Indian Railway Codes and Manuals-General Financial Rules-2017-Chapter- 10 (X) GFR-2017.
Chapter – 10
BUDGETING AND ACCOUNTING OF EXTERNALLY AIDED PROJECTS
Rule
264 (1)
Implementation
of Projects or Schemes through external aid receipt. The projects or schemes of
the Government of India to be implemented through external aid receipt from
multilateral or bilateral funding agencies shall be shown in the budget
proposals approved annually by the Parliament.
Rule
264 (2)
The
external aid comes from bilateral and multilateral sources as follows: (i)
Bilateral funding to finance specific project(s) by the funding agency(ies)
under Government to Government agreement(s); and, (ii) Multi-lateral funding by
Multi-Lateral Funding Agencies, such as the World Bank under agreement(s)
between the borrower (Government of India) and the Multilateral Funding
Agency(ies).
Rule
264 (3)
The
Department of Economic Affairs, Ministry of Finance as the nodal agency shall
execute the legal agreement for loans or grants from external funding
Agency(ies). However, grant agreements for Technical Assistance can also be
executed by the beneficiary Ministries or Departments with the approval of
Ministry of Finance, Department of Economic Affairs.
Rule
264 (4)
The
Office of the Controller of Aid Accounts and Audit (CAAA) in the Department of
Economic Affairs, Ministry of Finance shall be responsible for implementing the
financial covenants laid down in the agreement(s) executed by Department(s) of
Government of India and the External Funding Agency(ies). A copy of all such
agreements shall be sent to the Office of Controller, Aid Accounts and Audit,
Department of Economic Affairs for this purpose.
Rule
265
Currency
of external aid. The external aid shall flow from the Funding Agency in foreign
currency or Indian Rupees and shall be received by the Reserve Bank of India,
Mumbai which shall remit the rupee equivalent to the account of Controller, Aid
Accounts and Audit, Department of Economic Affairs at Reserve Bank of India,
New Delhi. The remittances shall be accounted as external loan/Grant receipts
in the Consolidated Fund of India.
Rule
266
Accounting
of Cash grants.Cash grants, as distinct from commodity grant or other
assistance in kind received from external sources shall be accounted for only
by the office of Controller of Aid Accounts and Audit, Department of Economic
Affairs.
Rule
267
Procedure
for withdrawal. The concerned administrative Ministries or Departments shall be
required to make provision of funds under the relevant head of account as
‘External Aided Component’ in their Detailed Demands for Grants for release of
external aid amounts during the year to the respective Project Implementing
Agencies. There are mainly two procedures laid down for withdrawal of funds
from the loan or grant account:
Rule
267 (1)
Reimbursement
procedure. Under the reimbursement procedure the Project Implementing Agency
shall initially spend or incur expenditure and subsequently claim the amount
from the Funding Agency through the office of the Controller, Aid Accounts. The
remittances shall be accounted as External Loan or Grant receipt in the
Consolidated Fund of India. There are two ways of dealing with the
reimbursement claims as given below: (i) Reimbursement through Special Account
(Revolving Fund Scheme). Under the Revolving Fund Scheme, the Funding Agency
disburses the estimated expenditure of four months for the projects as initial
advance to Government of India under the respective loan or credit or grant
agreement. Office of Controller of Aid Accounts & Audit withdraws the
amount specified in the agreement as initial deposit from the Funding Agency,
by sending a simple withdrawal application in the prescribed format after the
loan is declared effective. Such initial deposit designated in US Dollars is
received by Reserve Bank of India, Mumbai and Rupee equivalent shall be passed
on to Controller of Aid Accounts & Audit through Government Foreign
Transaction (GFT) advice. However, Reserve Bank of India, Mumbai shall maintain
a loan wise proforma account for liquidation of advance received from Funding
Agency. Office of Controller of Aid Accounts and Audit, on receipt of
reimbursement claims from Project Implementing Agency, shall send an advice to
Reserve Bank of India, Mumbai advising it to debit the Special Account with the
US Dollars equivalent of the amount of the eligible claim. Office of
Controller, Aid Accounts and Audit shall consolidate all such claims and submit
to Funding Agency for replenishment of Special Account. This shall be
accompanied by a statement of debits and credits made during the period by
Reserve Bank of India, Mumbai and supporting documents received from the
Project Implementing Agency. (ii) Reimbursement outside Special Account: Under
the reimbursement procedure (where there is no provision in the loan or credit
agreement for the Special Account or the balance in the Special Account is
‘Nil’) office of Controller of Aid Accounts and Audit shall send the
reimbursement claims r e c e i v e d f r o m t h e P r o j e c t Implementing
Agency direct to the Funding Agency after checking the eligibility aspect. The
Funding Agency shall disburse the eligible expenditure to the borrower’s
account with Reserve Bank of India, Mumbai, who shall pass on the Rupee
equivalent to the account of the Controller of Aid Accounts and Audit at
Reserve Bank of India, New Delhi by issue of Government Foreign Transaction
(GFT) advice.
