The Indian Constitution lists three different types of finances used by the Central Government: the Consolidated Fund of India (Article 266), the Contingency Fund of India (Article 267), and the Public Accounts of India (Article 266). 

Funds of the Government of India

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

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

The Consolidated Fund of India

  • Out of all the government accounts, this one is the most significant.
  • The following people fill this fund:
    • Taxes, including direct and indirect government of India loans
    • Returning loans or loan interests to the government on behalf of any recipient agencies
  • All of the government’s expenses are covered by this fund.
  • For the government to take money out of this fund, parliament must give its assent.
  • The Indian Constitution’s Article 266(1) makes provisions for this fund.
  • Every state may establish a consolidated state fund with comparable rules.
  • These funds are audited by India’s Comptroller and Auditor General, who also reports to the relevant legislatures on the funds’ management.

The Contingency Fund of India

  • The Indian Constitution’s Article 267(1) provides for this fund.
  • There are 500 crores in its corpus. It is comparable to an imprest, which is money set aside for a certain purpose.
  • On behalf of the Indian President, this fund is held by the Secretary of the Finance Ministry.
  • This money is used to cover sudden or unplanned expenses.
  • Article 267 permits each state to establish a separate contingency fund.

Public Accounts of India

  • The Constitution’s Article 266(2) establishes this.
  • This account or fund is credited with all additional public funds received by or on behalf of the Indian Government, excluding those covered by the Consolidated Fund of India.
  • This consists of:
    • The bank savings accounts of several departments and ministries
    • The Defence Fund and the National Small Savings Fund
    • National Investment Fund (disinvestment proceeds)
    • The National Contingency and Disaster Fund (NCCF) is dedicated to disaster management.
    • Postal insurance, provident fund, etc.
    • comparable funds
  • For the government to withdraw advances from this account, authorization is not required.
  • Every state may have comparable accounts of its own.
  • The CAG takes on the task of auditing every expense from the Public Account of India.

The following table summarises the three funds:

FundConsolidated Fund of IndiaContingency Fund of IndiaPublic Account of India
Income Taxes and non-tax revenueFixed corpus of Rs. 500 crorePublic money other than those under consolidated fund
Expenditure All expenditureUnforeseen expenditurePublic money other than those under consolidated fund
Parliamentary AuthorisationRequired prior to expenditureRequired after the expenditureNot required
Articles of Constitution266(1)267(1)266(2)

Types of Expenditures

Charged Expenditures

  • Charged expenditures are charges that are not subject to voting.
  • Regarding this amount, which comes out of the Indian Consolidated Fund, there is no voting. The consent of Parliament is not required.
  • Whether the budget is approved or not, these must be paid.
  • This spending includes the president’s emoluments, allowances, and office expenses. It also includes the salary and benefits of the Speaker, Deputy Speaker of the Lok Sabha, Chief Justice of the Supreme Court, and Chief Administrative Officer of the Rajya Sabha.
  • The government’s debt charges are an additional instance of a charged expenditure.
  • Since the state considers these payments to be guaranteed, they are not subject to voting.
  • Discussions on issues can occur in both houses even when voting does not occur.

The following are the costs incurred by the Consolidated Fund of India: in the table below.

Expenses Charged on Consolidated Fund of India
The following expenses are charged to the Consolidated Fund of India:
* President’s Emoluments and allowances and other expenditure relating to his office
* Chairman and the Deputy Chairman of the Rajya Sabha and the Speaker and the Deputy Speaker of the Lok Sabha – Salaries and allowances Salaries
* allowances and pensions of the Supreme Court’s judges.
* Pensions of the High Courts’ judgesComptroller and Auditor General of India’s salaries, allowances and pensions
* Salaries, allowances and pension of the chairman and members of the Union Public Service Commission
* Administrative expenses of the Supreme Court, the office of the Comptroller and Auditor General of India and the Union Public Service Commission including the salaries, allowances and pensions of the persons serving in these offices * the debt charges for which the Government of India is liable, including interest, sinking fund charges and redemption charges and other expenditure relating to the raising of loans and the service and redemption of debt
* Any sum required to satisfy any judgement, decree or award of any court or arbitral tribunal.
* Any other expenditure declared by the Parliament to be so charged

Voted/Votable Expenditures

  • This is the real spending plan.
  • In reality, the budget’s expenses take the form of requests for grants.
  • The annual financial statement and the grant requests are brought before the Lok Sabha. Typically, every ministry or department submits a single demand for the grant.

Supplementary Grants

  • When the amount approved by Parliament through the appropriation act for a particular service for the current fiscal year is determined to be insufficient, supplemental grants are awarded.

Additional Grants

  • They are given when a need for extra funding for a new service that wasn’t included in the budget for that year has arisen and will continue for the duration of the current fiscal year.

Excess Grants

  • An excess grant is given when the amount of money spent on a particular provision during a fiscal year surpasses the budgeted amount for that service.

Adv. Khanak Sharma

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