Union Budget 2019: Consolidated Fund of India is the main account of Centre, handles all expenses of govt

Finance Minister Nirmala Sitharaman will present her maiden Budget in the Parliament on 5 July. The Union Budget, by convention, also includes several components. One of the components is the Annual Financial Statement. The document, presented in the Lok Sabha under Article 112 of the Indian Constitution, shows estimated receipts and expenditures of the government for the coming year in relation to revised estimates for the previous year as well as the actual amounts for the year prior to it. The Annual Financial Statement is essentially divided into three parts: Consolidated Fund of India, Contingency Fund of India and the Public Account of India. Of these, the Consolidated Fund of India is the most important component of the statement. The Consolidated Fund of India, created under Article 266 of the Indian Constitution, includes the revenues received by the government and expenses made by it. However, the expenditure on exceptional items is met by the Contingency Fund of India. [caption id=“attachment_6013191” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] Notably, every state has its own consolidated fund which functions the same way as the Consolidated Fund of India. All the revenue that the government receives through direct (income tax, corporation tax etc.) or indirect tax (Goods and Services Tax or GST) go into the Consolidated Fund of India. Revenue from non-tax sources like dividends, profits from the PSUs, and income from general services also contribute to the fund. Recoveries of loans, earnings from disinvestment and repayment of debts issued by the Centre also contribute to the fund. All expenditure incurred by the government is met by the Consolidated Fund of India. However, no money can be withdrawn for meeting expenses until the government gets the approval of the Parliament. Examples of expenditure include wages, salaries and pension of government employees, and other fixed costs. The repayment of debts incurred by the government is also done through the Consolidated Fund of India. The Consolidated Fund of India is divided into five parts: revenue account – receipts, revenue account – disbursements, capital account – receipts, capital account – disbursements, and disbursements ‘charged’ on the Consolidated Fund of India. Revenue account includes revenue expenditure and revenue receipts. Revenue expenditure involves spending which does not create assets or reduce liabilities. On the other hand, the capital account consists of capital expenditure and capital receipts. Capital expenditure creates assets – building dams and highways are examples of capital expenditure – while capital receipts lead to the reduction of assets and an increase in liabilities. For instance, the government taking a loan from a foreign government. Disbursements ‘charged’ on the Consolidated Fund of India is a special category within the Consolidated Fund of India which is not put to vote in the Parliament. This means whatever comes under this category need to be paid, whether the Budget is passed or not. The salary and allowances of the President, speaker and deputy speaker of the Lok Sabha, chairman and deputy chairman of the Rajya Sabha, salaries and allowances of Supreme Court judges, pensions of Supreme Court and High Court judges come under this category. Follow full coverage of Union Budget 2019-20 here