Credits - Why they are excluded from the scope of Demands for Grants

CREDITS   -

(1) Why they are excluded from the scope of Demands ?   

(2) Why GROSS expenditure (instead of NET expenditure) under various    Demands for Grants presented to the Parliament for Vote ?

(3) What is the underlying principle justifying the same?

v   Earlier, the NET expenditure (i.e., deducting CREDITS from GROSS expenditure) under various Demands for Grants is presented to Parliament for Vote.

v  Example:  Gross: Rs.100,  Credits: Rs.20, and Net: Rs.80.  So Rs.80 only Voted by Parliament as Grant.

v   Due to above practice,  the following consequences will arise.

v  When full credits did not materialize, the expenditure used to exceed the Budget Grant/limit. Taking the above example, if Credits realized were Rs. 10 only (against budgeted Rs.20 ) resulting the NET expenditure Rs.90 (Rs.100 minus Rs.10) exceeding the Grant by Rs.10.

	Budget Grant	Actual	Variation
Gross	Rs.100	Rs.100	Nil
Credits	Rs.20	Rs.10	Rs.10 (Savings)
Net	Rs.80	Rs.90	Rs.10 (excess)

v  In above example, the Gross expenditure is not exceeded.  Because of less realization of credits, the Grant is exceeded. The Spending authority have to be answerable for excess Net Grant in spite of his adherence to the Gross expenditure.

v  When more Credits realized than budgeted, there is scope/possibility for spending authorities to incur unsanctioned expenditure to the extent of more credits.  Taking the above example, if Credits realized were Rs.30 (against Budgeted Rs.20), the likely unsanctioned expenditure to the extent of Rs.10 (Gross Rs.110, Credits Rs.30 and Net Rs.80). Budget Grant Rs.80 is not exceeded, but spending authorities have undue scope for spending authorities to spend more to the extent of more credits, which is not prudent.  

	Budget Grant	Actual	Variation
Gross	Rs.100	Rs.110	Rs.10 (excess)
Credits	Rs.20	Rs.30	Rs.10 (excess)
Net	Rs.80	Rs.80	Nil

v  To avoid the above eventualities,

1.       Now, the Credits and Recoveries have been excluded from the scope of Demands for Grants.

2.       Such Credits & Recoveries were shown as at footnote in the Demands for Grants.

3.       GROSS Expenditure (instead of NET expenditure) under various Demands is presented to Parliament for Vote.

v   List of Credits and Recoveries

A.      Hire and haulage charges of Rolling stock from the Port trust railways/Non budget lines.

B.      Commission on Audit of Military notes and Credit Notes.

C.      CRRM - Credit for Railway Released Materials.

D.      Service contributions from other Depts on account of Deputation.

E.       sale proceeds in Canteens.

F.       State Govt. grants to Schools and Fees recd. from students.

G.     Credits for freight charges on Railway materials.

H.     Credits on account of Inspection charges for Coal.

I.        Misc. receipts under Works Expenditure (Demand No.16)

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