Public Funds

The constitution of India consolidates various amendments and articles relating to many aspects of India’s political and economic system. In the Indian constitution, various public funds are mentioned relative to the central and state government.

All the public funds empowers the financial management of the economic system of India.According to the mentions in the constitution of India, all the public funds are managed with advanced internal controls and accounting processes. The Indian economic system has complete control over the accounting system with well-managed and well-designed methods.The below article discusses the public funds in detail and also gives a brief idea about the public provident funds.

Public Funds in the Government of India

Accounting and finance management is a crucial part of the government and the employees associated with the central and state government. The constitution of India mentions the major three types of public funds in India to support India’s financial and economic infrastructure. Below are the mentions:

• Consolidated funds in India (mentioned in article 266 (1) of the constitution of India)
• Public account of India (mentioned in article 266 of the constitution of India)
• A contingency fund of India (mentioned in article 267 (1) of the constitution of India)

As mentioned earlier, three public funds of India form a structure to support the Indian economic system and financial system. All the aspects of the public funds with terms and conditions are defined in the Indian constitution. Each account mandates specific rules and regulations as per the direction of the Indian constitution. Also, the accounts attain variable functioning withholding the power and responsibilities for specific management and tasks. 

Public Account of India

The Public Account of India keeps track of flows for transactions in which the government only serves as a banker. This fund was established in accordance with Article 266 (2) of the Constitution. The government does not own this money. Moreover, parliamentary authorization for payments from the Public Account is therefore not required. For example, money from public provident funds, minor saving schemes, etc. are deposited in these public accounts. The basic types of public accounts in India are:

• Small saving deposits – These include National Savings certificate, Sukanya Samridhi Yojana, etc.
• Provident fund deposits – These include public provident funds deposited by individual people.
• Suspense and Miscellaneous – These are temporary accounts to which transactions are posted before they are classified as permanent transactions.. 
• Deposits and advances – These transactions are those where the government is liable to return money or has a claim to collect money.
• Remittances – Money sent to pay for something is referred to as remittance. Remittances account for a significant component of India’s GDP.

Public Provident Funds: The Public Provident Fund or PPF is a savings instrument established in 1968 by the National Savings Institute of the Ministry of Finance. It is a type of public account of India. A PPF account’s balance is completely tax-free.The central government has completely guaranteed the public provident fund scheme.Its principal goal is to encourage people to save small amounts of money by providing a safe investment with tax benefits. As per the  Government Savings Banks Act of 1873, the balance in a PPF account is not susceptible to attachment by a court order or judgement. Contrarily, Income Tax and other government entities have the ability to seize the account to collect unpaid taxes. 

Consolidated Funds of India

These are the most critical and integral part of the Indian economic and financial system. Such an account relates to the tax management, payment and associated implementation in the growth and development of the country. In the constitution of India, the mention of the consolidated funds of India is present in article 266 (1).

The consolidated accounts are quite different from the Public Account of India and attain the hold over tax revenues of excise duties, corporate and personal income tax, customs, etc. It also includes the non-tax revenues like dividends, public sector undertaking profits, licence fees, etc. The union government receives all these revenues. In addition, any internal and external loans or loans in return for treasury bills are also an essential part of consolidated funds under the control of the Union Government. 

A Contingency Fund of India

The establishment of a contingency fund for India is mentioned under article 267 (1) of the constitution of India. This fund came into existence in 1950 by the parliament for better fund management. This type of fund is complex and differs in its properties from a Public Account of India. It attains the nature of imprest (maintenance of money to fulfil some specific purpose). 

In article 267 (2), the contingency fund for each state is specified with its functions, powers and features. The control over these funds is under the finance secretary of India’s department of economic affairs. The finance secretary holds this control on behalf of the President of India. The contingency fund of India relates to the expenditure needed in case of emergency and specific disasters. The limit of the contingency fund was increased from 50 crores to 500 crores by the parliament of India in 2005. 

Conclusion

Here is the description of India’s three primary public funds along with a brief note on what is public provident fund. There is a comprehensive mention in the constitution of India relating to the public funds with their features, advisories, transaction and inclusive. The funds collectively had a powerful impact on India’s economy and financial system. Many economists and financial advisors state that the three public accounts frame the robust structure of the Indian economy and depict the relative growth and development in the future.