An In-Depth Look at India's Financial Management: Consolidated Fund and More

What is the Consolidated Fund of India (CFI)?

The CFI serves as the primary account for the government of India, where all revenues, loans, and repayments received by the Union government are deposited. It can be likened to the government's main bank account, playing a crucial role in the nation's financial management.

Types of Revenues Included in the CFI

The CFI comprises a variety of revenues:

• Tax Revenues: This includes personal income tax, corporate tax, customs duties, and excise duties.
• Non-Tax Revenues: These are revenues that do not arise from taxes, such as license fees, dividends from the Reserve Bank of India (RBI), and profits generated from public sector undertakings.

Expenditure from the CFI

Any spending from the CFI necessitates approval via an Appropriation Bill, which must be passed by the Parliament. This ensures that all expenditures are accounted for and properly authorized.

What is the Public Account of India (PAI)?

The PAI is an account where the government holds money as a custodian for others. This is similar to a bank account, where the government is responsible for managing funds like provident funds and small savings accounts.

Parliamentary Approval for Spending from the PAI

Unlike the CFI, expenditures from the PAI do not require parliamentary approval. This is because the funds in the PAI do not belong to the government; rather, they are held on behalf of individuals and entities.

Examples of Funds Included in the PAI

Some of the key funds that fall under the PAI include:

• Provident funds
• Small savings
• National Clean Energy Fund
• National Investment Fund
• National Disaster Response Fund (NDRF)

What is the Contingency Fund of India (CFI)?

The CFI is specifically created to address unforeseen expenditures that arise when the Parliament is not in session. The President holds the authority to approve withdrawals from this fund, which are later replenished through a Money Bill.

Current Size of the CFI

The CFI was originally set up with a size of ₹50 crores. It has since undergone significant increases, growing to ₹500 crores in 2005 and further expanding to ₹30,000 crores in 2021, reflecting the evolving fiscal needs of the government.