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Para No. 4.1.11 Annexure: 4-A7

Distribution of Funds by the Railway Board
(Extract of Chapter III of Indian Railways Financial Code, Volume I)

(1) Distribution of Funds by the Railway Board: The Grants as voted by the Parliament and
the appropriations for the charged expenditure as sanctioned by the President, are
distributed by the Railway Board among the Railway Administrations and other
authorities subordinate to them, as soon as possible, after the Budget is sanctioned. The
sums so distributed are called "Allotments" and the orders by means of which the
allotments are made are called "Budget Orders". The allotments made out of funds
voted by the Parliament are shown as "Voted" and those fixed by President are shown as
"Charged". (Para 361)

(2) The Budget Orders are accompanied by the final issues of "Demands for Grants" and
"Works, Machinery and Rolling Stock Programmes" containing the detailed distribution of
the Budget allotment made to The Railway administrations for working expenses and
Capital, Depreciation Reserve Fund, Development Fund, Open Line Works (Revenue) and
Accident Compensation, Safety and Passenger Amenities Fund expenditure. The Budget
allotment made to a Railway administration is intended to cover all charges, including the
liabilities for past years to be paid during the year or to be adjusted in the accounts for it. It
shall be operative until the close of the financial year. Under the “doctrine of lapse" any
unspent balance shall lapse and shall not be available for utilization in the following year.
(Para 362)

(3) In the event of the Budget Orders of the Railway Board not being received before the
commencement of the financial year, the Railway administrations are empowered to
incur expenditure, pending the receipt of the Budget Order, on works which were in
progress at the end of the previous financial year. All expenditure incurred under this
rule must be treated as a charge, against the allotment eventually made for such works.
(Para 363)

(4) Distribution of Funds by General Managers to Lower Authorities: Subject to the other
provisions of this Chapter or of any general or specific orders issued by the Railway
Board, a General Manager is expected to take steps immediately to distribute the funds,
placed at his disposal, to authorities subordinate to him in such manner as he may
consider most suitable, provided that the total of the sums so allocated does not exceed
that total of the grant placed at his disposal. In making this initial distribution, he may, at
his discretion, keep a sum unallotted as a reserve for emergencies that may arise in
future. He may also vary the initial distribution as necessity arises during the course of
the year. In regard to "Carry over" works, the latest information as to the necessity and
extent of funds required for such works should be obtained from the authorities
concerned and taken into consideration in making the initial distribution. (Para 365)

(5) No expenditure shall be incurred by an authority without the allotment of necessary
funds. The authorities to whom the funds are allotted, shall be responsible to report at
once to the next higher authority the probability of any lapses or excesses over the sums
placed at their disposal. ln exceptional cases, where expenditure is authorized in
anticipation of the allotment of funds, or in excess of the existing provision, the
authorizatio should be followed, as soon as possible, by a formal allotment of funds to
the extent required. (Para 367)

Chapter 4 Budget Estimates, Expenditure, Budget Control and Completion Reports Page 73 of 535