Types of Funds in India – Consolidated Fund, Contingency Fund, and Public Account of India
By BYJU'S Exam Prep
Updated on: November 14th, 2023
There are three types of funds in India – Consolidated Fund of India, Contingency Fund, and Public Accounts of India mentioned under different articles of the Indian Constitution. The consolidated fund of India is the main revenue account of the Government of India. The strategies by which money is obtained include businesses, income tax, central tariff, and non-tax revenue, excluding extraordinary items.
The capital spent by the Government, comprising of overall expenditure, is acquired from a consolidated fund account. Effectively, an aggregate of Rs 500 crore from the Consolidated fund of India is transmitted to the contingency fund of India (one of the types of funds in India) to deal with any trouble. This article illustrates detailed information on the three types of funds in India – contingency fund, public account, and consolidated fund of India along with the types of expenditures involved.
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What are the Types of Funds in India?
The central Government mentions types of funds in India – Consolidated Fund of India (Article 266), Contingency Fund of India (Article 267), and Public Accounts of India (Article 266) mentioned in the Indian Constitution.
Types of Funds of India PDF
The types of funds of India are maintained in three parts, which are:
- Public Accounts of India
- Contingency Fund of India
- Consolidated Fund of India
The three funds in India are summarized depending on the income, expenditure, parliamentary authorization, and the articles under which they are formed.
| Consolidated Fund of India | Contingency Fund of India | Public Accounts of India |
| Taxes and non-tax income | Rs. 500 crores (Fixed collection) | Public money (Except under the consolidated fund of India) |
| All expense | Unpredictable expenditure | Public money (Except under the consolidated fund of India) |
| Needed before expenditure | Needed after the expenditure | Not required |
| Article 266(1) of Indian Constitution | Article 267(1) of Indian Constitution | Article 266(2) of Indian Constitution |
Consolidated Fund of India
The most crucial type of fund in India is the consolidated fund of India. The consolidated fund of India is included in the IAS Exam GS-II – Indian Polity curriculum. This fund is supplied by:
- The Government of India accepts direct and indirect tariff loans.
- Repaying government interests/loans by the agency that has taken it.
The Government meets all its expenditures from this fund but requires consent from the parliament to withdraw any capital from it.
- The Consolidated Fund for every state is distinctive with comparable provisions.
- Article 266(1) of the Indian Constitution mentions the fund’s requirement.
- The President controls the consolidated fund of India and has authority over it.
- CAG, or the Comptroller and the Auditor General of India, inspect the funds and report to the appropriate legislatures on their administration.
The Consolidated Fund of India is separated into five elements:
- Revenue account (disbursements).
- Disbursements charged on the Consolidated Fund.
- Capital account (disbursements).
- Capital account (receipts).
- Revenue account (receipts).
Expenditures Charged on Consolidated Fund of India
No vote occurs for charged expenditures from the Consolidated Fund of India. Approval from the Parliament is not needed. The expenses (including salaries, allowances, and pensions) charged to the Consolidated Fund of India are:
- President’s compensations and expenditures relating to his post.
- Salaries of Deputy Chairman and Chairman of the Rajya Sabha, Speaker and the Deputy Speaker of the Lok Sabha.
- Pensions of the Supreme Court’s and High Courts’ judges.
- Salaries of Comptroller and Auditor General of India.
- Wages and pension of the chairman and Union Public Service Commission members.
- Administrative expenses of the Supreme Court members serving in these offices.
- Any cost must satisfy a judgment, law, or recognition of any court or arbitral tribunal.
- Any other expense asserted by the Parliament to be so charged.
Contingency Fund of India
Provision for the contingency fund of India is formed in Article 267(1) of the Constitution of India, and its aggregation is roughly Rs. 500 crores. The contingency fund of India is an important topic in the IAS Exam GS-II – Indian Polity curriculum.
- It is a fund used by a business for small expenditure items and periodically restored to a fixed amount.
- The contingency fund of India is utilized to meet unpredictable expenses.
- Every state can maintain its contingency fund according to Article 267(2) of the Constitution.
- The contingency fund of India is controlled by the Finance Ministry Secretary on behalf of the President.
Public Accounts of India
The entire public money not included under the Consolidated Fund of India is credited to the public account, acquired by or on behalf of the Government. The public accounts of India is formed under Article 266(2) of the Constitution.
The Comptroller and Auditor General of India carry out the audit of the payments from this fund. Every state of India has similar accounts, and the Government does not require consent to take advances from the fund’s account.
Public Accounts of India is created of the following:
- National Investment Fund (capital gained from disinvestment).
- National Calamity & Contingency Fund (NCCF) (for Disaster Management).
- Postal insurance, Provident fund, etc.
- Bank savings account of the different ministries/departments.
- National small savings fund, defence fund.
- Similar funds.
Types of Expenditures in India
In India, expenditures can be broadly classified into two categories – Revenue Expenditures and Capital Expenditures. Let’s take a deeper look to understand the two categories properly.
Revenue Expenditure
This refers to the regular expenses that are incurred by the government to meet its day-to-day functioning.
- It can include salaries of government employees, interest payments on loans, subsidies, pensions, grants, and maintenance of public infrastructure.
- The revenue expenditure is not expected to create any asset or reduce any liability of the government.
Capital Expenditure
This refers to the investments made by the government in creating assets such as roads, bridges, dams, power plants, schools, hospitals, etc.
- These investments are expected to provide benefits over a long period of time and are meant to improve the country’s infrastructure, increase productivity and contribute to economic growth.
- Capital expenditures are usually financed by borrowing, and the repayments of these loans are spread over a longer period.
Contingency and Consolidated Funds UPSC
The Contingency and Consolidated funds topic is essential from the UPSC exam point of view. The candidates must be possessing an in-depth knowledge of the types of funds in India. The knowledge of the concepts will help the candidates in tracking the right answers to the questions and increase the probability of getting recruited for the desired posts.
Getting an in-depth knowledge of the topics such as contingency and consolidated funds will assist the candidates in framing an effective preparation strategy for the exam. You must practice the previous year’s papers and mock tests, to score well in the exam. The contingency and consolidated funds is an important segment of the syllabus.
Contingency and Consolidated Funds UPSC Question
Practising the questions related to contingency and consolidated funds is important for the candidates as it will help them in analyzing the type of questions asked from this topic. Hence, it will help them in optimizing their efforts and channel them in the right direction for uplifting the preparation strategy.
Question: Take into consideration the statements; [1] The Department of Revenue is having the responsibility of preparing the Union Budget that is presented to the Parliament. [2] The funds cannot be withdrawn from the Consolidated Funds of India without authorization from the Parliament. [3] All the expending from the public account need to be authorized from the Parliament of India.
Which of the statement is correct? [A] 1 and 2 only [B] 2 and 3 only [C] 2 only [D] 1,2 and 3
Answer: Option D (2 only) The funds cannot be withdrawn from the Consolidated Funds of India without authorization from the Parliament.
