Question

With reference to Indian Public Finance consider the following statements
1.Disbursements from Public Accounts of India are subjected to vote of Parliament
2.The Indian Constitution provides for the establishment of a Consolidated Fund, a Public Account and a Contingency fund for each state
3.Appropriations and disbursements under the Railway budget are subjected to the same form of Parliamentary control as other appropriation and disbursements.
Which of the statements given above are correct
A)1 and 2
B)2 and 3
C)1 and 3
D)1,2 and 3

Answer 1

Hint: The Constitution describes the detailed procedure in which the finances of the nation are managed. Both the Union and the state have powers to raise as well as disburse funds. The Constitution states that expenditure can be made from public funds only in a manner that has been stated in the constitution itself. It also states that no tax can be imposed except by authority of law. Also, executive authorities like the ministers can use public money only if sanctioned by the legislature.

Complete Answer: Article 266 and 267 of the constitution provides for the creation of the following three kinds of funds
-Consolidated fund of India: It is a fund to which all receipts are credited and all payments are debited.
-Public account of india: All other public money (other than those which are credited to the Consolidated Fund of India) received by or on behalf of the Government of India shall be credited to the Public Account of India.
-Contingency Fund of India: It is created to meet unexpected emergencies.
To attempt this question ,we also need to understand what the budget is. The budget is the estimate of all the expenditures and revenue of the government for a given financial year. The presentation of the budget is followed by voting on the demand for grants that are included in the budget. It is followed by the passing of the Appropriation bill without which no money can be used from the Consolidated Fund of India. Finally , the Finance Bill is passed to implement the financial proposals of the government for the given year.
Let us look at the statements given to us
-Statement 1 says Disbursements from Public Accounts of India are subjected to vote of Parliament.
Public money ,except those credited to Consolidated Fund of India, received by the government is credited to the Public Account of India. This includes provident fund deposits, judicial deposits, savings bank deposits, departmental deposits etc. However payments from this account can be made without Parliament's appropriation. In other words disbursements from Public Accounts of India are not subjected to vote of Parliament as it is operated by mere executive action. This statement is therefore incorrect.
-Statement 2 says that the Indian Constitution provides for the establishment of a Consolidated Fund, a Public Account and a Contingency fund for each state. It is true that each state of India has its own Consolidated fund, a Public Account and a Contingency Fund. Therefore this statement is correct.
-Statement 3 says appropriations and disbursements under the Railway budget are subjected to the same form of Parliamentary control as other appropriation and disbursements. In 2016, the railway budget was merged with the general budget and its now its appropriation and disbursement is same as that of the general budget

Therefore the correct statements are 2 and 3 . Option (B )is correct.

Note: Unlike the Public Accounts of India , money can be withdrawn from the Consolidated fund of India only after parliament's approval. One should not get confused between Public Accounts of India and Contingency Fund of India because both of these are operated by executive action. Only the President can allow for money to be used from this fund for unforeseen expenditure pending authorisation at Parliament.