The Consolidated Fund of India is created by inflow of tax funds and non-tax revenues to be paid to the Government. Loans raised by the Government are also received in this fund. The Govt. meets all its expenditures from this fund. No amount can be withdrawn from the fund without the authority of the Parliament. Contingency Fund of India is a Rs. 500 crore fund sanctioned in the budget for contingent expenditure of unforeseen nature. This amount can be used by the Finance Secretary on behalf of the President of India. Here we are giving a brief note about these two Funds which will be helpful for your UPSC, SSC and other examinations.

The Consolidated Fund of India Art. 266 (1) 

The Consolidated Fund of India is a reservoir with regard to the resources of the Union and as such it is termed as the Union Consolidated Fund of India. A similar fund is also to be known as the Consolidated Fund of the State which is the reservoir of the resources of a State. No moneys can be issued out of this fund except in accordance with a valid law made by the Legislature concerned. All revenues received, all loans raised by the issue of Treasury Bills, and all moneys received by the Government of India or by the Government of a State shall from one consolidated fund called “The Consolidated Fund of India“, or “The Consolidated Fund of the States“, as the case may be. Moneys from such a fund cannot be appropriated except in accordance with law and for the purposes and in the manner provided in this Constitution (Art. 266 (1) ) .

All other public moneys received by or on behalf of the Government of India or the Government of a State shall be credited to the public account of India or the public account of the State, as the case may be (Art. 266 (2) ). Further, all sums to be paid to any Ruler of a State as privy purse shall be charged on, and paid out of, the Consolidated Fund of India; and the sum so paid to any Ruler shall be exempt from all taxes on income (Art. 281).

The Contingency Fund of India or a State (Art. 267)

The necessity of having a Contingency Fund is on account of the fact that under the Indian Constitution, every item of expenditure requires the prior sanction of the Parliament or the State Legislature as the case may be. When an unexpected demand is to be met with and when there is no time to get the sanction of the Parliament or State Legislature, Art 267 provides that the Parliament may by law establish such a Fund in the nature of an imprest to be entitled the Contingency Fund of India into which shall be paid from time to time such sums as may be determined by law, and the said fund shall be placed at the disposal of the President to enable advances to be made by him out of such Fund for the purposes of meeting unforeseen expenditure pending authorization of such expenditure by Parliament by law under Art 115 or Art 116 which provides for the creation of the Contingency Fund of the State by a State Legislature and which is at the disposal of the Governor or Rajpramukh of the States as the case may be.

It follows that Art. 267 authorizes the creation by Parliament of a Contingency Fund of the Union or by the Legislature of a State for that State, the amount to be deposited in this Fund which will be determined by laws made by the Parliament or the State Legislature as the case may be from time to time. The Fund is at the disposal of the Executive to enable him to make such advances for the purposes of meeting unforeseen expenditures.

The custody of the Consolidated as well as Contigency Funds shall be regulated by Rules made by the President or the Governor of a State as the case may be (Art. 284).