The government has notified amendments to General Financial Rules (GFR) to ensure that goods and services valued less than Rs 200 crore are being procured from domestic firms, a move which will benefit MSMEs. Govt has notified the amendments to the General Financial Rules 2017 to ensure that henceforth global tenders will be disallowed in government procurement up to Rs 200 crore, as announced in the Aatma nirbhar Bharat Package. 
 
 
What
  1. Sitharaman had last week announced an economic support package for micro, small and medium enterprises (MSMEs), which includes disallowing global tender for government procurement up to Rs 200 crore.
  2. Amending the GFR, the Department of Expenditure under Ministry of Finance said, No Global Tender Enquiry (GTE), however, shall be invited for tenders up to Rs 200 crore or such limit as may be prescribed by the Department of Expenditure from time to time.
  3. Provided that for tenders below such limit, in exceptional cases where the Ministry or Department feels that there are special reasons for GTE, it may record its detailed justification and seek prior approval for relaxation to the rule from competent authority specified by the Department of Expenditure.
  4. The MSME package announced last week comprised Rs 3 lakh crore of collateral-free loans, which would benefit about 45 lakh small businesses.
  5. Another two lakh such businesses would benefit from a Rs 20,000 crore subordinate debt for stressed or loan defaulting MSMEs, adding a fund of funds for MSMEs is also being created, which will infuse Rs 50,000 crore equity in units that have growth potential.
  6. Also the definition of MSMEs has been changed from a pure investment-based one to one that provides for higher investments and turnover for companies to remain as small businesses, and avail financial and other incentives.
  7. Besides, an estimated Rs 1 lakh crore in dues to MSMEs by government and central PSUs will be released within 45 days.
  8. Small and mid-sized businesses in India account for about a third of gross domestic product and employ more than 11 crore people and the package announced is aimed at helping them overcome coronavirus disruptions.
Flashback
  1. General Financial Rules (GFRs) are a compilation of rules and orders of Government of India to be followed by all while dealing with matters involving public finances
  2. These rules and orders are treated as executive instructions to be observed by all Departments and Organisations under the Government and specified Bodies except otherwise provided for in these Rules.
  3. General Financial Rules were issued for the first time in 1947 bringing together in one place all existing orders and instructions pertaining to financial matters. These have subsequently been modified and issued as GFRs 1963 and GFRs 2005.
  4. In the last few years, the Government has made many innovative changes in the way it conducts its business. Reforms in Government budgeting like removal of distinction in non-plan and plan expenditure, merger of Railway Budget with General Budget, focusing on outcomes through an improved Outcome Budget document, all needed to be reflected in the GFRs. 
  5. Increased focus on Public Finance Management System(PFMS), reliance on the Direct Benefit Transfer (DBT) Scheme to ensure efficient delivery of entitlements, introduction of new e-sites like Central Public Procurement Portal, Government e-Marketing (GeM) Portal, Non-Tax Revenue Portal have also necessitated revision of the existing GFRs to keep them in tune with the changing business environment
  6. The objective was to make the GFRs facilitate efficiency rather than create impediments in smooth and timely implementation while following principles of accountability and procedures of financial discipline and administrative due diligence. 
  7. The Expenditure Management Commission set up in 2014 to recommend ways in which efficiency of public expenditure could be increased has also made several recommendations especially with respect to Autonomous Bodies
  8. New rules on non-tax revenues, user charges, e-receipts portal have been added in addition to the manner in which Autonomous Bodies are run.
  9. The PAC in April 2015, Group of Secretaries in February 2016 and EMC in March 2016 has recommended setting up a Task Force to review the GFRs so as to frame comprehensive rules to address the issues as highlighted in the above para.
  10. GFRs, 2017 have evolved as a result of wide consultations with Central Government Ministries and Departments, some State Governments and other stakeholders at the Task Force stage and thereafter.