New Delhi: All the money collected by the Union government is kept in three funds, including the Consolidated Fund of India, from where most of the expenditure of the government is incurred. The expenditure mentioned in the Annual Financial Statement or the Union Budget, which is presented to the Parliament in the form of Demands for Grants, is paid from the Consolidated Fund of India after obtaining the Parliamentary approval.
Consolidated Fund of India owes its existence to Article 266 of the Indian Constitution which deals with the Consolidated Funds both at the Central and State level.
All revenues received by the government, loans raised by the government, and also the receipts from the recoveries of the loans granted by it, collectively form the Consolidated Fund of India.
All government expenditures such as payment of salaries and wages to the government staff, payment of pension to retirees, expenses related to other expenses such as travel expenses, purchase of computers, stationery and other items used in the government offices, among other things are incurred from the Consolidated Fund of India.
According to the Constitutional provisions no amount can be drawn from the Consolidated Fund of India without due authorization from the Parliament.
Article 266 which deals with the Consolidated Funds of India and of the States says that with respect to the assignment of the whole or part of the net proceeds of certain taxes and duties to States, all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all money received by that Government in repayment of loans shall form one consolidated fund to be entitled ― the Consolidated Fund of India.
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Similarly, Article 266 says that all revenues received by the government of a state, all loans raised by that government by the issue of treasury bills, loans or ways and means advances and all money received by that government in repayment of loans shall form one consolidated fund to be entitled ― the Consolidated Fund of the State.
The Article further clarifies that all other public monies 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.
The Constitution of India makes it clear that no money out of the Consolidated Fund of India or the Consolidated Fund of a State can be appropriated except in accordance with the law and for the purposes and in the manner provided in the Constitution.
