Funds of the Government of India

31 May 2024  Read 1655 Views

Do you know where the President of India and the judges of the Supreme Court/High Courts get their salaries and pensions from? Or if someone invests in schemes like Sukanya Samriddhi Yojana, where does that deposited money go? Well, the answers to these questions lie in the detailed system of government funds that keep our country running. 

The Government of India has various funds to manage its finances. These funds are carefully organised to make sure that the government can keep money received from taxes, handle emergencies, and manage public investments effectively.

Keep reading to understand the different types of funds managed by the Government of India. 

Types of Central Government Funds

The Indian Constitution talks about 3 types of funds for the Central Government:

  1. Article 266: Consolidated Fund of India
  2. Article 266(2): Public Accounts of India
  3. Article 267: Contingency Fund of India

Consolidated Fund of India

As per Article 266 (1) of the Indian Constitution, the 'Consolidated Fund of India' for the Union Government includes:

  • All revenues generated by the Union government, including tax income from sources like income tax, corporate tax, customs duties, excise charges, and non-tax revenues such as licensing fees, dividends, and profits from public sector enterprises.

  • All funds are raised through the issuance of treasury bills, internal and external loans, and any money received by the Union Government as loan repayments.

Consolidated Fund of the State

Similarly, Article 266 (1) of the Indian Constitution sets up a Consolidated Fund of State for each state. 

  • This fund includes all money the state earns from taxes like GST and stamp duty, and non-tax income like user fees.

  • It also includes money from treasury bills, internal and external loans, and any repayments of loans given by the government. All these revenues must be included in this fund.

Note- If proper accounting processes are not followed, the Comptroller and Auditor General of India and the Public Accounts Committee audit these funds and report to Parliament. This fund covers all government expenses. The government needs approval from the legislature before taking money from this fund.

Expenditures Charged upon Consolidated Fund 

Non-Votable Charges: Expenses charged upon Consolidated Fund of India are certain expenses that are directly taken from this fund as required by the Indian Constitution. These expenses don't need annual approval from Parliament because the Constitution mandates them.

Examples: Salaries and allowances of the President, Vice President, Judges of the Supreme Court and High Courts, Comptroller and Auditor General of India, debt charges, and other expenses listed under Article 112 of the Constitution.

No Parliamentary Approval: The government doesn't need Parliament's yearly approval for these expenses because they are essential and mandatory for government operations.

Expenditures Made from Consolidated Fund

Votable Charges: These expenses are called votable, meaning they must be reviewed and approved by Parliament annually, ensuring transparency and alignment with Parliament's priorities.

Examples: Expenses made from the Consolidated Fund of India include all government spending that is not automatically charged by the Constitution. These expenses cover day-to-day operations, development projects, subsidies, pensions, and more.

Parliamentary Approval: These expenses need to be approved by Parliament each year through the Appropriation Bill and other financial bills. The government presents a budget to Parliament, and once approved, it can use the money from the Consolidated Fund for its expenses.

In short, expenditures charged upon consolidated funds are set by the Constitution and don't need yearly approval, whereas expenditures made from consolidated funds do require annual parliamentary approval.

Public Accounts of India

This fund is established under Article 266(2) of the Constitution. Any public money received by the Government of India, other than the money in the Consolidated Fund of India, goes into the Public Account of India. 

These funds do not belong to the government; it just acts as a banker or trustee. At some point, these funds must be paid back to their depositors. 

Due to this nature of the fund, parliamentary approval is not necessary for its expenditures. The CAG is liable for auditing all expenditures from the general public Accounts of India.

Examples are savings accounts of different ministries and departments, defence funds, provident funds, postal insurance, National Savings and Investment Corporation (money obtained from disinvestment), National Catastrophe and Contingency Fund (for Disaster Management), etc.

The Public Account consists of six sectors: 'Small Savings, Provident Funds, etc.', 'Reserve Funds', 'Deposit and Advances', 'Suspense and Miscellaneous', 'Remittances', and 'Cash Balance'.

Contingency Fund of India

The contingency fund is a sum of money set up for use during national or state emergencies, such as terrorist attacks, riots, or natural disasters such as floods or cyclones. 

It's meant to act as a financial safety net to help the country manage during these crises.

Who Manages the Contingency Fund of India?

Under Article 267(1) of the Indian Constitution, Parliament established the Contingency Fund of India in 1950 through the "Contingency Fund of India Act, 1950" to address financial emergencies. 

The Finance Secretary (Department of Economic Affairs) manages this fund on behalf of the President. However, the government cannot withdraw funds without Parliament's approval. 

The fund amount was increased from ₹50 crores to ₹500 crores in 2005.

Contingency Fund of the State

Under Article 267 (2), each state in India can establish its own contingency fund. The Governor manages this fund, and any expenditure from it requires the state legislature's approval. 

The amount in the state contingency funds varies across different states, and the state legislature determines the size of the corpus (total amount of money).

If you don't know the privileges of Parliament, then you should read this article. Click on the link.


These funds ensure that the government can function smoothly and respond to both planned and unplanned expenses. The Consolidated Fund covers routine expenses, the Contingency Fund is there for emergencies, and the Public Account holds money that people have entrusted to the government.

About the Author: Anirudh Nikhare | 66 Post(s)

Anirudh did his Bachelor's in Law and has practical experience in IPR, Contracts, and Corporate. He is your go-to legal content writer turning head-scratching legal topics into easy-to-understand gems of wisdom. Through his blog, he aims to empower readers with knowledge, making legal concepts digestible and applicable to everyday life.

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