Consolidated Fund of India

Indian Consolidated Fund

The Consolidated Fund of India is the account to which all inflows and outflows are recorded. The Consolidated Fund of India was formed by Article 266(1) of the Indian Constitution. The Indian Constitution makes reference to the Public Accounts of India (Article 266), the Contingency Fund of India (Article 267), and the Consolidated Fund of India (Article 266) as three separate types of central government finances.

Indian Consolidated Fund Meaning

The whole of the Government of India’s receipts from income tax, Customs, central excise, and other sources, as well as its outlays, less unique items, is referred to as the Consolidated Fund of India. The Indian Constitution‘s Article 266(1) authorized for its formation.

Formation of the Consolidated Fund of India

All of the government of India’s receipts, all of the loans it has secured through the issuance of treasury bills, loans, or other types of advances, and all of the money it has gotten in loan repayments make up the Consolidated Fund of India. This fund is used by the Indian government to fulfill all legal obligations.

All government expenses are paid for out of this fund, with the exception of extraordinary items, which are paid for out of the Contingency Fund or the Public Account. To distribute (issue or draw) money from this fund, a parliamentary act must be passed. According to Article 266 (1) of the Indian Constitution, it was established. Each state may establish a Consolidated Fund of India with the exact same characteristics. The Comptroller and Auditor General of India, who also audits the funds, submits reports on the management of the consolidated funds to the relevant legislatures.

Parts of the Consolidated Fund of India

There are five divisions within the Indian Consolidated Fund, including:

• Account for revenue (receipts)
• Disbursements account for revenue
• Account for capital (receipts)
• (Disbursements) Capital account
• Charges made on the Consolidated Fund for payments.

India’s consolidated fund and charged expenses

Charged expenses are referred to as non-votable expenses by India’s Consolidated Fund when presenting the yearly budget. Before the Indian government may spend any money from the Consolidated Fund, it must first receive approval from the Lower House of Parliament or the State Assemblies. Certain chargeable expenditures from the combined budget are made in accordance with Articles 112(3) and 202(3) of the Indian Constitution without requiring a vote.

Key Aspects Of Consolidated Fund of India

1. Definition and Objectives: Article 266(1) of the Indian Constitution provides a definition of the Consolidated Fund of India. The government uses it to cover both revenue and capital expenditures, making it the most significant fund in the government’s accounts.
2. Revenues and expenses are included: The Consolidated Fund includes all of the government’s receipts, including taxes and non-tax revenues, as well as all of its outlays, including both current and capital expenditures.
3. Exclusiveness of parliamentary authority: Only the Parliament has authority over the Consolidated Fund. Without the approval of the Parliament through the passing of appropriation measures, no funds may be taken out of this fund.
4. The Constitution’s Article 114: According to Article 114 of the Indian Constitution, the government must present a statement to the Parliament outlining its anticipated receipts and outlays for the upcoming year.
5. Nothing Can Be Withdrawn Without Legislation: A crucial component of the Consolidated Fund is the rule that no taxation or spending may be made without parliamentary consent. Without the consent of the Parliament, the government is not permitted to withdraw money from this fund.
6. Public Account vs. Consolidated Fund vs. Contingency Fund: The Contingency Fund of India and the Public Account of India are not the same as the Consolidated Fund. The Public Account stores assets for specific uses like provident funds and minor savings, whereas the President has access to the Contingency Fund to cover unforeseen expenses.
7. Acts of Annual Appropriation: Annual appropriation acts approved by Parliament provide the government the legal right to take money out of the Consolidated Fund to cover its costs. These acts specify how money is distributed to various government agencies and ministries.
8. Encompassing Nature: The Consolidated Fund is comprehensive and includes all government activities, including capital expenditures and revenue expenditures for long-term investments and asset creation.
9. Accountability and auditing: In order to ensure accountability, transparency, and proper use of money, the Comptroller and Auditor General (CAG) of India audits the accounts pertaining to the Consolidated Fund. The Parliament is given the audit reports.
10. Exceptions to Borrowing: To pay its financial obligations, the government may borrow from the market, but only up to the restrictions set forth in the Fiscal Responsibility and Budget Management Act (FRBMA), which promotes fiscal restraint.
11. Support for Other Funds: Even when money is coming into the Consolidated Fund, there are times when it is being moved to another fund. For instance, the government may allot money to particular funds or plans.
12. Function in the Budgetary Process: The annual budgeting process heavily relies on the Consolidated Fund. The budget outlines the estimated revenues and expenditures that will be incorporated into the Consolidated Fund for the fiscal year.