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28st Aug 2021

Various Funds of Union Government of India and State Governments

 There are three types of funds of the Central Government – Consolidated Fund of India (Article 266), Contingency Fund of India (Article 267) and Public Accounts of India (Article 266) mentioned in the Indian Constitution. 

Funds of Government of India

The Indian government’s funds are kept in three parts, which are listed below:

1. Consolidated Fund of India
2. Contingency Fund of India
3. Public Accounts of India

(1) Consolidated Fund of India

• This term derives its origin from the Constitution of India.
• Under Article 266 (1) of the Constitution of India, ‘Consolidated Fund of India’ for the Union Government include –
  • all revenues (for example tax revenue from personal income tax, corporate income tax, customs, and excise duties as well as non-tax revenue such as license fees, dividends, and profits from public sector undertakings, etc.) received by the Union government
  • all loans raised by the issue of treasury bills, internal and external loans and all money received by the Union Government in repayment of loans
• Similarly, under Article 266 (1) of the Constitution of India, a Consolidated Fund of State (a separate fund for each state) has been established where
  • all revenues (both tax revenues such as Sales tax/VAT, stamp duty, etc.. And non-tax revenues such as user charges levied by State governments) received by the State government as well as
  • all loans raised by the issue of treasury bills, internal and external loans and all money received by the State Government in repayment of loans shall form part of the fund.
• The Comptroller and Auditor General of India audit these Funds and reports to the Union/State legislatures when proper accounting procedures have not been followed.
• The government meets all its expenditure from this fund.
• The government needs parliamentary approval to withdraw money from this fund.

(2) Contingency Fund of India

• The Contingency Fund of India is established under Article 267(1) of the Indian Constitution. It is in the nature of an imprest (money maintained for a specific purpose). Accordingly, Parliament enacted the contingency fund of India Act 1950.
• The fund is held by the Finance Secretary (Department of Economic Affairs) on behalf of the President of India and it can be operated by executive action. The Contingency Fund of India exists for disasters and related unforeseen expenditures.
• In 2005, it was raised from Rs. 50 crores to Rs 500 crore.
• Approval of the Parliament of India for such expenditure and for withdrawal of an equivalent amount from the Consolidated Fund is subsequently obtained to ensure that the corpus of the Contingency Fund remains intact.
• Similarly, the Contingency Fund of each State Government is established under Article 267(2) of the Constitution – this is in the nature of an imprest placed at the disposal of the Governor to enable him/her to make advances to meet urgent unforeseen expenditure, pending authorization by the State Legislature.
• Approval of the Legislature for such expenditure and for withdrawal of an equivalent amount from the Consolidated Fund is subsequently obtained, whereupon the advances from the Contingency Fund are recouped to the Fund.
• The corpus varies across states and the quantum is decided by the State legislatures.

(3) Public Accounts of India

• This is constituted under Article 266(2) of the Constitution.
• All other public money (other than those which are credited to the Consolidated Fund of India) received by or on behalf of the Government of India shall be credited to the Public Account of India.
• This is made up of:
  • Bank savings account of the various ministries/departments
  • National small savings fund, defense fund
  • National Investment Fund (money earned from disinvestment)
  • National Calamity & Contingency Fund (NCCF) (for Disaster Management)
  • Provident fund, Postal insurance, etc.
• Similar funds
  • The government does not need permission to take advances from this account.
  • Each state can have its own similar accounts.
  • The audit of all the expenditure from the Public Account of India is taken up by the CAG

The following table summarizes the three funds:

Controller General of Accounts (CGA)

• The CGA is the Principal Accounting Adviser to the Government of India. The office is in the Department of Expenditure, Ministry of Finance, GOI.
• CGA is the Principal Accounting Adviser to the Government of India and is responsible for establishing and maintaining a technically sound Management Accounting System.
• It also prepares and submits the accounts of the Central Government.
• It is also in charge of the exchequer control and internal audits.

Functions

• The Office of CGA prepares monthly and annual analyses of expenditure, revenues, borrowings, and various fiscal indicators for the Union Government.
• Under Article 150 of the Constitution, the Annual Appropriation Accounts (Civil) and Union Finance Accounts are submitted to Parliament on the advice of the Comptroller and Auditor General of India.
• Along with these documents, an M.I.S Report titled ‘Accounts at a Glance’ is prepared and circulated to Hon’ble Members of Parliament.
• It is also responsible for the coordination and monitoring the progress of submission of corrective/remedial action taken notes (ATNs) on the recommendations contained in Public Accounts Committee’s (PAC) reports as well as the Comptroller & Auditor General (CAG) reports through its web-based Audit Para Monitoring System (APMS).

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