Rule
267 (2)
Direct
Payment Procedure. Under this procedure adopted in some cases the Funding
Agency, on the request of the Project Implementing Agency (received through
Controller of Aid Accounts and Audit), duly supported by relevant documents,
shall directly pay to the contractor or supplier or consultant from the loan or
credit or grant account. The Funding Agency, after satisfying itself as to the
eligibility of the expenditure etc. remits the amount directly to the account
of the payees as per the payment instructions. The Funding Agency apprises the
office of Controller of Aid Accounts and Audit and the Project Implementing
Agency of the particulars of the payment made. Office of Controller of Aid
Accounts and Audit shall work out the rupee equivalent of the foreign currency
payment. This rupee equivalent shall be recovered by office of Controller of
Aid Accounts and Audit from the Project Implementing Agencies or State
Governments which have availed of the Direct Payment Procedure. Note : In the
case of Central Projects, Centrally Sponsored Projects and Public Sector or
Financial Institutions, the concerned administrative Ministry or Department
shall release the fund to the Project Implementing Agency with the instruction
to deposit rupee equivalent of the foreign currency that have been availed of
under Direct Payment Procedure by them to the account of Controller of Aid
Accounts and Audit at Reserve Bank of India, New Delhi or Branch of SBI so authorized.
Rule
268 (1)
Fund
Flow for State Projects financed from external aid source. T h e respective
Departments of the State Government shall provide in the Budget such
expenditure proposed to be incurred under Plan Schemes during the financial
year by the Project Implementing Agencies. These shall be in respect of State
projects to be financed from external aid sources both under loan or credit and
grants and eligible for disbursement from Funding Agency under Reimbursement or
Direct Payment Procedure.
Rule
268 (2)
Fund
flow for State Projects under Reimbursement Procedure. The disbursements under
the “Reimbursement through Special Account ” and “Reimbursement out side
Special Account”, referred to in Rule 267 (i), shall be consolidated at
periodical intervals under each loan or credit State-wise by the office of the
Controller of Aid Accounts and Audit. The details of the same shall be sent to
Plan Finance Division of the Department of Expenditure in the Ministry of
Finance for release of funds to the respective State Governments. The Plan
Finance division of Department of Expenditure in the Ministry of Finance shall
issue sanctions for actual release of the disbursement for each State. A copy
of such sanction shall be endorsed to the Finance Department of the concerned
State Government for information. The office of the Chief Controller of
Accounts, Ministry of Finance shall issue the Inter-Government (IG) Advice to
Reserve Bank of India, Central Accounts Section, Nagpur, for effecting the
release to the concerned State Governments. The account of the State Government
maintained at Reserve Bank of India, Central Accounts Section, Nagpur, shall be
credited with the amount so released, thus, completing the cycle of funds from
the expenditure incurred from the Budget of the State till receipt of funds of
such expenditure from Government of India to the State.
