Madhavi Gaur
August 30, 2023 04:28
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The Contingency Fund of India was established under Article 267(2) of the Indian Constitution. It empowers the President to utilize the fund for making loans in urgent situations while awaiting Parliamentary approval for unforeseen expenditures like disasters, wars, riots, etc. Managed by the Finance Secretary, this fund is an essential aspect of Indian Polity and a crucial topic in the UPSC Syllabus.
As per the Constitution, the establishment of the “Contingency Fund of India” falls under the jurisdiction of Parliament, into which periodically accumulated funds are deposited. Subsequently, the India Contingency Fund Act was enacted by Parliament in 1950. In alignment with Article 267 of the Constitution, an advance carrying a corpus of 500 crore rupees is identified as the Contingency Fund of India.
The fund’s overall value escalated from Rs. 5 crore to Rs. 500 crore in 2005. Following consultation with the Union Cabinet and obtaining parliamentary consent, the President of India holds the authority to allocate funds from the Union government’s Contingency Fund of India. A parliamentary vote is required for this allocation. The financial secretary is responsible for the administration of the President’s funds, akin to the management of the Public Account of India, done through executive order.
As per Article 267(2) of the Constitution, every State Government is mandated to institute a contingency fund. The Governor is granted access to this fund through an advance, which allows them to provide for unforeseen expenses while awaiting approval from the State Legislature.
As per Article 267 of the Indian Constitution, the Contingency Fund of India must establish a corpus to manage emergency situations. This permanent fund is reserved to cover essential expenses for the country’s management and survival, known as the corpus, which can occasionally increase.
To protect the corpus, any spending or withdrawal from the contingency fund requires legislative approval. Similarly, the state legislature must endorse all disbursements from the state contingency fund. Furthermore, each Indian state’s legislature determines the varying amount of the state contingency fund corpus.
Establishing an emergency fund is a paramount approach to navigate financial challenges. Below are some key advantages of maintaining a contingency fund:
| Consolidated Fund of India | Contingency Fund of India |
|---|---|
| Covered by Article 266 (1) of the Indian Constitution. | Established under Article 267 (1) for the central government and Article 267 (2) for state governments. |
| Largest and encompasses all government revenue, both taxable and non-taxable, including loans, interest, allowances, salaries, and pensions. | Reserved for unforeseen expenses during crises, such as natural disasters or armed conflicts. |
| Requires parliamentary approval before expenditures can be made. | The President and state governors can access the fund during emergencies, subject to post-expenditure approval from the parliament or state legislature, respectively. |
| Used for catastrophe management by both central and state governments. |
The Indian Constitution establishes three significant funds for effective financial management of the government: the Consolidated Fund of India (Article 266), the Contingency Fund of India (Article 267), and the Public Accounts of India (Article 266). The Contingency Fund is crucial for managing catastrophes at both the central and state levels. To access more information related to UPSC, students can explore the official website of PWonlyIAS UPSC Online Coaching.
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