KERALA BUDGET MANUAL

 NEW SERVICE

94. (1) Term explained.—The term ‘new service’, which appears in Articles 115(1) and 205(1) of the Constitution, has not been specifically defined therein. It means a service ‘not contemplated in the annual financial statement for the year’. But, a new item of expenditure need not necessarily constitute a ‘new service’. A ‘new service’ may be a new form of service or a new instrument of service. For example, if, in a State, a Land Board is newly created to implement the land reform measures, that, undoubtedly, is a new form of service. In every State there are hospitals. If it is decided a build a new hospital, this is not a new form of service, because hospitals already exist. It is, however, a new instrument of service.

 

 A new form of service involves the adoption of a new policy, the provision of a new facility, or the alteration in character of an existing facility, and is normally looked upon as a ‘new service’, if it has not been contemplated in the annual financial statement (budget). A new instrument of service is treated as a ‘new service’, only if the expenditure involved is relatively large. In other words, it should involve an important extension of a previous specific commitment or facility, entailing relatively large expenditure. Thus, starting a new school and employment of an additional peon may both constitute examples of new instruments of service; but only the former is treated as a ‘new service’. i.e., the cost of the new instrument of service should exceed certain specified limits, vide Appendix 13, if the service is to be treated as ‘new’.

  (2) How financed.—According to Article 205 of the Constitution, when a need arises during the current financial year for supplementary or additional expenditure upon same ‘new service’ not contemplated in the annual financial statement for that year, a supplementary statement showing the estimated amount of that expenditure has to be laid before the Legislature. No expenditure should be incurred on a ‘new service’, even if there are savings within the grant, before a supplementary grant is thus obtained. [If the expenditure can be met fully or partly from savings within the grant, a token sum (Rs. 100) or the balance actually required, as the case may be, need alone be shown in the supplementary statement of expenditure. When the supplementary demand is for a token sum, details of the new scheme, including its financial implication should be given as a foot-note.] If, however, the need is so urgent that expenditure on the ‘new service’ cannot be put off till a supplementary grant is obtained, interim provision may be found by obtaining an advance from the Contingency Fund, pending authorisation by the Legislature. The advance should be for the full amount required for expenditure during the interim period (not a token sum), even when the expenditure can be met fully or partly from savings within the grant, and if the amount of advance is later found insufficient, an additional advance should be obtained.

 

  (3) Rulings on New Service.—Based on the recommendations of the Public Accounts Committee, Government have, from time to time, laid down certain criteria for deciding whether a new item of expenditure would constitute a ‘new service’. These are reproduced in Appendix 13.