The Indian Constitution‘s Article 267(2) established the Contingency Fund. The president has access to this fund, and he is permitted to use it to make advances while waiting for Parliamentary approval to cover unforeseen expenses, such as those associated with catastrophes, wars, natural disasters, riots, etc. On behalf of the President, the Finance Secretary oversees the fund.
India’s Contingency Fund
- According to the Constitution, Parliament has the authority to establish the “Contingency Fund of India,” into which periodically monies that have been duly constituted are paid.
- As a result, the India Contingency Fund Act was passed by Parliament in 1950.
- The Contingency Fund of India, which is an imprest with a corpus of Rs. 500 crores, is authorized by Article 267 of the Constitution.
- In 2005, the entire amount of the fund climbed from Rs. 5 crore to Rs. 500 crore.
- The President of India has the authority to allocate money from the contingency fund of the Union government after consulting with the Union Cabinet and getting approval from Parliament. Parliament must take a vote.
- The President’s money is managed by the finance secretary. It is governed by executive order, just like India’s Public Account.
- Each State Government must establish a contingency fund under Article 267(2) of the Constitution. This fund takes the form of an imprest that is available to the governor, allowing them to make advances to cover urgent unforeseen expenses while waiting for state legislature approval.
Parliamentary Approval for India’s Contingency Fund
- Each expenditure or withdrawal of money from the contingency fund requires parliamentary approval in order to ensure that the corpus is maintained.
- Similar to that, the state legislature must approve any use of the state contingency fund.
- In addition, each Indian state has a different corpus for state contingency reserves, and the size is decided by the state assembly.
New Information
- The Expenditure Secretary is now permitted to spend 40% of the total Contingency Fund of India after the government modified the rules.
- Budget 2021–22 proposed expanding the India Contingency Fund from 500 crore to 30,000 crore through the Finance Bill.
- The fund may be increased by a Finance Bill while Parliament is in session. Or, by Ordinance if the House is not in session and the circumstances warrant it.
- The Secretary of the Department of Economic Affairs must approve withdrawals from the fund in accordance with the Contingency Fund of India Act, 1950.
Who has the India Contingency Fund?
Under the “Contingency Fund of India Act, 1950,” Parliament established the contingency fund of India in 1950 to cover any unforeseen financial demands. It is, in essence, a rainy day fund. The contingency fund is held by the finance secretary (Department of Economic Affairs) on behalf of the President of India, and it is managed with the President’s approval. But the government is unable to remove money without the consent of the legislature.
Body Of The Emergency Fund
Article 267 of the Indian Constitution requires the creation of a corpus under the contingency fund of India to handle dire circumstances. The permanent money held for the costs necessary for the management and survival of the country is referred to as the corpus. This sum may occasionally be increased. The initial capital for India’s contingency fund was Rs 5 crore; in 2005, it was raised to Rs 500 crores, or Rs 5 billion. The finance bill 2021 was recently recommended as a way to increase India’s contingency reserve from Rs 500 crore to Rs 30,000 crore. Additionally, the government altered the contingency fund of India’s regulations such that the finance secretary can now access 40% of the whole capital.
To preserve the corpus, any spending or withdrawal from the contingency fund needs to be approved by the legislature. The state legislature must also approve all expenditures from the state contingency fund. Additionally, the state legislature of each Indian state determines the amount of the state contingency fund corpus, which differs across the country.