Consolidated Fund of India - Explained

The Consolidated Fund of India is the main reservoir for all government income, including interest earned, tax collections, and borrowed funds. Similar to any other entity, the government of India follows a structured approach to managing funds designed for revenue and capital expenditure. The consolidated fund, the public account, and the contingency fund are three key components of the financial account of the government of India. The consolidated fund is one of the main pillars of the government’s financial framework. It is used for various accounting practices and efficiently manages government spending. Let us read in detail the consolidated fund of India, the contingency fund of India, and related terms in detail. Keep reading!

What is Consolidated Fund of India - An Overview

The Consolidated Fund of India, as defined in Article 266(1) of the Indian Constitution. The fund includes revenue from direct taxes like income tax and corporate tax, dividends and profits obtained from Public Sector Undertakings (PSUs), revenue from indirect taxes like the Goods and Services Tax (GST), earnings derived from the government's general services and receipts from disinvestment, debt repayments, and loan recoveries.

• Use: The capital can be used for covering routine expenses, including pensions, salaries, defense, infrastructure projects, debt servicing, and various other costs.
• Approval: Appropriation bills need to be passed in the parliament specifying the nature and expenses amount for withdrawal.
• Manage expenses: The government of India holds accountability for all the expenses made from the consolidated funds. It also helps the government to efficiently manage finances ensuring expenditures are authorized and as per the budget.
• Transparency: The government of India requires to be transparent and accountable for any expense made using the consolidated fund. It requires approval from the Parliament for withdrawal of funds.

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Components of the Consolidated Fund of India

Below are the five primary sections that the consolidated funds of India are divided into:

• Revenue Account (Receipts)
• Revenue Account (Disbursements)
• Capital Account (Receipts)
• Capital Account (Disbursements)
• Disbursements Charged on the Consolidated Fund

Various Revenue Sources for the Consolidated Fund of India

The Consolidated Fund of India acts as the main repository for all government revenue, drawing from different sources and transactions. Below is the list:

• Revenue from Indirect Taxes
  Revenue from indirect tax includes Goods and Service Taxes which is the majority of the fund. Goods and services applicable at the point of sale or consumption.
• Revenue from Direct Taxes
  Direct taxes include tax collection from individuals and corporate bodies. It includes taxes on salaries, investments, and business profits.
• Revenue from Government Services
  Revenue generated from offering public services such as licenses, administrative fees, and permits is included.
• Profits and Dividends from Public Sector Enterprises
  Public Sector Undertakings (PSUs) are state-owned companies that help boost the revenue generated by the government through the profits and dividends generated from their activities.
• Receipts from Disinvestment, Loan Recoveries, and Debt Repayments
  This includes income generated from the sales of government assets, any loan recoveries, and debt repayments. These funds are sourced from the retrieval of outstanding loans and strategic divestments.

Expenses Charged on the Consolidated Fund of India

The Consolidated Fund of India is used to pay several expenses that don’t require parliament’s approval. Below are the expenses:

• Parliamentary Salaries: It includes the salaries and allowances of the Chairman and Deputy Chairman of the Rajya Sabha and Deputy Speaker of the Lok Sabha.
• Salaries and Pensions of Judges: This covers the allowances, salaries, pensions of Supreme Court judges, and the pensions of high court judges.
• Costs related to the President’s Office: This covers the salaries, allowances, and other expenses in relation to the President of India's office.
• Supreme Court Expenses: This includes all administrative expenses of the Supreme Court, the salaries, perks, and pensions of its judges and staff.

Conclusion
The Consolidated Fund heavily contributes to the country's progress towards economic growth and inclusive development. It helps the government manage funds in order to provide benefits to all citizens. In order to offer benefits, the government is required to maintain transparency and seek approval from parliament for any financial action against the funds.