What is Consolidated Fund of India

The Consolidated Fund of India (CFI) acts as a central account where all government revenues, loans, and other receipts are deposited. Established under Article 266(1) of the Indian Constitution, the fund ensures that public money is used only with the approval of the Parliament, making it a pillar of fiscal accountability and democratic governance.

The Consolidated Fund of India is the central government’s main account where all revenues and loans are credited, and all government expenses are paid from. It is the primary fund used for managing the Union Government’s finances.

The Consolidated Fund is established under:

• Article 266(1) of the Constitution of India
  

• It mandates that all revenues received and loans raised by the Union Government must be deposited into this fund

Parliament's approval is mandatory before any expenditure can be made from the CFI, thereby enforcing democratic oversight over public funds.

The Consolidated Fund of India consists of several key components:

Revenues Received by the Government

This includes both tax revenues and non-tax revenues.

• Tax Revenues: Income Tax, GST, Corporate Tax, Customs Duties, Excise Duties
  

• Non-Tax Revenues: Interest receipts, dividends from PSUs, fees, and fines
  

Money Raised Through Borrowings

Includes:

• Market borrowings like Government Securities (G-Secs)
  

• External loans from foreign institutions
  

• Treasury Bills

Expenditures Made from the Fund

Includes all government spending, including:

• Defence expenditure
  

• Salaries and pensions
  

• Subsidies and grants
  

• Public infrastructure spending
  

• Interest payments on borrowings
  

No money can be withdrawn from the Consolidated Fund without Parliamentary approval via appropriation bills.

Parliament plays a key role in authorising the use of the Consolidated Fund. This is done through:

• Annual Budget or Union Budget
  

• Appropriation Bills: To authorise expenditure
  

• Finance Bills: To enact tax proposals
  

Key Financial Documents Involved:

Several financial documents govern the use of the Consolidated Fund of India:

• Demand for Grants: Presented by each ministry
  

• Appropriation Bill: Legalises the expenditure from the CFI
  

• Finance Bill: Deals with revenue-raising measures

Parliament’s approval ensures checks and balances over executive spending.

The CFI is the most critical for day-to-day government operations and budgeting.

The existence of the CFI guarantees that taxpayer contributions are channelled responsibly.

Each Indian state has its own State Consolidated Fund, which functions similarly to the central fund.

• Governed by Article 266(1) (for states)
  

• State legislatures must authorise withdrawals
  

• Funds state-specific expenditures and programmes

The principles remain the same—transparency, legislative oversight, and accountability.

Major flagship schemes and national development projects are often routed through the CFI.

Audits by bodies like the Comptroller and Auditor General (CAG) help mitigate the following risks:

By understanding the role and structure of the CFI, citizens can better appreciate how the government mobilises and utilises public funds for nation-building.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.