Rule
268 (3)
Fund
flow for State Projects under D i r e c t P a y m e n t P r o c e d u r e .
Under Direct Payment Procedure the claims shall be processed as mentioned in
Rule 267 (ii). Office of Controller of Aid Accounts and Audit shall work out
the Rupee equivalent of such Direct Payment based on Reserve Bank of India
buying rate applicable for the value date on which the Direct Payment was made.
Office of Controller of Aid Accounts and Audit shall consolidate such
disbursement in Rupees, and send a list of such disbursement State wise to Plan
Finance Division of Department of Expenditure at periodical intervals
requesting them to release the amount to the State concerned notionally and
recover the same for credit to Controller of Aid Accounts and Audit’s account.
The Plan Finance Division shall issue a separate sanction for the amount to be
released to the State concerned and for simultaneous recovery and credit back
to the account of the Controller of Aid Accounts and Audit. A copy of such
sanction shall also be endorsed to the Finance Department of the State
Government concerned. The office of the Chief Controller of Accounts, Ministry
of Finance shall advise Reserve Bank of India, Central Accounts Section,
Nagpur, for making necessary adjustment entries in the accounts of the State
concerned under intimation to the Finance Department of the State and
Controller of Aid Accounts and Audit. This completes the cycle of funds flow in
the case of direct payment claims.
Rule
269
Fund
flow for Central or Central sponsored Projects. Under the Central or Central
sponsored project financed from external aid, whether loan or grant, the
process of disbursement of such claims by the Funding Agency shall be the same
as explained in Rule 267. The respective Ministry or Department get EAP funds
under a separate budget head when Demands for Grants are passed in the
Parliament and advised by the Budget Division of the Ministry of Finance. The
funds shall be released to Project Implementing Agency within six weeks by the
administrative Ministry or Department with reference to expenditure incurred by
the Project Implementing Agency.
Rule
270
Fund
flow for Public Sector or Financial Institutions. When the Project Implementing
Agency under Loan or Credit Agreement is a Public Sector or Financial
Institution or Autonomous Body and Government of India is the Borrower, the
Administrative Ministry concerned shall provide in its budget funds required to
be passed on to the Project Implementing Agency for the expenditure incurred by
the latter under the externally aided project. The Project Implementing Agency
shall submit claims under reimbursement or direct payment procedures to the
office of the Controller of Aid Accounts and Audit, Department of Economic
Affairs. The disbursement of the claims by the Funding Agency shall be similar
as explained in Rule 267. The concerned administrative Ministry or Department
releases the amount to Project Implementing Agency based on the certification
of disbursement received from the Funding Agency as certified by the office of
the Controller of Aid Accounts and Audit. However, where the loan is negotiated
directly by a particular Public Sector Undertaking or Financial Institution,
the funds from the Funding Agency shall flow direct to the borrowing entity.
Rule
271
Repayment
of loans. Office of Controller of Aid Accounts and Audit shall be responsible
for prompt repayment of principal on the due date as per the agreements. The
remittance of foreign currency is arranged through designated Public Sector
Commercial Banks and Reserve Bank of India. The Rupee equivalent and the amount
of foreign currency remitted shall be intimated by the Banks to Controller of
Aid Accounts and Audit. The Rupee equivalent of the foreign currency remitted
is credited to the respective Banks’ account maintained at Reserve Bank of
India, New Delhi, by debit to Controller of Aid Accounts and Audit’s account as
per standing arrangement. On the receipt of the advice from Reserve Bank of
India, New Delhi, Controller of Aid Accounts and Audit shall debit the
concerned loan account in the Consolidated Fund of India. The repayment of
loans shall be classified as charged expenditure. In cases where the funds from
externally aided Projects are further passed on as loans, the recovery of the
loan along with interest shall be the responsibility of the respective
administrative Ministry or Department.
