MPSC 2024 Prelims Paper-I · Question 74 of 100

Correct — option (2), 'President of India'. Article 267 of the Constitution authorises Parliament to establish a Contingency Fund of India, into which sums determined by law are paid, and provides in terms that the fund shall be placed at the disposal of the President, to enable advances to be made by him out of it for the purpose of meeting unforeseen expenditure pending authorisation by Parliament. The fund was created by the Contingency Fund of India Act, 1950, and its corpus, long fixed at a modest figure, was enlarged to thirty thousand crore rupees in 2021. Its purpose is to solve a timing problem rather than a money problem. No expenditure may be made from the Consolidated Fund of India without an appropriation made by law, and Parliament cannot always be summoned in time when an emergency, a natural calamity or an unforeseen liability arises; the Contingency Fund allows the executive to act at once and regularise afterwards. An advance is drawn, the money is spent, and when Parliament next votes a supplementary or additional grant covering that expenditure, an equivalent sum is transferred from the Consolidated Fund to the Contingency Fund so that the corpus is restored to its full amount. The fund is described as an imprest, that is a standing advance, and although it is placed at the disposal of the President it is held on his behalf by the Secretary in the Ministry of Finance, who authorises withdrawals in practice. Each State has a corresponding Contingency Fund under Article 267(2), which is placed at the disposal of the Governor of that State.

• (1)Comptroller and Auditor General of India — The Comptroller and Auditor General audits expenditure from the Contingency Fund; he does not hold it and has no power to authorise any withdrawal from it. Confusing the auditor with the custodian mistakes the whole design of financial control in the Constitution, which deliberately separates the executive that spends, the Parliament that authorises and the auditor who reports afterwards to the legislature. This option is made more tempting by the fact that the previous question in this very paper concerns the Comptroller and Auditor General, and by the genuine connection between his office and every fund of the Union.
• (3)Parliament of India — Parliament creates the Contingency Fund by law, fixes and revises its corpus and votes the supplementary or additional grants by which advances from it are recouped, but the fund is not placed at its disposal. The entire point of the arrangement is that money can be drawn when Parliament is not in a position to authorise the expenditure in advance; a fund at Parliament's disposal would defeat the object. What Parliament holds is control over the Consolidated Fund, from which no sum may be appropriated except in accordance with law.
• (4)Prime Minister of India — The Constitution names the President, not the Prime Minister, in Article 267. The distinction is formal but consistently maintained throughout the financial provisions: it is the President who causes the annual financial statement to be laid before Parliament, who receives the reports of the Comptroller and Auditor General, and at whose disposal the Contingency Fund is placed, in each case acting on the advice of the Council of Ministers. A candidate who reasons from where executive power really lies rather than from where the Constitution places it will be caught by exactly this substitution.

The Constitution provides for three government accounts and keeps their control quite distinct. The Consolidated Fund of India, under Article 266(1), receives all revenues, all loans raised and all money received in repayment of loans, and it is the fund from which the ordinary expenditure of government is met; nothing may be withdrawn from it except by an appropriation made by law, which makes it the fund over which Parliament's control is complete. The Public Account of India, under Article 266(2), holds money in which the government acts as banker rather than as owner — provident funds, small savings, deposits and remittances — and payments from it can be made by executive action, since the money is not the government's own. The Contingency Fund of India, under Article 267, is an imprest placed at the disposal of the President and used for urgent, unforeseen expenditure that cannot wait for parliamentary authorisation; advances from it are recouped from the Consolidated Fund once Parliament votes the necessary grant. Each of the three has a State counterpart, with the Governor standing where the President stands. The design reflects a single principle running through Part XII of the Constitution: money may be spent only with the sanction of the legislature, and where speed makes prior sanction impossible, the sanction follows rather than being dispensed with.

The three funds are among the most reliably examined items in Indian polity because the distinctions between them are sharp and easy to test in one line: which fund needs an appropriation by law, which is at the disposal of the President, which holds money the government does not own. MPSC's questions on this theme are almost always direct recall of exactly that kind, and they can be answered instantly by a candidate who has learnt the three articles as a set — 266(1), 266(2) and 267 — with the custodian and the mode of withdrawal attached to each. The financial cluster is being examined more than once in this paper, since the Comptroller and Auditor General appears two questions earlier, and it is worth preparing the whole block together rather than article by article. Note that the fund's corpus has been revised by law from time to time; the figure is examinable but the arrangement is what matters, and a candidate who knows the design can answer even when the figure has moved.

• Article 267 provides for the Contingency Fund of India and places it at the disposal of the President, for advances to meet unforeseen expenditure pending authorisation by Parliament.
• The fund was established by the Contingency Fund of India Act, 1950, and its corpus was enlarged to thirty thousand crore rupees in 2021.
• Advances drawn from the fund are recouped from the Consolidated Fund of India after Parliament votes the corresponding supplementary or additional grant, restoring the corpus.
• In practice the fund is held on behalf of the President by the Secretary in the Ministry of Finance, who authorises withdrawals.
• Each State has its own Contingency Fund under Article 267(2), placed at the disposal of the Governor of that State.

• Placing the Contingency Fund at the disposal of the Prime Minister or the Finance Minister rather than the President, whom the Constitution names
• Confusing the auditor of a fund with its custodian
• Assuming Parliament controls the Contingency Fund directly; its control is exercised afterwards through the grant that recoups the advance
• Mixing up the Consolidated Fund, from which no money may be drawn without an appropriation by law, with the Public Account, from which payments may be made by executive action

MPSC asks the government funds as single-line recall — which article, which fund, whose disposal, what kind of expenditure — and occasionally as a match-the-columns item pairing the three funds with their articles or with their custodians. The State counterparts are asked in the same form with the Governor in place of the President, so both halves should be learnt together. Companion questions concern the kinds of grant Parliament votes and the meaning of charged expenditure, since all of them belong to the same chapter of the Constitution.

No directly related past PYQ was found.

• practice — not a real PYQ

  No money can be withdrawn from which of the following except in accordance with an appropriation made by law ?

  • (a)The Public Account of India
  • (b)The Contingency Fund of India
  • (c)The Consolidated Fund of India
  • (d)The National Calamity Contingent Fund

  Answer(c) The Consolidated Fund of India — Article 266 provides that no money may be appropriated out of it except in accordance with law and for the purposes and in the manner provided in the Constitution. Payments from the Public Account may be made by executive action, and advances from the Contingency Fund are made by the President and regularised by Parliament afterwards.

• practice — not a real PYQ

  The Contingency Fund of a State is placed at the disposal of :

  • (a)The Chief Minister of the State
  • (b)The Governor of the State
  • (c)The State Legislature
  • (d)The Accountant General of the State

  Answer(b) The Governor of the State — Article 267(2) allows a State legislature to establish a Contingency Fund placed at the Governor's disposal, mirroring the Union arrangement in which the fund is at the disposal of the President. Advances are recouped once the legislature votes the necessary grant.