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Release of funds

13 th Finance Commission Award 33 rd Review Meeting of State FCs- Delhi (24 th - 25 th May 2012). 13 th FC Award. Release of funds The FC Award for each year releases directly to the Finance Department of the respective States.

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Release of funds

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  1. 13th Finance Commission Award33rd Review Meeting of State FCs- Delhi (24th - 25th May 2012)

  2. 13th FC Award • Release of funds • The FC Award for each year releases directly to the Finance Department of the respective States. • The Finance Department in turn transfers the entire fund to the State Implementing Society for utilization under SSA. • Items on which expenditure to be incurred • In recommending the award, the FC focused on recurrent items of expenditure and excluded the requirements of civil works.

  3. 13th FC Award • Conditions for release of Award • The Annual allocation of the award will be released in one instalment in the month of June during the award period. • The State Government should budget and spend the award on Elementary Education under major head-2202, sub-major head–01 – Elementary Education. • In order to eligible for the 13th Finance Commission Award, the State needs to maintain a growth of at least 8% annually during 2010-15. • Payment of arrears on account of award of the VIth Pay Commission will be deducted from the expenditure on elementary education to determine 8% annual growth. • The grant for the year 2010-11 will be released unconditionally .

  4. 13th FC Award • Subsequent instalments will be released if Budget Estimates (BE)/Revised Estimates (RE)/ Actuals under Major Head-2202, sub-major head-01-Elementary Education, net of FC-XIII Award released in respective years, meet the following requirements. • For 2011-12 : 2011-12 (BE) should be at least 8% more than 2010-11 (RE) • For 2012-13: 2012-13 (BE) should be at least 8% more than 2010-11 (RE), and 2010-11 (Actual) should be at least 8% more than 2009-10 (Actual) • For 2013-14: 2013-14 (BE) should be at least 8% more than the 2013-14 (RE), and 2011-12 (Actual) should be at least 8% more than 2010-11 (Actual) • For 2014-15: 2014-15 (BE) should be at least 8% more than 2013-14 (RE) and 2012-13 (Actual) should be at least 8% more than 2011-12 (Actual)

  5. 13th FC Award • When Finance Accounts for 2013-14 and 2014-15 become available, expenditure booked under the major head: 2202-01, net of Award released in 2013-14 and in 2014-15, should be at least 8% more than that of in 2012-13 and in 2013-14, net Award released in these years respectively. • In case the increase is less than 8% in 2013-14 or 2014-15, direct recoveries from State government would be effected for the grant released in 2013-14 or 2014-15, as the case may be. • The grant released in a particular year should be utilized in that year.

  6. 13th FC Award • Accounting Procedure • MHRD issued detailed accounting guidelines vide letter No. 15/5/2003-SSA (PR) dated 25th May 2011 (copy enclosed). • The Award will be an additionality to the current expenditure of the States for elementary education. • Therefore, the expenditure (plan + non-plan) under elementary education, i.e. major head-2202, sub-major head-01, exclusive of 13th Finance Commission Award should grow by at least 8% annually during 2010-15. • Expenditure booked under major head: 2202-01 in the Finance Accounts, net of 13th Finance Commission Award in a year will, therefore, determine a State’s eligibility for the Award during the next financial year.

  7. 13th FC Award • For this purpose, it is necessary to record distinct entries in the books of accounts of SSA at all levels. • The State Government should budget and spend the Award on elementary education under major head – 2202, sub- major head-01 – elementary education. • Since SSA is maintaining budget head and account head similar to the financial norm number, a distinct major head and sub-major head may be used for receipt of Award from the Finance Department of State Government and for booking of expenditure incurred from out of the Award.

  8. 13th FC Award • While making entries in the cash book both for receipt and expenditure, this distinct head of accounts may be used at all levels in order to identify the transaction under the Award. • With a view to track the expenditure incurred under this distinct major head and sub-major head, separate pages should be allocated in the ledger to account for the Award. • This will facilitate the States to maintain separate accounts of expenditure incurred from the Award. • Ensure that civil works expenditure is not incurred from out of the Award. • Statutory auditors will, therefore, be able to focus on the correctness of expenditure with reference to the Award received.

  9. 13th FC Award • Utilization Certificate • The State Government needs to provide a utilization certificate as per format given in Annexure-Ievery year by first week of June indicating the budget provision, items of expenditure on plan and non-plan side, unutilized amount etc for the grant received in the preceding year. • This utilization certificate will need to be countersigned by the State’s Finance Secretary. • State Implementing Societies should submit the Utilization Certificate to the State’s Finance Secretary for countersignature through the State Education Secretary. • Since the Audit under SSA will not be completed by June, an unaudited UC is acceptable. • The countersigned UC should thereafter be submitted to the Ministry of Finance, Department of Expenditure, Finance Commission Division.

  10. 13th FC Award • Monitoring • While the utilization of the grant is to be monitored by the State Executive Committee at the State level, the same at the National level will be monitored by the Project Approval Board for SSA through a special meeting of the PAB to be held at least once in a year. • States need to submit the audited Utilization Certificate along with the financial information on investment in Elementary Education as given in Annexure-II immediately on completion of the Statutory Audit every year to facilitate monitoring by the PAB.

  11. 13th FC Award • Audit by the Comptroller and Auditor General (C&AG) • The C&AG would be expected to audit the release of use of the grant-in-aid within the specified time and for the purposes mentioned by the FC-XIII. • GOI may take appropriate decision about withholding Award to a State, if the C&AG reports that the State allowed the Award to be used for purposes other than the ones for which it was provided.

  12. 13th FC Award • Clarifications • MHRD issued further clarifications on the subject on 7th October 2011 (copy enclosed). • MHRD had written to States on 30th September 2010 to indicate that the award would be deducted from the overall RTE-SSA estimates and the balance amount would be shared between Central and State Government in the ratio of 65:35. • The award is being directly released to the Finance Department of the State who in term transfers the entire amount to SIS. • Utilization of the Award will be monitored by the State Executive Committee. • States to ensure that UCs for the award are submitted early.

  13. 13th FC Award • Financial • MHRD on 10th February 2012 sought the utilization certificate along with financial information for 2010-11 from the States. • Since the information was not forthcoming from many States a reminder was issued on 24th April 2012. • The UC and financial information are still awaited from the following States: • Arunachal Pradesh, Assam, Bihar, Karnataka, Jharkhand, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and West Bengal

  14. 13th FC Award • Incomplete financial information in respect of Chhattisgarh, Goa and J&K; • Since a special PAB is to be held, these States are requested to furnish the UC and financial information immediately without any further delay;

  15. Thank You

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