Rule
272
Interest
Payments. Interest on external loans shall be paid on the due date as
stipulated in the loan or credit agreements against the budget provision made
for this purpose. Interest payments shall be accounted for as debit under the
Major Head ‘2049-Interest Payments’ for external loans in the Consolidated Fund
of India. The procedure for transfer of amount shall be the same as followed in
the case of repayment of loans, referred to in Rule 271 above. The interest
payment shall be classified as charged expenditure.
Rule
273
Accounting
of exchange variation. The exchange variation in respect of foreign loans that
have been fully repaid shall be adjusted written off to “8680- Miscellaneous
Government Accounts - Write off in terms of Government Accounting Rules and the
procedures prescribed by CGA in consultation with CAG.
Rule
274
Aid
in form of materials and equipment. In cases where materials, equipment and
other commodities, without involving any cash inflow, are received as aid from
foreign countries, the Funding Agency issues an advice to the concerned
Ministry or Department giving details of materials supplied along with the
value thereof. The Ministry or Department concerned in turn shall intimate the
details to the office of the Controller of Aid Accounts and Audit, Department
of Economic Affairs for making the budget provision in regard to aid material
or equipment. Note : Refer to Para 4.8.1 of Civil Accounts Manual and Note (1)
below Major Head ‘3606-Aid Materials and Equipments’ of List of Major and Minor
Heads of Account of Union and States for detail procedure of adjustment of
value of the materials etc. received.
Multiple choice questions:
. Which department is responsible
for executing legal agreements for loans or grants from external funding
agencies?
- A) Ministry of External Affairs
- B) Ministry of Commerce
- C) Department of Economic Affairs, Ministry of Finance
- D) Reserve Bank of India
Answer: C) Department of Economic Affairs, Ministry of Finance
2. Where must the external aid
projects or schemes be shown for approval?
- A) Government of India’s annual financial statement
- B) Budget proposals approved annually by the Parliament
- C) State Government’s budget proposals
- D) International Funding Agency reports
Answer: B) Budget proposals approved annually by the Parliament
3. Which office is responsible for
implementing financial covenants in agreements executed by the Government of
India and External Funding Agencies?
- A) Office of the Chief Controller of Accounts
- B) Reserve Bank of India
- C) Office of the Controller of Aid Accounts and Audit
(CAAA)
- D) Plan Finance Division of the Department of
Expenditure
Answer: C) Office of the Controller of Aid Accounts and Audit
(CAAA)
4. What is the role of the Reserve
Bank of India in relation to external aid?
- A) Managing foreign exchange reserves
- B) Receiving external aid and remitting the rupee equivalent
to the account of the Controller of Aid Accounts and Audit
- C) Issuing currency notes
- D) Executing loan agreements with foreign countries
Answer: B) Receiving external aid and remitting the rupee
equivalent to the account of the Controller of Aid Accounts and Audit
5. Who is responsible for the
accounting of cash grants received from external sources?
- A) Plan Finance Division
- B) Reserve Bank of India
- C) Department of Economic Affairs
- D) Office of Controller of Aid Accounts and Audit
Answer: D) Office of Controller of Aid Accounts and Audit
6. Under which procedure does the
Project Implementing Agency initially incur expenditure and later claim the
amount from the Funding Agency?
- A) Direct Payment Procedure
- B) Reimbursement Procedure
- C) Advance Payment Procedure
- D) Cash Grant Procedure
Answer: B) Reimbursement Procedure
7. Which of the following describes
the Revolving Fund Scheme?
- A) A method where funds are directly paid to
contractors or suppliers
- B) A method where the Funding Agency disburses an
estimated expenditure of four months as an initial advance
- C) A procedure where loans are directly transferred to
the borrowing entity
- D) A system where funds are reimbursed after the
project completion
Answer: B) A method where the Funding Agency disburses an estimated
expenditure of four months as an initial advance
8. How is the rupee equivalent of a
foreign currency payment recovered in the Direct Payment Procedure?
