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Question

Difficulty: MediumFiscal Policy, Union/State Budgeting, Public Finance, and Taxation Structure

Consider the following statements regarding the Public Funds of India under the constitutional framework of public finance:

1. Parliamentary authorization is mandatory for all withdrawals made from the Consolidated Fund of India as well as the Public Account of India.
2. The Contingency Fund of India is placed at the disposal of the President of India to meet unforeseen expenditure pending authorization by Parliament.
3. National Small Savings Fund deposits, provident fund receipts, and judicial deposits are credited to the Public Account of India.

Which of the statements given above is/are correct?

  1. A
    1 and 2 only
  2. 2 and 3 onlyAnswer
  3. C
    1 and 3 only
  4. D
    1, 2 and 3

Answer

2 and 3 only
The statement specifying '2 and 3 only' is correct. The Contingency Fund of India (Article 267) is held by the Finance Secretary on behalf of the President to meet urgent unforeseen expenses. The Public Account of India (Article 266(2)) handles banking-type transactions such as provident funds, small savings, and judicial deposits, which do not belong strictly to the government and do not require prior parliamentary sanction for withdrawal. Only the Consolidated Fund of India strictly mandates prior parliamentary authorization through an Appropriation Act.

Step-by-Step Solution

1
Analyze Statement 1 regarding Parliamentary authorization for Public Funds.
Statement 1 is incorrect.
Under Article 266(1), withdrawals from the Consolidated Fund of India require an Appropriation Act passed by Parliament. However, under Article 266(2), the Public Account of India accounts for money received on behalf of third parties (e.g., provident funds, small savings), and payments from this account can be made by executive action without parliamentary approval.
2
Evaluate Statement 2 regarding the Contingency Fund of India.
Statement 2 is correct.
Under Article 267(1), the Contingency Fund of India is established at the disposal of the President of India to make advances for meeting unforeseen expenditures pending authorization by Parliament.
3
Evaluate Statement 3 regarding receipts under the Public Account of India.
Statement 3 is correct.
Public money received by or on behalf of the Government of India that is not credited to the Consolidated Fund of India (such as small savings, provident funds, and judicial deposits) is credited to the Public Account of India.

Key Concept

Constitutional provisions for Public Funds of India (Consolidated Fund, Public Account, and Contingency Fund)
Estimated Time:1m 15s
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Topics

Fiscal Policy, Union/State Budgeting, Public Finance, and Taxation Structure