (c f. 508-F. 512-F)

1507. The monthly Financial Reviews provide two projections viz. (j) actual expenditure compared to the proportionate allotment of the end of the month under review, and (ii) actual expenditure to the end of the month under review compared to the expenditure to the end of the corresponding month of the preceding year. The financial reporting system provided by the monthly Financial Reviews offers a means of exercising control over expenditure under Revenue Demands.

1508. Budgetary Control over expenditure on Acquisition, Construction and Replacement of Railway Assets.- In the case of works chargeable to Capital, Depreciation Reserve Fund, Development Fund, Accident Compensation Safety and Passenger Amenities Fund and Open Line Works Revenue, Railway Administrations are required to exercise budgetary control not only under each sub-head of grant. but also against the allotment sanctioned for the year for each work costing over Rs. 50,000 each. For this purpose the financial reporting system provides for the preparation of two review statements by the Accounts Officers every month (i) by sub-head of grant in Form 525-F and (ii) by individual work in Form 526-F These reviews are furnished to the authorities concerned by the Accounts Officer by such dates as may be fixed in consultation with them (c.f.519-F).

1509. Budgetary Reviews.- During the financial year three budgetary reviews are made during August, December and February to review the requirements of funds. Reference may be made to Chapter 111 of Indian Railway Financial Code, regarding the relevant provisions in this connection. These reviews provide a means of reassessing the requirements of funds and they should commence at the "grassroots level" i.e. Division. Workshop as the case may be. Since the responsibility for framing the requirements devolves upon the spending authorities concerned. care should be taken to see that the data on which the forecast is based is adequate and reliable and that the conclusions arrived at from the data can be sustained by past experience and future expectations of likely events to make the assessment as accurate as possible.

1510. Exchequer Control.- Exchequer Control is an important tool for budgetary control, and functions as a mechanism for concurrent of cash outgo by each disbursing officer against the cash content of the budget allotment. The regulation of cash disbursements will be made by disbursing officer separately under each grant and executive officers should assist the disbursing officer in framing the data as indicated in para 1512. (cf. 540-F).

1511. Implementation of Exchequer Control.- Implementation of Exchequer Control involves the following steps

• (i) Correct assessment of the `cash' and `adjustment' portions of the sanctioned annual budget under each demand by cash disbursing officer;

• (ii) As accurate an assessment  as possible of the quarterly requirement of cash.

• (iii) Issue of quarterly/monthly cash authorisation to disbursing officer, and

• (iv) Concurrent control of cash outgo by each disbursing officer (c f. 545-F).

1512. Information to be furnished by Executive Officers.-Executive officers, should assist the disbursing officer in making a correct assessment of `cash' and `adjustment' portions of the sanctioned annual budget under each Demand, keeping the guidelines indicated in para 546-F in view. They should also make an assessment of quarterly forecast of expenditure under the categories 'cash' and 'adjustment' and finish the data to the disbursing officer for exercising control of cash outgo.

1513. Limitation of Exchequer Control.-Exchequer Control is a self imposed expenditure disciplirie by means of a system of day to day monitoring. to ensure that the cash contents of the budgetary allocation is not exceeded (cf. 543-F).

1514. Watch or Credit on Recoveries .The credit for released materials  do not figure in the gross Demands, and are outside the scope of the Grants, but constitute a reduction of expenditure in accounts. The expenditure voted by Parliament is on gross basis but the compilation of expenditure by Plan Heads is on a net basis taking into account the credit or recoveries reflecting the effect of the resources generated by the realisation of credits for released materials. The resource allocation made for framing the Works Programme take into account the additional resources that would accrue by the realisation of credits indicated by the Railway Administrations and hence it is necessary that a watch on the actual credit realised is maintained. If credits as indicated at the planning stage do not materialize, it will have an adverse effect on the resource position.

Expenditure Control

1515. Expenditure Control.-The sanction to an estimate constitutes authority for spending a specific amount on a particular work. Executive Officers should not, therefore, incur expenditure or liability on a work in excess of the sanctioned estimate without the prior sanction of the competent authority. From the moment expenditure or liability is incurred on works, a check at regular. and frequent intervals should be made on its progress both against estimates and funds. The check should originate at the lowest executive level viz. a Division.

1516. Method of exercising control over expenditure.-The control over expenditure on railways is exercised through

• (i) The preparation in advance of estimates of the expenditure;

• (ii) The allotment of funds through budget grants for the year on the basis of these estimates; and

• (iii) The continuous and concurrent review of the expenditure as incurred against the details of the estimates and against the sanctioned grants, so that revisions of estimates or reappro- priation of funds are arranged for at the earliest possible point of time.

1517. Use of Works Register.-The Works Register (refer to para 1472) maintained in each division serve as an important management tool in providing information which enables a comparison of the expenditure incurred against a work with the provisions made in the estimate. The Executive Officer should examine the information recorded in the Works Registers monthly or at more frequent intervals and watch the progress of expenditure on each work so that any tendency towards excess over sanctioned estimate may be investigated and curbed or fresh administrative and technical sanction obtained in time to cover the anticipated excess.

1518. Progress Report-Cum-Financial Review.-For effective financial control of works a system which will monitor the relation between achievement and expenditure is essential. Financial Reviews assist in such a monitoring process and also serves as a management reporting system linking the progress of work with the expenditure incurred. Financial Review provides a means of assessing probable variations from* sanctioned estimate at the earliest possible date.

1519. Preparation of Progress Report-Cum-Financial Review.-Financial Reviews are to be prepared half yearly in the proforma given below (From E-1519) and should include (a) new construction conversions, doubling, (b) open line works costing Rs.50 lakhs (gross) and over, and (c) track renewal - works costing Rs.50 lakhs (gross) and over.

Form E-1519 (continued to...............list of forms)

1520. Progress Report-cum- Financial Reviews are to be prepared by the Divisional Executive Officer and countersigned by the Divisional Accounts Officer and sent to Chief Engineer and the Financial Adviser and Chief Accounts Officers. These Financial Reviews should be submitted before the end of the 3rd week of the 2nd month following i. e. before 21st May and 21st November for the period ending 31st March and 30th September respectively.

1521. These reviews are to be prepared from the time the expenditure is incurred on the work even though the work might not have been physically commenced. The review should show both the progress of works based on physical progress as well as progress of expenditure, actual and anticipated for each of the works. They should also give the overall financial and the physical progress as also the dates of commencement of the work and the probable date of completion.

1522. In the remarks column of the Financial Review (E-1519) any anticipated excess of not less than Rs.20,000 or 10 per cent over the provision under sub heads of account should be explained briefly When a financial review shows the probability of a variation which is beyond the power of the Railway Administration to sanction, an explanation should be given of the measures taken or proposed to be taken to regularize the position. Explanations for savings of 20 per cent or one lakh. whichever is less occurring under any main head of account such as "Formation` "Bridge Work etc. should also be given in the remarks column.

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