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Tuesday, February 7, 2017

The Explainer: What is the Govt's Contingency Fund?


What are the different types of accounts of the Government of India?
The Government of India has three major types of accounts. These are listed in the Union Budget. The three are:
(a)   Consolidated Fund of India;
(b)   Contingency Fund of India, and
(c)   Public Accounts.

What is the Consolidated Fund of India?
This is the most important account maintained by the Government of India. The Consolidated Fund of India contains all the revenues (tax and non-tax revenues) earned and all the expenditures incurred by the Government of India.

No money from the Consolidated Fund of India can be spent by the Government without approval of the Parliament of India.

What is the Contingency Fund of India?
Contingency means ‘unforeseen’ or ‘emergency’. As mentioned above, all withdrawals  from the Consolidated Fund of India require prior approval of the Parliament.

However, sometimes there are emergency expenses for which the Government may not wait for the Parliament’s approval; like, expenses incurred to tackle a devastating flood/earthquake.

In such cases, the Government of India will withdraw funds from the Contingency Fund of India. Once the expense is met, the Government may seek approval of the Parliament for such withdrawal. In short, the Parliament’s approval comes post-facto (i.e., after the expense has been made).

However, after the Parliament approves such expense, an equal amount is withdrawn from the Consolidated Fund of India to be put back into the Contingency Fund of India.

What are Public Accounts?
Public Accounts hold money that does not belong to the Government of India. Such accounts include the Employees Provident Fund and Small Savings Scheme. This money belongs to the general public but is held in Government’s trust.

Whenever withdrawals are made from such accounts, the Government pays out the amounts without the Parliament’s approval.

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