Union Budget 2025 | FAQs: What are Contingency, Consolidated Funds?

In light of the upcoming Budget, we take a look at what Contingency and Consolidated Funds are.

The Union Budget for the upcoming financial year is all set to be presented on February 1, 2025, by Finance Minister Nirmala Sitharaman. According to reports, the Narendra Modi government may consider slashing income tax for individuals earning up to Rs 15 lakhs per annum and extend the tax relief bracket in a bid to provide relief to the middle class and boost consumption.

In light of the upcoming Budget, we take a look at some of the terms associated with the exercise.

What is Contingency Fund?

The Contingency Fund serves as an imprest account designed to address urgent or unforeseen government expenditures. Any immediate expenses are met through the Contingency Fund, which is released by the President under Article 267. However, any disbursement from this fund necessitates subsequent approval from Parliament, and the withdrawn amount is returned to the fund from the Consolidated Fund.

What is Consolidated Fund?

The Consolidated Fund of India holds paramount importance among all government accounts. It encompasses revenues received by the government and its expenditures, excluding exceptional items. As per Article 266 (1), the Consolidated Fund comprises all revenues derived from direct and indirect taxes, money borrowed, and receipts from loans extended by the government. Every government expenditure is financed through this fund, except for exceptional items, which are covered by the Contingency Fund or the Public Account. Crucially, no funds can be withdrawn from the Consolidated Fund without the approval of Parliament.