A recent directive from the Ministry of Home Affairs (MHA) has led to widespread unease across Union Territories (UTs), after a change in financial delegation rules placed tighter control of funds and approvals directly under the Centre. The move, officials say, has altered how UT administrations function, with several departments seeking clarity on which works can now be cleared locally.
The change stems from Rule 12(2) of the Delegation of Financial Powers Rules (DFPR), 2024, a regulation introduced earlier this year that bars UT authorities from further delegating financial powers unless the MHA specifically allows it. In effect, the order means that all new projects requiring administrative approval—regardless of cost or department—must now be examined and sanctioned by the Central Government.
Until now, most UTs had internal systems allowing administrators, secretaries, or heads of departments to sanction works up to certain limits. This autonomy helped speed up small-scale infrastructure and maintenance jobs such as road repairs, school renovations, or building upkeep. With the new rule, many of those approvals are being routed to Delhi, creating a longer process and, in some places, a temporary slowdown.
Departments handling engineering, public works, and infrastructure across several UTs—such as Chandigarh, Puducherry, Jammu and Kashmir, and the Andaman and Nicobar Islands—have reportedly paused or delayed new tenders while they await formal instructions. Officials have expressed concern that without clear distinctions between “routine maintenance” and “capital projects,” even essential upkeep may get caught in procedural delays.
However, Chandigarh Finance Secretary Diprava Lakra, while acknowledging the change in the approval structure, has said fears of a complete administrative freeze are misplaced. “Routine maintenance and minor repairs are continuing under existing powers. The MHA’s directive mainly covers new capital works or projects that require administrative approval,” he clarified.
Lakra emphasised that UT administrations operate directly under the Centre’s authority and therefore must follow the new framework until further instructions are issued. “We are implementing the directive as received. Any change or relaxation can only come through fresh guidelines from the MHA,” he said.
According to senior officials, the MHA’s intent is not to disrupt operations but to introduce a uniform system of financial discipline and oversight across all Union Territories. The Centre has been gradually standardising administrative procedures in UTs to bring them in line with national financial norms and strengthen accountability.
Still, the rollout has created uncertainty on the ground. Some departments are avoiding fresh spending approvals or tendering out of caution, fearing later audit objections. Officials also warn that delayed expenditure could affect this year’s fund utilisation and budgeting for the next fiscal cycle.
Many UT administrations have sought written clarification from the MHA, recommending that low-value and maintenance works remain exempt from central scrutiny. They argue that such flexibility is essential for cities and regions that rely on fast local response to maintain public infrastructure and services.
While the Centre is expected to issue detailed guidelines soon, officials admit the transition period will take time to settle. For now, most Union Territories are proceeding cautiously—continuing essential maintenance while holding back new projects until Delhi’s next directive arrives.
What the Rule Says — and Why It Matters
Rule Invoked: Rule 12(2) of the Delegation of Financial Powers Rules, 2024
Core Change: UTs cannot re-delegate financial powers without prior approval from the MHA
Applies To: New capital and development projects requiring administrative sanction
Not Affected: Routine repair and maintenance, as clarified by officials
Purpose: To bring financial uniformity, tighten audit controls, and centralise accountability across all Union Territories