1. Constitutional Framework of Public Expenditure

(A) Consolidated Fund of India (Article 266)

• All government revenues, loans, and receipts are credited here.
• No expenditure can be incurred without Parliamentary approval.

Types of Expenditure:

1. Charged Expenditure (non-votable)
   • President’s salary
   • Judges’ salaries
   • CAG expenses
2. Voted Expenditure
   • Requires approval of the Lok Sabha through voting

(B) Annual Financial Statement (Budget) – Article 112

• Presented by the President (through Finance Minister)
• Shows estimated receipts and expenditure

(C) Parliamentary Control Mechanisms

1. Demand for Grants (Article 113)

• Ministries seek approval for expenditure
• Lok Sabha can:
  • Approve
  • Reject
  • Reduce (cut motions)

2. Appropriation Bill (Article 114)

• Legal authority to withdraw money from Consolidated Fund

3. Finance Bill (Article 117)

• Deals with taxation proposals

(D) Role of Rajya Sabha

• Limited role in financial matters
• Cannot amend Money Bills; can only recommend changes

(E) Comptroller and Auditor General (CAG) – Articles 148–151

• Audits government expenditure
• Ensures funds are used:
  • Legally
  • Efficiently
  • For intended purposes

2. Principles Governing Public Expenditure

1. Legislative Control

No taxation or expenditure without Parliament’s approval.

2. Executive Accountability

Executive must justify expenditure to legislature.

3. Financial Discipline

Expenditure must align with budget authorization.

4. Transparency and Audit

Independent audit ensures accountability.

3. Important Case Laws on Public Expenditure Control

1. Ram Jawaya Kapur v. State of Punjab (1955)

Principle: Executive power and expenditure

Held:

• Executive can spend public funds only with legislative sanction.
• Constitution follows parliamentary system where executive is accountable to legislature.

Importance:

• Established link between executive action and legislative financial control.

2. Bhim Singh v. Union of India (2010)

Issue: Misuse of MPLADS funds

Held:

• Public funds must be used for public purpose and transparency.
• Scheme upheld but with accountability requirements.

Importance:

• Reinforced that public expenditure must not be arbitrary.

3. Common Cause v. Union of India (1996)

Issue: Misuse of public funds by government

Held:

• Public money cannot be used for private or political gain.
• Emphasized accountability in expenditure.

Importance:

• Strengthened ethical limits on government spending.

4. S.R. Bommai v. Union of India (1994)

Relevance: Though mainly about Article 356

Financial Aspect:

• Misuse of state machinery (including funds) can be judicially reviewed.

Importance:

• Linked federalism and financial propriety.

5. Centre for Public Interest Litigation v. Union of India (2G Spectrum Case, 2012)

Issue: Allocation of national resources

Held:

• Natural resources are public assets.
• Allocation must be:
  • Transparent
  • Non-arbitrary

Importance:

• Public expenditure includes distribution of state resources.
• Introduced public trust doctrine in financial matters.

6. Subramanian Swamy v. CBI (2014)

Issue: Sanction for prosecution in corruption cases

Relevance:

• Corruption directly impacts public expenditure.

Held:

• Protection mechanisms cannot shield misuse of public funds.

Importance:

• Strengthened accountability in financial governance.

7. Nandini Sundar v. State of Chhattisgarh (2011)

Issue: Funding of vigilante groups

Held:

• State cannot spend public funds on unconstitutional activities.

Importance:

• Public expenditure must comply with constitutional values.

8. Vineet Narain v. Union of India (1997)

Issue: Corruption in public offices

Held:

• Ensured independence of investigative agencies.

Importance:

• Prevents misuse of public funds through corruption.

4. Role of Parliamentary Committees

(A) Public Accounts Committee (PAC)

• Examines CAG reports
• Ensures money is spent as approved

(B) Estimates Committee

• Suggests improvements in expenditure

(C) Committee on Public Undertakings

• Reviews PSU spending

5. Judicial Control Over Public Expenditure

Courts intervene when:

• Spending is arbitrary
• Violates Fundamental Rights
• Lacks public purpose
• Involves corruption or mala fide intent

6. Modern Developments

Increased Judicial Activism:

• Courts scrutinizing allocation of:
  • Spectrum
  • Coal blocks
  • Natural resources

Transparency Measures:

• RTI Act
• Digital budgeting systems

Fiscal Responsibility Laws:

• FRBM Act promotes discipline

Conclusion

The Constitution creates a multi-layered control system over public expenditure:

• Parliament: Primary authority (approval and oversight)
• Executive: Implements spending within limits
• CAG: Independent audit authority
• Judiciary: Ensures legality and prevents misuse

Through case laws and evolving interpretation, India has developed a system where:

Public money is treated as a sacred trust, and its use is subject to strict constitutional, legislative, and judicial scrutiny.