Actual Article
Article 266: Consolidated Funds and public accounts of India and of the States
- Subject to the provisions of Article 267 and to the provisions of this Chapter with respect to the assignment of the whole or part of the net proceeds of certain taxes and duties to States, all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled “the Consolidated Fund of India,” and all revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled “the Consolidated Fund of the State.”
- 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.
- 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 the purposes and in the manner provided in this Constitution.
UPSC Notes for Article 266
Explanation:
- Consolidated Fund: Clause (1) establishes the Consolidated Fund of India and the Consolidated Fund of each State, where all revenues, loans, and money repayments are credited. This fund is the primary account for all government finances.
- Public Account: Clause (2) specifies that other public moneys received by the Government of India or a State, which do not form part of the Consolidated Fund, are credited to the public account of India or the public account of the State.
- Appropriation of Funds: Clause (3) states that no money can be withdrawn from the Consolidated Fund of India or a State without proper legal authorization and must follow the procedures provided in the Constitution.
Key Points:
- Financial Management: Article 266 ensures a structured and accountable system for managing government finances, segregating them into the Consolidated Fund and public accounts.
- Legislative Control: Withdrawal from the Consolidated Fund requires legislative approval, ensuring transparency and accountability in government spending.
- Comprehensive Coverage: The article covers all forms of government revenues, loans, and public moneys, providing a holistic approach to financial management.
Important Cases and Commissions Related to Article 266
Cases:
- Jai Prakash vs. Union of India (1972): The Supreme Court emphasized the importance of legislative approval for any appropriation from the Consolidated Fund, reinforcing the principles of Article 266.
- M.P. Sharma vs. Satish Chandra (1954): Highlighted the significance of maintaining public accounts and ensuring that all government receipts and expenditures are accounted for as per constitutional provisions.
Commissions:
- Finance Commission: Reviews and recommends the distribution of financial resources between the Union and the States, ensuring equitable distribution and proper management of funds as per Article 266.
- CAG Reports: The Comptroller and Auditor General (CAG) regularly audits and reports on the management of the Consolidated Fund and public accounts, ensuring adherence to constitutional provisions.
Important Reports Related to Article 266:
- Finance Commission Reports: Provide detailed analysis and recommendations on the management and distribution of the Consolidated Fund and public accounts between the Union and States.
- CAG Reports: Audit reports by the CAG highlight discrepancies, ensure accountability, and recommend improvements in financial management.
Previous Year Prelims Questions Related to Article 266
- (UPSC Prelims 2016) What forms the Consolidated Fund of India as per Article 266?
- A. Revenues received by the Government of India
- B. Loans raised by the Government of India
- C. Money received by the Government of India in repayment of loans
- D. All of the above Correct Answer: D. All of the above
- (UPSC Prelims 2018) According to Article 266, which of the following is credited to the public account of India?
- A. Revenues received by the Government of India
- B. Loans raised by the Government of India
- C. All other public moneys received by or on behalf of the Government of India
- D. Money received in repayment of loans Correct Answer: C. All other public moneys received by or on behalf of the Government of India
Previous Year Mains Questions Related to Article 266
- Mains 2016: “Discuss the significance of the Consolidated Fund of India and the Consolidated Fund of States in the financial management of India. How does Article 266 ensure transparency and accountability in government spending?”
- Mains 2019: “Evaluate the role of legislative control in the appropriation of funds from the Consolidated Fund of India. How does this control mechanism contribute to financial accountability as provided under Article 266?”
Additional Insights:
- Financial Discipline: Article 266 ensures financial discipline by mandating legislative approval for withdrawals from the Consolidated Fund, promoting responsible financial management.
- Audit and Accountability: The role of the CAG in auditing the Consolidated Fund and public accounts underscores the importance of accountability and transparency in government finances.
Understanding Article 266 is crucial for UPSC aspirants as it provides insights into the financial management and accountability mechanisms of the Indian government, emphasizing the importance of legislative control and proper auditing of public funds. This knowledge is essential for both preliminary and main examinations, offering a comprehensive understanding of the constitutional provisions that ensure