Friday, September 4, 2009



The primary duty of the executive is to ensure that the expenditure should be incurred for the purpose for which the vote of parliament has been obtained. it is also the duty of the executive that the expenditure is kept within the funds allotted to an authority. It is the duty of the executive to see that the progress of the expenditure is watched by means of maintenance of certain sets of registers and to keep the aggregate charges within the amount of the grant or appropriation placed at his disposal.

budgetary control and control against detailed estimate:- separate allotments are placed at the disposal of each railway administration under each grant for
i. revenue working expenses
ii. for expenditure on works chargeable to capital, DF, DRF etc. these lumpsum allotments and these distribution over various items of work are indicated in Pink Books, which show in the case of works costing over Rs 1 lakh total estimated cost of each work.
It is the duty of the railway administration to watch that the total estimated cost is not exceeded. In the case of works costing not more than 1 lakh the railway administration should see that the total allotment for a group of work is not exceeded.

Thus the COE on the railways is exercised through
the preparation in advance of the estimates of expenditure to be incurred
allotment of funds to budget grant for the year on the basis of these estimates
the continuous and concurrent review of expenditure as incurred against the details of the estimates and against the sanctioned grants, so that the revision of estimates or reappropriation of funds are arranged for at the earliest point of time.

Control over revenue expenditure: this is done by the maintenance of Revenue Allocation Registers which records all revenue expenditure commencing from the beginning of the year and ending at the end of the financial year( April to March). The object of the register is to advise the executive s regarding the progress of expenditure against the allotment. The allotment as sanctioned is shown at the top of the register in RED ink, so that a comparison may be made at the end of the every month between the expenditure for the month and the proportionate budget allotment.

Control over works expenditure: the control over capital, DF, DRF, OLWR works is done through the medium of works register. The WR shows
i. the expenditure incurred on each work and the detailed provision made for the estimate of the work
ii. the budget allotment for the work and the actual expenditure to end of the month

The executive officer should examine the WRs monthly and watch the progress of expenditure on each work so that these are no excess over sanctioned estimate.
The AO should also watch the progress of expenditure on works and advise the executive regarding the necessity of re appropriation of funds where necessary. The AO should also see whether
(a) the expenditure up to any date is not in excess of the estimate for the quantity executed
(b) the anticipated credits have actually been realized
(c) All adjustments are made in time.

The revenue allocation register is closed every year and the total expenditure compared with the total allotment for the year. The works register is closed only on completion of work and comparing the expenditure with the sanctioned estimate.

Budget exercises:
The expenditure to be incurred for the ensuing year is envisaged as early as in Nov the previous year based on the actual expenditure up to that period and approximate projection for the ensuing year. Finally this estimate becomes the basis for Demands for Grants to be voted in the parliament. While advising the zonal railways, the railway board specifies a spending limit to be adhered to by each zonal railway. Based on the budget orders, the proportionate requirement is distributed to twelve months and cash authorization is advised for each month. The cash authorization is cross checked with the actual cash expenditure at the end of the month to enforce budgetary discipline on units which have incurred expenditure beyond the authorization.

Fiscal Review exercises:
Review exercises are basically aimed at informing the railway board about the expenditure vis-à-vis earnings to be submitted to the parliament which originally sanctioned the demands for grants. The first is the august review which takes in to account the actual for the April, May, June and the approximate for July to review the financial situation. The second being the financial review in December. The third is the final modification in January and the fourth is the violent modification in February. Thus the review exercises also contribute greatly to control the expenditure.

Account currents:
In railways, the approximate and actual accounts current are prepared for the purpose of “ways and means” to enable the finance ministry to monitor excess / savings over the granted budget allotment. The approximate account current separately for revenue and capital are submitted in the first week of the subsequent month and the actual account current is submitted in the third week of the subsequent month. This account current contributes greatly to control the expenditure.

Control over capital expenditure:
All items of expenditure chargeable to capital, DRF, DF, OLWR other that Rolling Stock are programmed through works program. the proposals for creation, acquisition an replacement of assets on railways are processed through the annual works programme. The items of works to be included in the works programme is prepared by the individual departments and finally compiled for the railway under the supervision of chief engineer. The programme is prepared within the financial ceiling limits of probable out lay of funds as laid down by the board under various plan heads. Each zonal railway should submit the works programme for the following year to the railway board duly vetted buy FA&CAO by the specified dates. This is largely exercised through advance planning like Preliminary Works Programme and Final Works Programme. These programmes are accepted after meticulous planning and the financial justification. Thus the exercise acts as medium for controlling the capital expenditure.
The works chargeable to the above funds are initially framed by the concerned executive authorities in the form of abstract estimates (excluding items started on Urgency certificates and are thoroughly scrutinized buy the associate accounts officer from a finance angle. The points of check include
the propriety of expenditure to ensure that the amounts are properly and legitimately chargeable to the railways
the financial out lays are realistic and are based on factual data
the incidence and classification of charges are correct
the estimates are devoid of errors and omissions
The importance of works programme is further notable from budgetary control point of view since all proposals would be subjected to finance scrutiny with reference to guidelines on the subject. Thus, the itemized works programme is the tool for control over expenditure while executing the work.
Liability register: it is the responsibility of railway administration to ensure that the requirement of funds are realistically assessed and suitably provided for in the budget.

Parliamentary control over expenditure:
IR being the largest departemental undertaking of the GOI, their functions and finances are watched, monitored, and controlled by Parliament. The finances and performance of the IR as a commercial enterprise are controlled by the Railway Management (Railway Board).

Parliamentary control: the control of parliament over railway finances is exercised as follows:
voting the railway budget and review of the budget through appropriation accounts under various articles of constitution of India
Review of the policy and finances of railway by parliamentary committees viz, Estimates Committee, Public Accounts Committee, and Railway Convention Committee.
Parliamentary Financial Committees: even though parliament discusses the demands for grants for sufficiently long period before voting, due to magnitude and complexity of state activities, it is almost impossible for the parliament as a body to scrutinize the myriad expenditure proposals and Govt activities. In order to help it exercise effective control over public expenditure, Lok Sabha has set up three financial committees viz Estimates Committee, Public Accounts Committee, and Committee on Public Undertakings. Railway Convention Committee is an ad hoc committee functions like a finance committee.
Estimates Committee:
Public Accounts Committee
Railway Convention Committee

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