UPSC Prelims 2015 Q60: Indian Polity – Public Finance & Finance Commission
With reference to the Union Government, consider the following statements:
1. The Department of Revenue is responsible for the preparation of Union Budget that is
presented to the Parliament.
2. No amount can be withdrawn from the Consolidated Fund of India without the authorization
from the Parliament of India.
3. All the disbursements made from Public Account also need the authorization from the
Parliament of India.
Which of the statements given above is/are correct?
- (a) 1 and 2 only
- (b) 2 and 3 only
- (c) 2 only
- (d) 1, 2 and 3
Answer: (c) 2 only
Explanation
Union Budget and Government funds
| Statement | Verdict | Fact |
|---|---|---|
| 1. The Department of Revenue is responsible for the preparation of Union Budget | Incorrect | The Department of Economic Affairs (Budget Division) prepares it |
| 2. No amount can be withdrawn from the Consolidated Fund of India without the authorization from the Parliament | Correct | An Appropriation Act is needed (Articles 114 and 266) |
| 3. All the disbursements made from Public Account also need the authorization from the Parliament | Incorrect | Payments from the Public Account are made by executive action |
The three funds:
| Fund | Article | Holds | Withdrawal |
|---|---|---|---|
| Consolidated Fund | 266(1) | All revenues, loans raised, loan recoveries | Parliament's authorization |
| Public Account | 266(2) | Provident funds, small savings, deposits | Executive action |
| Contingency Fund | 267 | Advance for unforeseen spending | By the President, later regularised by Parliament |
Answer: (c) 2 only.
Why each option is right or wrong
- (a) Incorrect. The Budget is prepared by the Department of Economic Affairs.
- (b) Incorrect. The Public Account does not need Parliament's authorization.
- (c) CORRECT. Only withdrawals from the Consolidated Fund need Parliament's authorization.
- (d) Incorrect. Statements 1 and 3 are false.
Key point
Budget: Department of Economic Affairs. Consolidated Fund (Article 266(1)) needs Parliament's authorization; Public Account (266(2)) does not; Contingency Fund (267).
Remember
Consolidated Fund needs Parliament; Public Account does not.
Common mistakes
- Thinking the Department of Revenue prepares the Budget.
- Assuming Parliament must approve payments from the Public Account.
- Confusing the Contingency Fund with the Consolidated Fund.
Exam tip
Public Account money is not the Government's own: it acts as a banker, so no vote is needed.
Sources
- Constitution of India — Articles 114, 266 and 267
- M. Laxmikanth — Indian Polity, chapter on Parliament (funds and budget)