Public Account of India

Also called: Article 266(2) · Topic: Parliamentary Procedure, Committees and Privileges · NCERT: Beyond NCERT

Meaning

The Public Account of India (Article 266(2)) holds all public money the government receives that does not go into the Consolidated Fund. Most of it is money the government keeps as a banker or trustee, such as provident funds, small savings, deposits and remittances. Payments from it are made by executive order, and Parliament does not vote on them.

It matters because it is a clear exception to Parliament's "control of the purse". Money can leave this account without an appropriation law (a law that says how much may be spent and on what). The CAG and the PAC still check it after the money is spent.

Explanation

Where it fits: the three government accounts

• The government keeps its accounts in three parts: the Consolidated Fund, the Contingency Fund and the Public Account [2].
• Consolidated Fund of India (Art. 266(1)): the government's main account. All revenues, loans raised and loan repayments received go into it.
• Public Account of India (Art. 266(2)): gets "all other public moneys" received by or on behalf of the Government of India.
• Contingency Fund of India (Art. 267): a fixed sum kept for emergencies and placed at the disposal of the President.

What goes into the Public Account

• Provident funds: money that employees save, to be paid back to them later.
• Small savings: money people put into government savings schemes.
• Deposits: money placed with the government that must be returned.
• Remittances: money moving between government accounts and offices.
• The common feature: this money mostly does not belong to the government.
• The government only holds it as a banker or trustee (someone who keeps money safe for others).
• It must be paid back one day to the people or bodies who deposited it.

How money comes out, and why no vote is needed

• Payments are made by executive order. No appropriation law is needed [3].
• Why Parliament does not vote:
• The government is only returning money that belongs to others.

• Asking Parliament to vote each time a provident fund or savings deposit is paid back would serve no purpose.

• Compare the Consolidated Fund: under Art. 266(3), no money can leave it unless Parliament passes an appropriation law.

Limits: how it is still checked

• Audit by the CAG: the Comptroller and Auditor General audits the Public Account like other government accounts.
• Examination by the PAC: the Public Accounts Committee (the parliamentary committee that examines the CAG's audit reports) still looks at it.
• So Parliament checks this account after the money is spent, not before.
• Parliament does not approve each payment in advance.
• Instead, it relies on the CAG's audit and the PAC's examination afterwards.

In the Constitution and practice

• Article 266(2): all public money received by or on behalf of the Government of India, other than what goes into the Consolidated Fund, is credited to the Public Account of India.
• Article 266(3): requires an appropriation law only for withdrawals from the Consolidated Fund. The Public Account is outside this rule. That is why its payments need no vote [3].
• States: each state has its own Public Account under the same article (Art. 266). It sits beside the state's Consolidated Fund and Contingency Fund (Art. 267(2)).
• Who runs it: the executive (the Union government) makes the payments. The CAG audits them and the PAC examines them.
• In the budget papers: the Ministry of Finance's budget documents show government accounts in three parts, and the Public Account is one of them [2].
• Wider principle: Art. 265 (no tax without authority of law) and Art. 266(3) (no spending from the Consolidated Fund without an appropriation law) give Parliament control of the purse. The Public Account is a planned exception because the money is held in trust.

Don't confuse with

• Consolidated Fund of India (Art. 266(1)): the government's own money (revenues and loans). Spending from it needs an appropriation law passed by Parliament. The Public Account needs none.
• Contingency Fund of India (Art. 267): a fixed emergency sum at the disposal of the President. Parliament approves the spending later (ex post facto), and the fund is refilled from the Consolidated Fund [2]. Its corpus was raised from ₹500 crore to ₹30,000 crore by the Finance Act 2021 [1][2]. The Public Account has no fixed corpus and never needs Parliament's approval.
• Public Accounts Committee (PAC): a parliamentary committee, not an account. The names sound alike, but the PAC is one of the bodies that examines the Public Account.
• Charged expenditure (Art. 112(3), 113(1)): it is not voted, but it is still drawn from the Consolidated Fund and still goes into the Appropriation Bill (Art. 114). Payments from the Public Account need no appropriation law at all.

Prelims Hooks

• Article 266(2) sets up the Public Account. Art. 266(1) sets up the Consolidated Fund. Art. 267 sets up the Contingency Fund.
• Trap: "Payments from the Public Account need an appropriation law." This is false. They are made by executive action [3].
• Trap: "Since Parliament does not vote on it, the Public Account is free from audit." This is false. The CAG audits it and the PAC examines it.
• Money in the Public Account includes provident funds, small savings, deposits and remittances. The government holds it as a banker or trustee.
• Every state also has a Public Account under Art. 266.
• The Contingency Fund is at the disposal of the President. The Public Account is run by executive order. The Consolidated Fund needs an appropriation law.

Mains Points

• Flexibility vs control: the Public Account lets the government repay depositors quickly without going to Parliament each time. But Parliament's check then rests only on checks after the money is spent: the CAG's audit and the PAC. CAG reports on unauthorised spending show why this check matters.
• Trust money calls for strict accounting: the money mostly belongs to citizens, such as savers and employees. The PAC's close examination of this account is therefore a test of the government's accountability to the people, not just to Parliament.
• Fits the logic of control of the purse: Arts. 265 and 266(3) make the government depend on Parliament for its own money. The Public Account is a reasoned exception for money it only holds in trust. In a GS-II answer, it shows how the Constitution balances legislative control with smooth administration.

Related concepts

• No tax without authority of law
• Consolidated Fund of India
• Contingency Fund of India
• Charged expenditure
• Voted expenditure
• Union Budget
• Interim budget

Read more

• Public money: funds, charged expenditure and the Union Budget