Railway Accounts Department Examinations

Monday, April 30, 2018

Exchequer control

Exchequer control

Ø   Meaning : A mechanism for concurrent regularisation of cash out go by each disbursing officer against the cash content of the Budget allotment.

Ø  Object: Enables the Government to regulate the flow of Cash in terms of Ways and Means Position

Ø  Railway's expenditure divided into two parts. 

1) Cash - 70 % (approximately)
2) Adjustments -  30 % (approximately)

Ø  The exchequer control mechanism – covers Cash out go only.

Ø  Exchequer control has thus the merit of providing an effective means of monitoring a substantial part of expenditure on a day to day basis.

Ø  All Accounting units will submit their cash requirements for the following month under the following segments by 15th/18th of every month to Central Books Section in FA&CAO’s Office.

Ø  The cash requirements are under the following segments.
Amount in Rs.
I. Revenue Demands
A) Staff Payments
B) Other Payments
II. Works Demands
A) Capital
B) Railway Funds
III. Non – Budget Items

Ø  The requirements of all units are consolidated and total requirement for the whole Railway is forwarded to Railway Board before 20th of every Month.

Ø  Railway Board would communicate the authorization, by 1st or 2nd working day.  The same is distributed and communicated to all Units(Divisions,Wkshops).

Ø  Mid Review:  The current month requirements will be reviewed and if any additional allotment is required, the same will be communicated to the Board by 20th of current month along with requirements of the Next month.

Ø  Surrender: Cash allotted and likely to remain unspent by the end of the month, may be surrendered to Hqrs (by Units) by 27th to 29th which would be consolidated and allotted to any of the needy units.  Else the same will be surrendered to Railway Board by last working day of each month.

Ø  NET WITHDRAWALS:  Under the extant rules, all Cash receipts of Central Govt should be promptly deposited to the credit of Central Govt’s Account in RBI (CAS/Nagpur) and all payments should be made through withdrawals from RBI only.  The difference between the Deposits and Withdrawals during a given period is known as “NET WITHDRAWALS”.

Ø  NEGATIVE  NETWITHDRAWALS: The Negative difference resulting from excess of withdrawals over deposits add to the deficit of the Government.


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


(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
Rs.10 (Savings)
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
Rs.10 (excess)
Rs.10 (excess)

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)




5 marks question - 2015 General expenditure (without books)

Ø    Meaning: A contract in which the price payable for work done under the contract is decided on the basis of actual cost of work plus profit.

Ø  In simple, it is Actual cost plus Contractors profit.

Ø  A cost-plus contract, also termed a cost reimbursement contract, is a contract where a contractor is paid for all of its allowed expenses to a set limit plus additional payment to allow for a profit

Ø  As per GFR - General Financial Rules, 2017, Cost plus contracts should ordinarily be avoided. Where such contracts become unavoidable, full justification should be recorded before entering into the contract.

Explanation: A cost plus contract means a contract in which the price payable for supplies or services under the contract is determined on the basis of actual cost of production of the supplies or services concerned plus profit either at a fixed rate per unit or at a fixed percentage on the actual cost of production.


Closing Entries

Closing Entries
 (Para Nos.230AI to 232AI

At the end of financial year the following transactions in the Indian Railways have been closed to the respective heads.

Closed to
Revenue transactions (except suspense heads i.e., MAR  & DP)
Net Revenue
Capital transactions (except suspense heads i.e., WMS & Stores Suspense)
Capital outlay
Debt (Example: Provident Fund)

Remittances (Example: Cheques& Bills)
Balance in Transfer Railways (if any) in the Books of Railway Board
Revenue suspense head MAR, Capital suspense heads WMS, Stores & MAC and Link Heads a) Demands Payable b) Traffic c) Demands Recoverable d) Labour
Balance in Transfer Railways in the books of Zonal Railways
Miscellaneous Government Account
All heads (other than Debt & Remittances)
Example: Deposit with Reserve Bank of India


Standards / canons of financial propriety

Standards / canons of financial propriety

(Most important question and asked many times in a examination)

Ø Para No. 116 of Financial Code  -

Ø Rule No. 21 of GFR, 2017 ( General Finance Rules) of Dept. of Expenditure, Ministry of Finance, Govt. of India.  Click for GFR, 2017

Ø All sanctioning authorities must pay due regard these rules/principles while exercising their financial powers.  There is false impression, that these are the norms to be followed by financial authorities (Finance officers).  But it is not correct.  All Executives/Officers as sanctioning authorities have conscious of these standards.

Ø  Every Officer should also enforce financial order and strict economy at every step and see that all relevant financial rules and regulations are observed, by his own office and by subordinate disbursing officers.

1.     The expenditure should not prima facie be more than the occasion demands. 

              (prima facie means 'at first appearance' or 'before investigation'. A proposal for purchase of chair for officer at a cost of Rs.one lakh need not requires much investigation to sanction the same.  That means on the face itself i.e., cost of the chair Rs. one lakh is not justified to incur expenditure.)

2.      That every Government servant should exercise' the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of the expenditure of his own money.

            (As a ordinary person, how much exercise we would be taken for purchase of Computer or Plasma Color Television, the same exercise suppose to be applied also for expenditure involved of public money)

3.      No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.

                        ( Sanctioning of expenditure would not be advantage to the sanctioning authorities directly or indirectly.  That means Officer should not decided the specifications of the items to be purchased to suit the particular firm for which he or his relatives have a stake)

4.     Public moneys should not be utilized for the benefit of a particular person or section of the community unless-
 a. the amount of expenditure involved is insignificant ; or
 b. a claim for the amount could be enforced in a court of law ; or
 c. the expenditure is in pursuance of a recognized policy or custom.
5.     The amount of allowances, such as travelling allowances, granted to meet expenditure of a particular type, should be so regulated that the allowances are not on the whole sources of profit to the recipients.

                        ( People should not think that the allowances such as Travelling allowance, Over time allowance, etc as profit.  It should not be correct )

Ø Audit officers shall also be responsible for watching that the above principles are strictly observed or not.