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Home » Article 389 of the Indian Constitution: UPSC 2025 Notes

Article 389 of the Indian Constitution: UPSC 2025 Notes

Actual Article

Article 389: Provisions as to the Consolidated Fund of India and the public accounts of India and of the States

(1) As from the commencement of this Constitution—

  • (a) 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”;
  • (b) 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;
  • (c) all moneys received by or deposited with—
    • (i) any court within the territory of India to the credit of any cause, matter, account or persons, or
    • (ii) any public servant employed in connection with the affairs of the Union or of a State in his capacity as such, other than revenues or public moneys raised or received by the Government of India or the Government of the State, as the case may be, shall be paid into the public account of India or the public account of the State, as the case may be.

UPSC Notes for Article 389

Explanation:

  • Consolidated Fund of India and States: Article 389 mandates the creation of a Consolidated Fund for both the Union and the States. This includes all revenues received, loans raised, and repayments of loans.
  • Public Accounts: All other public moneys received by or on behalf of the Government of India or a State are credited to the respective public accounts.
  • Court and Public Servant Funds: Moneys received by courts or public servants in their official capacity, but not as revenues or public moneys, are also directed to the respective public accounts.

Key Points:

  • Financial Management: Ensures proper financial management and accountability by mandating the formation of Consolidated Funds and public accounts.
  • Separation of Funds: Clearly separates revenue receipts, loans, and other public moneys into different funds for transparency and efficient management.
  • Court and Official Funds: Provides specific provisions for moneys received by courts and public servants, ensuring they are properly accounted for in the public accounts.

Important Cases and Commissions Related to Article 389

Cases:

  • No landmark Supreme Court cases specifically interpreting Article 389, as it primarily deals with the financial management framework.

Commissions:

  • Various Finance Commissions: Have reviewed the financial management systems and the operation of the Consolidated Funds and public accounts in India.

Important Reports Related to Article 389:

  • Reports by the Comptroller and Auditor-General (CAG): Discuss the management and auditing of the Consolidated Funds and public accounts of India and the States.

Previous Year Prelims Questions Related to Article 389

  1. What does Article 389 of the Indian Constitution provide for?
    A. Establishment of new tax laws
    B. Formation of the Consolidated Fund of India and the States
    C. Powers of the President during an emergency
    D. Special provisions for the financial administration of States Correct Answer: B. Formation of the Consolidated Fund of India and the States
  2. Under Article 389, where are all revenues received by the Government of India credited?
    A. Public account of India
    B. Consolidated Fund of India
    C. Reserve Bank of India
    D. Treasury bills Correct Answer: B. Consolidated Fund of India
  3. According to Article 389, where are all moneys received by or on behalf of the Government of India or a State, other than revenues and loans, credited?
    A. Consolidated Fund of India or the State
    B. Public account of India or the State
    C. Central Bank
    D. National Reserve Fund Correct Answer: B. Public account of India or the State

Previous Year Mains Questions Related to Article 389

  1. Discuss the significance of Article 389 in ensuring financial accountability and transparency in the management of public funds. How does this provision contribute to the financial stability of the Union and the States?
  2. Evaluate the role of the Consolidated Fund of India and the States under Article 389. How does this provision ensure proper financial management and separation of funds?
  3. Analyze the impact of Article 389 on the financial administration of India. How did this provision facilitate the efficient management of revenues, loans, and other public moneys during the establishment of the new constitutional order?

Additional Insights:

  • Financial Accountability: Article 389 plays a crucial role in maintaining financial accountability and transparency by ensuring that all revenues, loans, and other public moneys are properly accounted for in the Consolidated Funds and public accounts.
  • Efficient Management: Ensures efficient financial management by clearly separating different types of funds and specifying their respective accounts.
  • Historical Context: Reflects the importance of establishing a clear financial framework during the transition to the new constitutional order, ensuring continuity and consistency in financial administration.

Understanding Article 389 is crucial for UPSC aspirants as it provides insights into the constitutional provisions for maintaining financial stability and accountability in the management of public funds. This knowledge is essential for both preliminary and main examinations, offering a comprehensive understanding of the mechanisms ensuring the effective management of the Consolidated Funds and public accounts within the Indian Constitution.

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