What is the Contingency Fund of India?

Article 267 of the Constitution mandates formation of a corpus under Contingency Fund of India to deal with any emergency situation. It is an imprest placed at the disposal of the President of India.

Government cannot withdraw funds from it without authorization of the Parliament. And the corpus has to be replenished with the same amount later.

It is one of the three categories in which the central government accounts are kept based on the constitutional requirement. The other two are Consolidated Fund of India and the Public Account. We had explained Consolidated Fund of India in the decoded section of our previous episode.

In government accounts, the Contingency Fund has a single Major Head to accommodate all transactions of the fund. It is placed at the disposal of the President, who releases the funds on request of the Union Cabinet at a time when there is a crisis, such as a natural disaster. Any expenditure incurred from this fund requires a subsequent authorisation from the Parliament. 

The Union finance ministry holds the fund on behalf of the President. And the fund size is enhanced from time to time by the government. In 2005, the corpus of the fund was raised from Rs 5 crore to Rs 500 crore.

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And in the last Union Budget, the government enhanced the Contingency Fund of India from Rs 500 crore to Rs 30,000 crore through the Finance Bill 2021.  

The fund can be increased through a Finance Bill when the Parliament is in the session. Or through Ordnance if the House is not in session and situation warrants. Withdrawal from the fund takes place with the approval of the Secretary of Department of Economic Affairs, in terms of the Contingency Fund of India Act, 1950. 

While increasing the corpus last year, the government also conferred more powers to the Expenditure Secretary in dealing with the fund. 

An amount equivalent to 40% of the corpus has now been placed at the disposal of the Expenditure Secretary. All further Contingency Fund releases beyond this limit will require the approval of the Expenditure Secretary in addition to the Economic Affairs Secretary’s approval.

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