The General Financial Rules (GFR) 2017 are a cornerstone of India’s financial governance framework, regulating budget formulation and procurement to inventory management and grants, basically everything related to public finances.
In this blog one of the three-parts blog series, we will try to explain how it has evolved from its first version, which was highly influenced by the British system of financial governance to the more robust version addressing vastly unique needs of the Indian economy.
Before, we jump into the revision details, let us understand it first.
What is GFR?#
The General Financial Rules (GFR) are a compilation of rules and orders of the Government of India to be followed by all while dealing the matters involving public finances.
These rules and orders are to be treated as executive instructions and observed by all Departments and Organisations under the Government and specified Bodies except otherwise provided for in these Rules.
What are the Objectives of GFR?#
- To ensure standardization in financial rules and practices across various government departments and ministries.
- To establish and communicate clear guidelines for the use of public funds, promoting transparency and accountability.
- Implement uniformity in financial processes and reduce unexpected delays in procurement, expenditure, and reporting.
- To promote e-governance, such as e-procurement, and digital payments, and make use of robust platforms like Government e-Marketplace (GeM).
- To provide a unified framework for audits and evaluations of government schemes and expenditures.
What is its Applicability?#
GFR applies to all Central Government Ministries, Departments, attached offices, and subordinate bodies. These are deemed to apply to Autonomous Bodies as well except to the extent the bylaws of an Autonomous Body provide for separate Financial Rules which have been approved by the Government.
History and Evolution of GFR#
Starting from its initial version, which was introduced in 1947, the GFR has evolved regularly to meet the needs of a modern, technology-driven world. Let us dive into its history to understand its evolution.
Introduction of GFR (1947) – The first version:
- Release Date: Shortly after Indian Independence in 1947.
- Applicability: Became effective immediately upon release, providing a unified framework to manage public funds.
- Importance: These were the foundational rules, heavily influenced by the British system of financial governance.
First Revision, GFR 1963
- Release Date: In the year of 1963.
- Applicability: From the date of release.
- Importance: Rules were updated to adapt to the growing administrative and economic needs of the young Indian economy. It incorporated the provisions for emerging government functions and new organizational structures.
Second Revision, GFR 2005
- Release Date: 1st of July, 2005
- Applicability: Effective immediately upon release.
- Importance: A major upgrade of the GFRs was done in 2005, in line with the increasing emphasis on transparency and accountability and the government's move toward modernized financial management systems.
- Introduction of the provisions for e-governance and electronic procurement.
- Simplified procurement rules to facilitate faster decision-making.
- Clear guidelines on public-private partnerships (PPP) and outsourcing.
Third Revision, GFR 2017
- Release Date: 08th of March, 2017
- Applicability: Effective immediately upon release.
- Importance: The GFRs were revised again in 2017 to further streamline procedures and promote digitalization.
- It integrated rules for Government e-Marketplace (GeM).
- Reinforced accountability measures for the use of public funds.
- Introduction of performance-based evaluations for schemes and expenditures.
- Specific guidelines for autonomous bodies and grantee institutions to improve oversight.
- Increased focus on leveraging technology.
Latest Amendments
The GFR 2017 remains the current version in force, supplemented by regular updates to support modern requirements. Regular updates to the guidelines ensure the rules remain relevant without requiring a completely new revision each time.
Key focus area across different versions:
- Focus on financial discipline and uniform practices.
- Standardized procedures for budgeting and procurement.
- Openness to adopt digital and technology advancements.
- Provisions for accountability and audit compliance
- Consistent performance management.
Summing Up#
The General Financial Rules provide the foundation for India’s financial governance, ensuring transparency, accountability, and efficiency in managing public funds.
With its integration of technology and adaptability to modern challenges, they have evolved to accommodate the changing economic and administrative landscape and it remains indispensable for a transparent and efficient governance system.
Next week, we will be back with an in-depth understanding of what are the various categories of rules available in the latest amended version of GFR 2017.
What’s your take on GFR 2017? Share your thoughts and questions with us. If you found this blog informative, don’t forget to share it with your network!
