That's clear enough. But what is the Consolidated Fund of India?
Well, the government of India collects funds by way of taxation like income tax, central excise, custom, land revenue (tax revenues). It also receives money from other sources (these are basically non-tax revenues that include businesses and facilities run by the government) like the railways, posts, transport, etc.
All this money is credited into the Consolidated Fund.
Similarly, all loans raised by government by issue of public notifications, treasury bills (internal debt) and loans obtained from foreign governments and international monetary institutions (external debt) and all money received by government by way of interest repayment of loans it has made are also credited into this fund.
All expenditure incurred by the government for the conduct of its business, including repayment of internal and external debt and release of loans to the state/ union territory governments for various purposes is debited against this fund.
Money can be spent through this fund only if authorised by Parliament.
The Consolidated Fund was set up under Article 266 (1) of the Constitution of India. And what is the Contingency Fund?
Image: P Chidambaram, former finance minister, took over the home ministry after the Mumbai terror attack. | Photograph: Saab Pictures
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