Article 266 of the Indian Constitution establishes the Consolidated Fund and the Public Account for both the Union and each State. These funds are the primary repositories for government receipts and from which government expenditures are made. While the Public Account deals with funds that do not strictly belong to the government (like provident funds, judicial deposits), the Consolidated Fund holds the major portion of government revenue (taxes, non-tax revenue, loans raised).
Article 266(3) lays down a fundamental principle governing government finance, acting as a cornerstone of legislative control over the executive’s power to spend public money. It ensures financial accountability and prevents arbitrary expenditure by mandating specific legal authorization for drawing funds from the Consolidated Fund.
Original Text
(3) No moneys out of the Consolidated Fund of India or the Consolidated Fund of a State shall be appropriated except in accordance with law and for purposes and in the manner provided in this Constitution.
Detailed Explanation
Article 266(3) embodies the crucial principle of legislative supremacy in matters of public finance, specifically regarding government expenditure from the Consolidated Fund. It categorically states that money cannot be taken out of either the Consolidated Fund of India (at the Union level) or the Consolidated Fund of a State (at the State level) without explicit legal backing.
This provision ensures that the executive government, which is responsible for implementing policies and incurring expenditure, cannot spend money from the main government fund on its own discretion. Every withdrawal of money from the Consolidated Fund must be authorized by a law passed by the appropriate legislature (Parliament for the Union, State Legislature for a State). This law is typically an Appropriation Act, which is passed after the budget (Annual Financial Statement) is approved.
Furthermore, the article specifies that the appropriation must not only be in accordance with law but also for purposes and in the manner provided by the Constitution. This links the expenditure to the procedures and objectives outlined in the constitutional framework, such as the budgeting process and the purposes for which funds can be spent as decided by the legislature. It reinforces the idea that public money must be spent transparently, accountably, and for purposes approved by the representatives of the people.
Essentially, Article 266(3) serves as a constitutional check on the executive’s financial power, guaranteeing that all significant government expenditure from the Consolidated Fund is subject to legislative scrutiny and approval, thereby upholding financial discipline and accountability.
Detailed Notes
- Core Principle: Prohibits withdrawal of money from the Consolidated Fund without legal authority.
- Covered Funds: Applies to both the Consolidated Fund of India and the Consolidated Fund of a State.
- Requirement 1: In Accordance with Law: Money can only be withdrawn if a specific law permits it.
- This law is typically an Appropriation Act, passed by Parliament (for Union) or State Legislature (for State).
- The Appropriation Act is enacted based on the grants voted by the legislature and the expenditure charged upon the fund, as detailed in the Annual Financial Statement (Budget).
- Requirement 2: For Purposes Provided in the Constitution: The expenditure must be for purposes that are constitutionally permissible and approved by the legislature through the budgetary process.
- Requirement 3: In the Manner Provided in the Constitution: The procedure for withdrawing funds must follow the methods and processes laid down or implied by the Constitution (e.g., presentation of budget, voting on demands for grants, passing of Appropriation Bill).
- Significance:
- Ensures legislative control over the executive’s spending power.
- Upholds the principle of “no expenditure without legislative sanction.”
- Promotes financial accountability and discipline.
- Prevents arbitrary or unauthorized spending of public funds.
- Connection to other Articles: Directly linked to articles dealing with the Budget process (Articles 112-117 for Union, 202-206 for States), especially Articles 114 and 204 which mandate the passing of Appropriation Bills before money can be withdrawn from the Consolidated Fund.
- Contrast with Public Account: Money from the Public Account can be withdrawn by executive action without an Appropriation Act, as it does not belong to the government in the same way. Article 266(3) specifically applies to the Consolidated Fund.
Additional Comments
- Article 266(3) is a fundamental safeguard against executive profligacy and a cornerstone of parliamentary democracy in financial matters.
- The entire budgetary process, from the presentation of the Annual Financial Statement to the passing of the Appropriation Bill, culminates in fulfilling the requirement laid down by this article.
- Expenditure “charged” upon the Consolidated Fund (like salaries of judges, CAG, debt charges) does not require voting by the legislature but does require inclusion in the Appropriation Act for withdrawal, thus still falling under the ambit of withdrawal “in accordance with law”.
- This provision highlights the critical role of the legislature in scrutinizing and approving government spending, ensuring that public funds are used for intended purposes and within authorized limits.
Summary
Money cannot be withdrawn from the Consolidated Fund of India or a State without a law passed by the appropriate legislature. This law, typically an Appropriation Act, must also ensure that the expenditure is for purposes and in the manner prescribed by the Constitution. This provision is vital for maintaining legislative control over government spending, ensuring financial accountability, and preventing unauthorized expenditure.