Actual Article
Article 267: Contingency Fund
- Contingency Fund of India: The Contingency Fund of India shall be an imprest (advance) amount at the disposal of the President to meet unforeseen expenditure pending authorization by Parliament. Parliament may by law establish the fund and determine its corpus.
- Contingency Fund of the States: Similarly, each State may have its own Contingency Fund at the disposal of the Governor to meet unforeseen expenditure pending authorization by the State Legislature. The State Legislature may by law establish the fund and determine its corpus.
UPSC Notes for Article 267
Explanation:
- Contingency Fund of India: Clause (1) establishes the Contingency Fund of India, which is an advance amount available to the President to meet unforeseen expenditures. This fund allows for immediate financial responses to emergencies, with subsequent approval by Parliament.
- Contingency Fund of the States: Clause (2) provides for the establishment of similar Contingency Funds in each State, managed by the Governor to address unforeseen expenditures, subject to subsequent approval by the State Legislature.
Key Points:
- Emergency Expenditure: The Contingency Funds ensure that both the Union and State governments can address urgent and unforeseen expenditures without delay.
- Legislative Approval: Although the funds are used for immediate needs, expenditures from these funds must be subsequently authorized by Parliament or the State Legislature, ensuring accountability.
- Financial Management: These funds are crucial for effective financial management, allowing for quick response to emergencies while maintaining legislative oversight.
Important Cases and Commissions Related to Article 267
Cases:
- No specific landmark cases directly interpreting Article 267, as it deals primarily with financial procedures and contingency funds.
Commissions:
- Finance Commission: Reviews and recommends measures related to the financial management and distribution of funds, including contingency funds.
- Public Accounts Committee: Reviews expenditures from the Contingency Fund to ensure they comply with legal and financial guidelines.
Important Reports Related to Article 267:
- CAG Reports: The Comptroller and Auditor General (CAG) regularly audits the use of Contingency Funds to ensure that expenditures are justified and subsequently approved by the legislature.
Previous Year Prelims Questions Related to Article 267
- (UPSC Prelims 2016) What is the purpose of the Contingency Fund of India as per Article 267?
- A. To manage foreign exchange reserves
- B. To meet unforeseen expenditures pending authorization by Parliament
- C. To fund developmental projects
- D. To provide loans to states Correct Answer: B. To meet unforeseen expenditures pending authorization by Parliament
- (UPSC Prelims 2018) Who manages the Contingency Fund of a State according to Article 267?
- A. The Chief Minister
- B. The Finance Minister
- C. The Governor
- D. The State Legislature Correct Answer: C. The Governor
Previous Year Mains Questions Related to Article 267
- Mains 2016: “Discuss the significance of the Contingency Fund of India in managing unforeseen expenditures. How does Article 267 ensure financial accountability in the use of this fund?”
- Mains 2019: “Evaluate the role of Contingency Funds at the Union and State levels in addressing emergency financial needs. How does the requirement for subsequent legislative approval balance immediate response with accountability?”
Additional Insights:
- Immediate Financial Response: The Contingency Fund provides a mechanism for the government to respond immediately to emergencies, ensuring that financial constraints do not hinder critical actions.
- Legislative Oversight: The requirement for subsequent legislative approval ensures that expenditures from the Contingency Fund are scrutinized and justified, maintaining transparency and accountability in financial management.
Understanding Article 267 is crucial for UPSC aspirants as it provides insights into the mechanisms for managing unforeseen expenditures at both the Union and State levels, emphasizing the importance of quick response coupled with legislative oversight. This knowledge is essential for both preliminary and main examinations, offering a comprehensive understanding of the financial provisions and accountability measures enshrined in the Indian Constitution.