(1) Under Article 150 of the
Constitution, the accounts of the
Union and States shall be kept in
such form as the President may
on the advice of the Comptroller
and Auditor General, prescribe.
The word ‘Form’ used in Article
150 has a comprehensive
meaning so as to include the
prescription not only of the broad
form in which the accounts are to
be kept but also the basis for
selecting appropriate heads under
which the transactions are to be
classified.
(2) The estimates of receipts and
expenditure framed by
Government or in any order of
Appropriation shall indicate
provisions, ordinarily against
heads opened in conformity with
the prescribed rules. Where there
is divergence, the corresponding
receipt or expenditure shall be
brought to account under the
appropriate major head or minor
head or other unit of
classification as determined by
the President on the advice of the
Comptroller and Auditor General
of India.
(3) In Part-I, namely the
Consolidated Fund, there are two
main sub-divisions, namely
(i) Revenue: consisting of
sections for ‘Receipt Heads
(Revenue Account)’, and
‘Expenditure Heads (Revenue
Account)’.
(ii) Capital, Public Debt, Loans
consisting of sections for ‘Receipt
Heads (Capital Account)’
‘Expenditure Heads (Capital
Account)’ and ‘Public Debt’,
‘Loans’, and Advances’.
The first division comprising the
section Receipts Heads (Revenue
Account) dealing with the proceeds
of taxation and other receipts classed
as revenue and the section;
‘Expenditure Heads (Revenue
Account)’ dealing with expenditure
met there from.
The second sub-division comprises
the following sections:
(a) The Section ‘Receipts Heads
(Capital Account)’ which deals with
receipts of capital nature, which
cannot be applied as a set off to
Capital Expenditure.
(b) The section ‘Expenditure Heads
(Capital Account)’ which deals with
expenditure met usually from
borrowed funds with the object either
of increasing concrete assets of a
material and permanent character or
reducing recurring liabilities. It also
includes receipts of a capital nature
intended to be applied as set off to
capital expenditure.
(c) The Sections ‘Public Debt’ and
‘Loans and Advances’ which
comprise of loans raised and their
repayments by Government such as,
Internal Debt. External Debt of the
Central Government, and Loans and
Advances made by Governments,
and their recoveries.
The sources of inputs into the
Consolidated Fund are clearly
defined. These are:
(a) Revenues;
(b) Loans and ways means advances;
and
(c) Recoveries of loans granted by
Government.
The Constitution of India does not
mention whether grants form part of
revenue.
There are two kinds of grants: One is
grant to States whose revenues are
inadequate to meet their normal
expenditure of running the
Government and these grants are as
per the provisions of the
Constitution. Obviously, these can be
considered revenues of the receiving
State. Then there are grants which
the Government of India gives for
Centrally Sponsored Schemes; these
are also considered revenues. Similar
is the case of foreign aid in form of
grants received by the Government
of India.
(4) In Part II, namely Contingency
Fund, of the Accounts are
recorded the transactions
connected with the Contingency
Fund set up by the Government
of India or by a State
Government or by a Union
Territory Government under
Article 267 of the Constitution/
Section 48 of the Union Territory
Act, 1963.
The Contingency Fund is at the
disposal of President/Governor;
therefore, only Government can
issue authority for use of its
moneys. No subordinate
authority can of itself, authorise
its use.
(5) In Part III, namely Public
Account, of the Account, the
transactions relating to Debt
(Other than those included in
Part-I), ‘Deposits’, ‘Advances’,
‘Remittances’ and ‘Suspense’ are
recorded. The transactions under
Debt, Deposit and Advances in
this part are such in respect of
which Government incurs a
liability to repay the moneys
received or has a claim to recover
the amounts paid, together with
the repayments of the former
(Debt and Deposits) and the
recoveries of the latter
(advances). The transactions
relating to ‘Remittances’ and
‘Suspense’ in this part embrace all
merely adjusting heads under
which shall appear such
transactions as Remittances of
cash between treasuries and
currency chests and transfers
between different accounting
circles. The initial debits or
credits to these heads will be
cleared eventually by
corresponding receipts or
payments either within the same
circle of account or in another
account circle.
For payments out of the Public
Account, approval of the
Parliament or State Legislature is
not required.
Rule 19 of the Form of Accounts
of the Union and States (Basic) Rules 1983 elaborates the
concept of the Public Account. It
says that in the Public Account
the transactions relating to Debt
(other than those included in the
Consolidated Fund), deposits,
Advances, Remittances and
Suspense shall be recorded. The
transactions under Debt, Deposit
and Advances in the Public
Account are such in respect of
which Government incurs a
liability to repay the moneys with
the repayments of the former
(Debt and Deposits) and
recoveries of the latter
(Advances).
The transaction under the head
Remittances and Suspense in the
Public Account are booked only
for a temporary period until these
are transferred to the correct
accounts in the Consolidated
Fund or the Public Accounts.
(6) the transactions in the
Consolidated Fund are classified
into:
(i) Charged and Voted
expenditure;
(ii) Plan and Non-Plan
expenditure; and
(iii)Revenue and Capital
Account.
The concepts of voted expenditure and
charged expenditure and of Plan
expenditure and non-Plan expenditure
have been explained in Session 2 on
Introduction to Government Accounting.
The concepts and classification of
expenditure between revenue and capital
account is explained subsequently in this
session
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