Article 267 of the Indian Constitution pertains to the Contingency Fund, both at the Union and State levels. It allows for the establishment of a Contingency Fund to address unforeseen expenditures that may arise before they can be authorized by the respective legislatures. This fund serves as a financial buffer for emergencies, ensuring that essential expenses can be met promptly. The Contingency Fund of India is at the disposal of the President, while each State has its Contingency Fund managed by the Governor.
What does Article 267 states ?
Contingency Fund
(1) Parliament may by law establish a Contingency Fund in the nature of an imprest to be entitled the Contingency Fund of India into which shall be paid from time to time such sums as may be determined by such law, and the said Fund shall be placed at the disposal of the President to enable advances to be made by him out of such Fund for the purposes of meeting unforeseen expenditure pending authorisation of such expenditure by Parliament by law under Article 115 or Article 116
(2) The Legislature of a State may by law establish a Contingency Fund in the nature of an imprest to be entitled the Contingency Fund of the State into which shall be paid from time to time such sums as may be determined by such law, and the said Fund shall be placed at the disposal of the Governor of the State to enable advances to be made by him out of such Fund for the purposes of meeting unforeseen expenditure pending authorisation of such expenditure by the Legislature of the State by law under Article 205 or Article 206 Distribution of Revenues between the Union and the States .
Contingency Fund of India
- As per the provisions outlined in the Constitution, the authority to establish the Contingency Fund of India is vested in Parliament. This fund serves as a repository for periodically allocated funds that have been properly constituted. Consequently, the India Contingency Fund Act was enacted by the Parliament in 1950.
- The Contingency Fund of India, an imprest having a corpus of Rs. 500 crores, is established and authorized by Article 267 of the Constitution.
- The President possesses the authority to access these funds and is empowered to utilize them for the purpose of providing financial support to address unforeseen expenses, pending deliberation by the Parliament.
- The management of the President’s funds is entrusted to the finance secretary. Similar to India’s Public Account, the governance of this entity is carried out by the implementation of executive orders.
- Clause 2 of Article 267 of the Constitution of India grants each state the authority to establish its own contingency fund.
Key aspects of Article 267
• Purpose of the Contingency Fund: The primary purpose of the Contingency Fund, established both at the Union (national) and State levels, is to provide an immediate source of funds to meet unforeseen and urgent expenditures.
• Establishment and Nature: Parliament has the authority to establish the Contingency Fund of India, and State legislatures can establish the Contingency Fund of their respective States. These funds are treated as “imprests,” which means they are like cash-in-hand resources that can be accessed quickly when needed.
• Contributions: Funds are allocated into the Contingency Funds as decided by law. Regular allocations are made to keep these funds adequately funded and ready for contingencies.
• Discretionary Use: The President of India has control over the Contingency Fund of India, while the Governor of a State has control over the Contingency Fund of that State. They can make advances from these funds to address unforeseen and immediate financial needs.
• Utilization: These funds are utilized for meeting unforeseen and urgent expenses, particularly when there hasn’t been prior authorization from the respective legislatures to incur such expenditures. This ensures that critical expenses, like disaster relief or urgent administrative needs, can be met promptly.
• Parliamentary or Legislative Authorization: Any advances made from the Contingency Fund must be subsequently authorized by Parliament (in the case of the Union) or by the State Legislature (in the case of a State) under specific constitutional provisions, namely Article 115 or Article 116 for the Union and Article 205 or Article 206 for States.
• Importance: The Contingency Fund plays a significant role in maintaining fiscal discipline by preventing unauthorized or unaccounted expenditures. It ensures that even in emergency situations, financial prudence is maintained.
• Audit and Accountability: The utilization of these funds is subject to audit and accountability, and the expenditures from the Contingency Fund must be properly documented and justified.