- A) Through adjustment entries made by the State
Government
- B) By the Project Implementing Agency depositing it in
the account of the Controller of Aid Accounts and Audit
- C) By direct remittance to the contractor's account
- D) By issuing bonds in the international market
Answer: B) By the Project Implementing Agency depositing it in the
account of the Controller of Aid Accounts and Audit
9. Which procedure involves the
Funding Agency making payments directly to contractors, suppliers, or
consultants?
- A) Reimbursement Procedure
- B) Special Account Procedure
- C) Direct Payment Procedure
- D) Revolving Fund Scheme
Answer: C) Direct Payment Procedure
10. In the context of external aid,
what does the term "Special Account" refer to?
- A) An account where excess funds are stored
- B) An account used for direct payments to suppliers
- C) An account where the estimated expenditure for four
months is deposited by the Funding Agency as an initial advance
- D) An account used for internal government transactions
only
Answer: C) An account where the estimated expenditure for four
months is deposited by the Funding Agency as an initial advance
11. How are cash grants distinct
from commodity grants or other assistance in kind accounted for?
- A) By the Reserve Bank of India
- B) By the concerned Ministry or Department
- C) Only by the Office of Controller of Aid Accounts and
Audit
- D) By the Funding Agency
Answer: C) Only by the Office of Controller of Aid Accounts and
Audit
12. What is the role of the Plan
Finance Division in relation to external aid for State Projects under
Reimbursement Procedure?
- A) To provide funds directly to the Funding Agency
- B) To consolidate disbursements and release funds to
the respective State Governments
- C) To manage foreign currency exchanges
- D) To oversee the execution of legal agreements
Answer: B) To consolidate disbursements and release funds to the
respective State Governments
13. Which type of external aid
involves materials and equipment without involving any cash inflow?
- A) Commodity grants
- B) Cash grants
- C) Equipment loans
- D) Bilateral aid
Answer: A) Commodity grants
14. What must the respective
Departments of State Government provide in their budget concerning externally
aided Plan Schemes?
- A) A separate budget for foreign loans only
- B) Details of administrative costs
- C) Proposed expenditure for Plan Schemes financed from
external aid
- D) A detailed report on foreign currency transactions
Answer: C) Proposed expenditure for Plan Schemes financed from
external aid
15. How are interest payments on
external loans classified in the budget?
- A) As capital expenditure
- B) As charged expenditure
- C) As miscellaneous receipts
- D) As non-plan expenditure
Answer: B) As charged expenditure
16. Who is responsible for the
repayment of loans as per the agreements?
- A) Reserve Bank of India
- B) Funding Agency
- C) Office of Controller of Aid Accounts and Audit
- D) Project Implementing Agency
Answer: C) Office of Controller of Aid Accounts and Audit
17. Where is the exchange variation
in respect of foreign loans that have been fully repaid adjusted?
- A) In the Consolidated Fund of India
- B) Under the Major Head ‘2049-Interest Payments’
- C) As Miscellaneous Government Accounts
- D) In the Special Account for foreign loans
Answer: C) As Miscellaneous Government Accounts
18. For Central or Central-sponsored
projects, how soon must the funds be released to the Project Implementing
Agency after the Demands for Grants are passed in Parliament?
- A) Within two weeks
- B) Within six weeks
- C) Immediately
- D) After the project completion
Answer: B) Within six weeks
19. What happens to the funds from
externally aided projects when passed on as loans to other entities?
- A) The Funding Agency manages the recovery
- B) The funds are written off
- C) The respective administrative Ministry or Department
is responsible for recovery
- D) The funds remain in the Special Account
Answer: C) The respective administrative Ministry or Department is
responsible for recovery
20. What happens if there is a
variation in the exchange rate after a foreign loan is repaid?
- A) The amount is refunded to the Funding Agency
- B) The variation is adjusted under Miscellaneous
Government Accounts
- C) The exchange difference is added to the project cost
- D) The variation is ignored
Answer: B) The variation is adjusted under Miscellaneous Government
Accounts
Comments
Post a Comment