Types of Funds in India - Consolidated Fund, Contingency Fund, and Public Account of India

By K Balaji|Updated : October 31st, 2022

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 cash produced by the Indian Government is credited to the consolidated fund of India. It includes treasury invoices, loans via public statements, and lending from foreign nations or multinational institutions.

Types of Funds of India PDF

The capital spent by the Government, comprising of overall expenditure, is acquired from a consolidated fund account. Parliament is responsible for approving the Government to withdraw finances from this 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. However, if the Government does not use the contingency fund in a provided monetary year, there is no need to accumulate more funds. 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.

Table of Content

Types of Funds of India and Their Features

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.

The consolidated fund 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 consolidated fund of India)

All expense

Unpredictable expenditure

Public money (Except under 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 types of funds in India is the consolidated fund of India. The consolidated fund of India UPSC is included in the IAS Exam GS-II – Indian Polity curriculum. This fund is supplied by:

  • The Government of Indian 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 the 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 UPSC 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, defense fund.
  • Similar funds.

Types of funds in India - Expenditures

Below are the expenditure types for the three funds of India, along with their features.

Expenditure

Features

Charged Expenditures

  • This sum is from the Consolidated Fund of India.
  • There is no vote and no requirement for legislative permission.
  • Example is the government's debt fees.

This spending includes

  • President's emoluments, allowances, and expenses.
  • Salaries and allowances of the Chairman, Deputy Chairman, Speaker, Supreme Court justices, CAG, and Deputy Speaker of the Lok Sabha.

Voted/Votable Expenditures

  • Demand for Grants funds the budget's expenditures.
  • Demand for grants is presented to the Lok Sabha.

Supplementary Grants

  • When the amount allocated by Parliament via the appropriation act for a specific service for the current fiscal year is considered insufficient, supplemental grants are awarded.

Additional Grants

  • These are awarded when a need for additional spending for a new service that was not included in the budget for that year has arisen for the course of the current fiscal year.

Excess Grants.

  • An excess grant is awarded When the amount spent on a particular provision in a fiscal year exceeds the amount allocated for that service.

 

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FAQs on Types of Funds in India

  • There are three types of funds in India - Consolidated Fund of India, Contingency Fund of India, and Public Accounts of India mentioned under different articles of the Indian Constitution.

  • The most important account of the Government is the consolidated fund of India, and the Government requires parliamentary acceptance to withdraw finances from this fund. Article 266(1) of the Indian Constitution gives the provision for this fund.

  • The following get salaries, pension, and allowances from the consolidated fund of India:

    • Supreme Court judges
    • President
    • Deputy Speaker of Lok Sabha
    • Supreme Court and High Court Judges
    • CAG, Lok Pal
    • Chairman/ Deputy Chairman of Rajya Sabha.
  • The contingency fund of India is used to meet unexpected or unforeseen expenditures. Each state can establish its contingency fund under Article 267(2).

  • The consolidated Fund of India has been split into 'Revenue' and 'Capital' divisions. Whereas the contingency fund supports the Government in meeting unexpected expenditures, which cannot wait for approval of the Parliament. Both of them are types of funds in India.

  • The CGA is the Principal Accounting Adviser to the Government of India. It is responsible for setting and retaining a technically sound Management Accounting System. CGA drafts and proposes the accounts of the Government.

  • The sum of additional money accepted by the Indian Government is credited to the Public Account, excluding the share under the Consolidated Fund of India). The Government does not require authorization to take advances from this account.

  • The Ministry of Finance is the apex governing authority and prepares the budget in India. The ministry is concerned with tax, economic legislation, financial organizations, capital needs, center and state finances, and the Union Budget.

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