With a much bigger size of Contingency Fund from the current fiscal, the Finance Ministry has prescribed new arrangement with more power to Expenditure Secretary.

Article 267 prescribes setting up of Contingency Fund. It is placed at the disposal of the President to enable advances to be made by him out of such Fund for the purposes of meeting unforeseen expenditure. Later such expenditure is authorised by Parliament and the fund is replenished from Consolidated Fund. General Financial Rules 2017 prescribe the fund will be held on behalf of the President by the Economic Affairs Secretary.

New arrangement

Now, the Finance Ministry has not made any change in this proviso but in some other provisions. “An amount equivalent to 40 per cent of the Fund corpus shall be placed at the disposal of the Secretary, Ministry of Finance, Department of Expenditure for the purpose of meeting unforeseen expenditure, and beyond this limit, all further Contingency Fund releases shall be made with the approval of Secretary to the Government of India, Department of Economic Affairs, after the approval of Secretary to the Government of India, Department of Expenditure,” a notification by the Finance Ministry said.

This particular rule will replace existing provision where it has been said that a certain amount from the fund will be placed at the disposal of the Financial Commissioner of Railways for the purpose of meeting the unforeseen expenditure of the Railways. One reason behind this change could be because of Rail Budget was subsumed in General Budget and like for any other Central Ministries and Departments, Railway to get additional support from Finance Ministry during unforeseen circumstances.

Existing rule say that application for advance from the Contingency Fund will need to have details such as brief particulars of the additional expenditure involved, the circumstances in which provision could not be included in the Budget, why its postponement is not possible, the amount required to be advanced from the Fund with full cost of the proposal for the year or part of the year, and the grant or appropriation under which supplementary provision will eventually have to be obtained. Now, new rules propose no changes in the details, but application will required to be sent to Expenditure Secretary in place of Economic Affairs Secretary.

Enhancement of the fund

This is second big development after enhancement of the fund through this year Budget. On February 1, the Union Budget provided enhancing the corpus of the Fund from ₹500 crore to ₹30,000 crore.

The notification does not talk about changes in the intent of the fund. This means the there will be no change in uses and replenishment of the fund. The notification has also not mentioned rationale behind change, but it is believed that change in authorising authority or signatory is a step towards much better management of the fund.

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