Spending Norms for Contingency Fund

January 25, 2022

Union government has changed spending norms for Contingency Fund of India. It has allowed 40 per cent of total corpus to be placed at disposal of expenditure secretary.

Highlights

Budget 2021-22 had proposed to enhance the Contingency Fund of India to Rs 30,000 crore from Rs 500 crore, through Finance Bill.
As per new norm, an amount equivalent to 40 per cent of the Fund corpus has to be placed at the disposal of the secretary, ministry of finance, to meet the unforeseen expenditure.
Beyond this limit, all other Contingency Fund releases has to be made with approval of secretary, department of economic affairs, after the approval of secretary, department of expenditure.

Contingency Fund of India

The contingency fund of India is held by the department of economic affairs on behalf of President of India. It can be operated by executive action. The fund is used in case of disasters and related unforeseen expenditures. Fund can be increased through a Finance Bill, during session of the Parliament. It can also be increased through Ordinance, if the House is not in session and situation warrants. Funds can be withdrawn, after approval of the secretary of department of economic affairs, in accordance with Contingency Fund of India Act, 1950.

About Finance Bill

Finance Bill is a Money Bill. Through this bill, government seeks to levy new taxes, make proposals for continuance of present tax structure beyond original approval period or make alterations in the current tax structure. This bill is approved by Parliament for one fiscal year. After getting approval, Finance Bill becomes the Finance Act.

Features of the Finance Bill

Finance Bills are classified into three classes:

Finance Bill Category I
Finance Bill Category II, and
Money Bill.

Money Bills comprise of provisions related to regulation or borrowing, withdrawal of money from a contingency or consolidated fund, and amendments to tax laws at the Union or state level.
A Finance Bill is always be a Money Bill. But a Money Bill is not necessarily a Finance Bill.
Finance Bill can only be introduced in the Lok Sabha. Rajya Sabha can make recommendations on it. Rajya Sabha must return the bill within 14 days of receiving it, otherwise, it will be deemed as passed.

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