As per Article 267 of the Indian Constitution, it is mandatory to form a corpus under the Contingency Fund of India for handling emergencies. It is held at the disposal of the President of India. Without the Parliament’s authorisation, the government cannot withdraw funds from the Contingency Fund. In case of withdrawal, the corpus needs to be replaced with the same amount.
Among all the government accounts, there is a single Major Head for the Contingency Fund who accommodates all transactions related to the fund. The fund will be placed at the Indian President’s disposal, who shall release funds when there is a request from the Union Cabinet at the time of crisis, for example, a natural disaster. The government enhances the fund size from time to time.
In 2005, the corpus was increased to Rs 500 crore from Rs 5 crore. In the previous Union Budget, the government increased India’s Contingency Fund to Rs 30,000 crore from Rs 500 crore via the Finance Bill 2021.
The Contingency Fund is one of the three categories where the Central Government accounts are maintained based on the constitutional requirement. The other two accounts are the Consolidated Fund of India and the Public Account.
A fund withdrawal can occur based on the approval received from the Secretary of the Department of Economic Affairs, as per the Contingency Fund of India Act, 1950. Along with increasing the fund size, the government has also bestowed more powers to the Expenditure Secretary managing with the fund.
The Expenditure Secretary now has access to 40% of the corpus funds. Beyond this point, all additional Contingency Fund releases will require the Expenditure Secretary’s consent and the Economic Affairs Secretary.
For any clarifications/feedback on the topic, don’t hesitate to contact the writer at bhavana.pn@cleartax.in.
Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.
