Article 266 of the Indian Constitution deals with the Consolidated Funds and Public Accounts of India and of the States. This article establishes two main categories of public money for both the Union and each State. While Article 266(1) establishes the Consolidated Fund, Article 266(2) establishes the Public Account, which is distinct from the Consolidated Fund in terms of its composition and operational procedures.
The Public Account is a repository for public moneys that do not fall under the definition of revenue or receipts into the Consolidated Fund. Understanding Article 266(2) is crucial for comprehending the complete picture of government finances as outlined in the Constitution.
Original Text
(2) All other public moneys received by or on behalf of the Government of India or the Government of a State shall be credited to the public account of India or the public account of the State, as the case may be.
Detailed Explanation
Article 266(2) of the Constitution mandates the creation of a separate account, known as the Public Account of India or the Public Account of the State, as distinct from the Consolidated Fund. This account is designated to hold all public moneys received by or on behalf of the government that are not required to be credited to the Consolidated Fund under Article 266(1).
The nature of moneys credited to the Public Account is typically one where the government is acting more as a banker or trustee rather than receiving revenue or income. These are generally moneys received from transactions for which the government is liable to repay or disburse later. Examples include provident fund deposits, small savings collections, judicial deposits, deposits of local funds, and various other departmental deposits and remittances.
Unlike the Consolidated Fund, moneys held in the Public Account are not subject to the requirement of parliamentary or state legislative appropriation. Disbursements from the Public Account are made in accordance with the relevant laws or rules governing the specific transactions for which the money was received. This means that expenditures from the Public Account do not require a vote in the Lok Sabha or State Legislative Assembly, although they are still subject to executive control and audit by the Comptroller and Auditor General of India (CAG). The executive is competent to spend from this account without legislative approval for specific purposes defined by law or rules.
Detailed Notes
- Establishes the Public Account of India and of each State.
- Mandates that all public moneys received by or on behalf of the government, other than those credited to the Consolidated Fund under Article 266(1), shall be credited to this account.
- The moneys in the Public Account are generally in the nature of deposits or funds where the government acts as a banker or trustee.
- Examples include provident funds, small savings collections, judicial deposits, departmental deposits, remittances, etc.
- Crucially, disbursements from the Public Account are not subject to the vote of Parliament (for the Union) or the State Legislature (for the State).
- Expenditure from the Public Account is governed by executive action based on specific laws or rules related to the particular type of deposit or fund.
- The Public Account is operated by the executive government.
- Although not subject to legislative vote, transactions in the Public Account are subject to audit by the Comptroller and Auditor General of India (CAG) under Article 149.
- It provides a mechanism for handling funds that are not revenue receipts and are largely in the nature of liabilities or obligations of the government.
- It ensures that certain types of public money meant for specific purposes (like repaying depositors or fulfilling specific trusts) can be disbursed directly without requiring annual legislative approval, facilitating timely operations.
Additional Comments
- The distinction between the Consolidated Fund and the Public Account is fundamental to understanding governmental financial operations in India. The Consolidated Fund contains the government’s revenues and expenditures requiring legislative approval, while the Public Account holds other moneys not requiring such approval for disbursement.
- The Public Account reflects the government’s role beyond just collecting taxes and incurring general expenditure; it also manages funds held in trust or as deposits for various stakeholders.
- While money from the Consolidated Fund can only be withdrawn after appropriation by Parliament/Legislature, money from the Public Account is disbursed based on executive decision according to governing rules.
- This mechanism ensures administrative convenience for managing funds like provident funds, where frequent deposits and withdrawals occur based on individual entitlements, without needing legislative intervention for each transaction.
- The CAG’s audit ensures accountability and transparency even for transactions outside the legislative vote of appropriation.
Summary
Article 266(2) of the Indian Constitution establishes the Public Account for both the Union and each State. This account is the repository for all public moneys received by or on behalf of the government that are not credited to the Consolidated Fund under Article 266(1). It primarily holds funds where the government acts as a banker or trustee, such as provident funds, small savings, and deposits. A key characteristic is that disbursements from the Public Account are not subject to the vote of Parliament or the State Legislature; they are made in accordance with relevant rules and laws. The operation of this account falls under executive control and is subject to audit by the Comptroller and Auditor General.