There are three types of funds of the Central Government – Consolidated Fund of India (Article 266), Contingency Fund of India (Article 267), and Public Accounts of India (Article 266) mentioned in the Indian Constitution.
Funds of Government of India
The Constitution of India provides for the following three kinds of funds for the Central government:
- Consolidated Fund of India (Article 266)
- Public Account of India (Article 266)
- Contingency Fund of India (Article 267)
Consolidated Fund of India (Article 266)
This term derives its origin from the Constitution of India.
Under Article 266 (1) of the Constitution of India, all revenues (for example tax revenue from personal income tax, corporate income tax, customs, and excise duties as well as non-tax revenue such as license fees, dividends, and profits from public sector undertakings, etc.) received by the Union government as well as all loans raised by the issue of treasury bills, internal and external loans and all money received by the Union Government in repayment of loans shall form a consolidated fund entitled the ‘Consolidated Fund of India’ for the Union Government.
Similarly, under Article 266 (1) of the Constitution of India, a Consolidated Fund of State (a separate fund for each state) has been established where all revenues (both tax revenues such as Sales tax/VAT, stamp duty, etc.. And non-tax revenues such as user charges levied by State governments) received by the State government as well as all loans raised by the issue of treasury bills, internal and external loans and all money received by the State Government in repayment of loans shall form part of the fund.
The Comptroller and Auditor General of India audit these Funds and reports to the Union/State legislatures when proper accounting procedures have not been followed.
Public Account of India (Article 266)
All other public money (other than those which are credited to the Consolidated Fund of India) received by or on behalf of the Government of India shall be credited to the Public Account of India.
This includes provident fund deposits, judicial deposits, savings bank deposits, departmental deposits, remittances, and so on. This account is operated by executive action, that is, the payments from this account can be made without parliamentary appropriation. Such payments are mostly in the nature of banking transactions.
Contingency Fund of India
The Contingency Fund of India is established under Article 267(1)of the Indian Constitution. It is in the nature of an imprest (money maintained for a specific purpose). Accordingly, Parliament enacted the contingency fund of India Act 1950.
The fund is held by the Finance Secretary (Department of Economic Affairs) on behalf of the President of India and it can be operated by executive action. The Contingency Fund of India exists for disasters and related unforeseen expenditures.
In 2005, it was raised from Rs. 50 crores to Rs 500 crore. Approval of the Parliament of India for such expenditure and for withdrawal of an equivalent amount from the Consolidated Fund is subsequently obtained to ensure that the corpus of the Contingency Fund remains intact.
Similarly, the Contingency Fund of each State Government is established under Article 267(2) of the Constitution – this is in the nature of an imprest placed at the disposal of the Governor to enable him/her to make advances to meet urgent unforeseen expenditure, pending authorization by the State Legislature.
Approval of the Legislature for such expenditure and for withdrawal of an equivalent amount from the Consolidated Fund is subsequently obtained, whereupon the advances from the Contingency Fund are recouped to the Fund. The corpus varies across states and the quantum is decided by the State legislatures.
Controller General of Accounts (CGA)
The CGA is the Principal Accounting Adviser to the Government of India. The office is in the Department of Expenditure, Ministry of Finance, GOI.
- CGA is the Principal Accounting Adviser to the Government of India and is responsible for establishing and maintaining a technically sound Management Accounting System.
- It also prepares and submits the accounts of the Central Government.
- It is also in charge of the exchequer control and internal audits.
- The Office of CGA prepares monthly and annual analyses of expenditure, revenues, borrowings, and various fiscal indicators for the Union Government.
- Under Article 150 of the Constitution, the Annual Appropriation Accounts (Civil) and Union Finance Accounts are submitted to Parliament on the advice of the Comptroller and Auditor General of India.
- Along with these documents, an M.I.S Report titled ‘Accounts at a Glance’ is prepared and circulated to Hon’ble Members of Parliament.
- It is also responsible for the coordination and monitoring the progress of submission of corrective/remedial action taken notes (ATNs) on the recommendations contained in Public Accounts Committee’s (PAC) reports as well as the Comptroller & Auditor General (CAG) reports through its web-based Audit Para Monitoring System (APMS).
Controller General of Accounts Mandate
The Allocation of Business Rules 1961 gives the duties and responsibilities of the CGA, as mentioned below:
- General accounting principles related to the Central and State governments and form of accounts, and framing/revising rules and manuals.
- Reconciling the cash balance of GOI with the Reserve Bank of India in general, and the reserve deposits about civil ministries or departments in particular.
- Supervising whether adequate standards of accounting are maintained by central civil accounts offices.
- Consolidating monthly accounts, preparing a review of trends of revenue realization and significant features of expenditure, etc. & preparing annual accounts, annual receipts, and disbursements.
- Administering the Central Government Account (Receipt and Payment Rules 1983) and Central Treasury Rules.
- Coordinating and assisting in the introduction of management accounting systems in civil ministries and departments.
- Cadre management of Group ‘A’ (Indian Civil Accounts Service) and Group ‘B’ Officers of the Central Civil Accounts Offices.
- Matters about the Central Civil Accounts staff belonging to Group ‘C’ and ‘D’.
- Disbursing pension to central civil pensioners, high court judges, ex-presidents, ex-MPs, and freedom fighters.
The CGA is not a constitutional body, but the CAG is a constitutional body. Another difference between the CGA and the CAG is that the CAG is an independent body while the CGA is not. It is under the Department of Expenditure.
The President lays down general principles of government accounting on the CAG’s advice, the CGA performs the function of maintaining them.