The Contingency Fund of India Act, 1950
The Contingency Fund of India Act, 1950
Background and Purpose
The Contingency Fund of India is a fund established under Article 267(1) of the Indian Constitution and governed by the Contingency Fund of India Act, 1950. It is meant to meet unforeseen expenditure that the government might have to incur urgently before parliamentary approval can be obtained.
In essence, it acts as an imprest fund to provide immediate financial assistance to the government to meet unexpected expenditures.
Key Provisions of the Act
Establishment of the Fund:
The Central Government establishes the Contingency Fund.
The fund is at the disposal of the President of India.
The initial corpus of the fund was fixed at Rs. 50 crores but can be changed by the Parliament.
Purpose of the Fund:
The Fund is meant for meeting unforeseen expenditure, which cannot be met from the normal budget.
Such expenses are usually of an urgent nature.
Examples include natural disasters, emergencies, or urgent financial needs that arise suddenly.
Drawals and Replenishment:
Money can be withdrawn from the Fund by the President to meet unforeseen expenditure.
These withdrawals are considered advances to the government and must be recouped by subsequent authorization from the Parliament through the Appropriation Act.
If the expenditure does not receive parliamentary sanction, the money must be repaid into the Contingency Fund.
Parliamentary Control:
Though money from the Fund can be spent without prior parliamentary approval, the government must seek approval retrospectively.
The amount spent must be included in the annual Appropriation Bill.
Constitutional Basis
Article 267(1) of the Constitution of India provides the constitutional basis for the Contingency Fund.
The Fund is under the control of the President but used by the government.
It ensures that the executive has immediate access to funds for emergency expenditure, bypassing procedural delays in the parliamentary approval process.
Differences from the Public Account
The Contingency Fund is different from the Public Account.
The money from the Contingency Fund is spent by the government and must be approved by Parliament later.
Money in the Public Account does not belong to the government and does not require parliamentary approval for expenditure.
Important Case Laws Related to Contingency Fund of India
1. R.D. Shetty vs. International Airport Authority of India (1979)
Context: The issue of whether the government can use funds from the Contingency Fund without prior parliamentary sanction was discussed.
Observation: The Supreme Court upheld the principle that funds from the Contingency Fund can be used only for urgent and unforeseen expenditure. However, the government must seek approval from Parliament retrospectively.
Significance: This case reaffirmed that the Contingency Fund is not a free-for-all resource but subject to strict legal and constitutional control.
2. Union of India vs. Association for Democratic Reforms (2002)
Though this case is mostly about transparency and public funds, it touched upon the nature of government expenditures and stressed that any usage of public funds (including Contingency Fund) must be accountable and justifiable.
Practical Significance of the Contingency Fund
Helps in swift response to natural calamities like floods, earthquakes, pandemics, etc.
Used in situations where urgent military or defense expenditure is required.
Prevents the delay in government functioning due to procedural formalities.
Summary
| Aspect | Details |
|---|---|
| Act | The Contingency Fund of India Act, 1950 |
| Constitutional Provision | Article 267(1) of the Constitution |
| Purpose | To meet unforeseen urgent expenditures |
| Control | Fund controlled by the President |
| Corpus | Fixed by Parliament (initially Rs. 50 crores) |
| Parliamentary Approval | Required retrospectively via Appropriation Act |
| Use | Emergencies, urgent financial needs |
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