Part XII: Finance, Property, Contracts and Suits

Article 267: Contingency Fund

Original Article:

(1) Parliament may by law establish a Contingency Fund in the nature of an imprest to be entitled "the Contingency Fund of India" into which shall be paid from time to time such sums as may be determined by such law, and the said Fund shall be 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 pending authorisation of such expenditure by Parliament by law under article 115 or article 116.

(2) The Legislature of a State may by law establish a Contingency Fund in the nature of an imprest to be entitled "the Contingency Fund of the State" into which shall be paid from time to time such sums as may be determined by such law, and the said Fund shall be placed at the disposal of the Governor of the State to enable advances to be made by him out of such Fund for the purposes of meeting unforeseen expenditure pending authorisation of such expenditure by the Legislature of the State by law under article 205 or article 206.

Explanations:

Article 267 provides the Union and State governments with Contingency Funds to address unforeseen expenditures. These funds ensure fiscal agility and immediate financial response during emergencies, pending legislative approval.

Clause-by-Clause Explanation:

Clause (1): Contingency Fund of India

This clause empowers Parliament to establish a Contingency Fund titled "Contingency Fund of India." It allows the President to authorize advances from this fund for unforeseen expenditures, ensuring swift financial response in emergencies. Legislative approval for such expenditures must follow through Articles 115 or 116.

Example: During the COVID-19 pandemic, the President sanctioned emergency expenditures from the Contingency Fund for healthcare needs, demonstrating its use in national crises.

Clause (2): Contingency Fund of the State

This clause allows each state's legislature to establish a "Contingency Fund of the State," managed by the Governor. It ensures financial readiness at the state level for emergencies, with legislative approval required under Articles 205 or 206.

Example: The Kerala floods in 2018 prompted the Governor to authorize advances from the state's Contingency Fund for immediate relief efforts.

Historical Significance:

The Contingency Fund concept was inspired by British fiscal practices, tailored to India's unique needs. It reflects the foresight of the Constitution's framers in ensuring financial readiness for emergencies, emphasizing accountability and efficiency.

Legislative History:

Initially introduced as Article 248B in the Draft Constitution, Article 267 was debated extensively before being adopted on August 4, 1949. The article's provisions were aligned with India's commitment to fiscal responsibility and readiness to address emergencies.

Real-Life Examples:

• During the COVID-19 pandemic, the Contingency Fund of India was utilized to manage urgent healthcare expenditures and relief efforts before formal parliamentary approval.
• State contingency funds were deployed for flood relief in Kerala during the 2018 floods, ensuring immediate response to affected areas.
• The 2001 Gujarat earthquake saw swift allocation of funds from the state's Contingency Fund for rehabilitation efforts.

Debates and Deliberations:

In the Constituent Assembly, Pandit Kunzru emphasized the importance of an emergency fund to avoid delays in critical government functions. Dr. B.R. Ambedkar supported its inclusion, ensuring financial provisions for crises. Concerns over the misuse of funds were addressed by incorporating strict legislative oversight mechanisms.

References:

• Constituent Assembly Debates on Article 267.
• Historical Analysis of British Fiscal Practices.
• COVID-19 Relief Fund Utilizations in India.
• Government Reports on Disaster Management Funding.