Part XII: Finance, Property, Contracts and Suits

Article 283: Custody and Management of Funds

Original Article:

(1) The custody of the Consolidated Fund of India and the Contingency Fund of India, the payment of moneys into such Funds, the withdrawal of moneys therefrom, and all other matters connected with or ancillary to matters aforesaid shall be regulated by law made by Parliament, and, until provision in that behalf is so made, shall be regulated by rules made by the President.

(2) The custody of the Consolidated Fund of a State and the Contingency Fund of a State, the payment of moneys into such Funds, the withdrawal of moneys therefrom, and all other matters connected with or ancillary to matters aforesaid shall be regulated by law made by the Legislature of the State, and, until provision in that behalf is so made, shall be regulated by rules made by the Governor of the State.

Explanations:

Article 283 of the Indian Constitution delineates the procedures regarding the custody, withdrawal, and regulation of funds within the Consolidated Fund, Contingency Fund, and public accounts of the Union and State governments. This article ensures the secure management of public finances, setting legal standards for fund administration while upholding financial integrity and accountability within Indian governance.

Key Provisions:

Custody and Withdrawal Protocols

This clause governs the management of the Consolidated Fund of India and Contingency Fund of India, addressing the process for depositing and withdrawing public money. It grants Parliament the authority to legislate on these matters or, in the absence of such legislation, allows the President to set rules for handling these funds.

State-Level Fund Management

Similar to the Union protocols, this provision applies to the States, mandating that the custody, payment, and withdrawal of funds are regulated by the State Legislature. Until such legislation is enacted, the Governor is authorized to manage fund protocols.

Amendments:

The Constitution (Seventh Amendment) Act, 1956, removed the words “or Rajpramukh” in Clause 2. This amendment streamlined the language, reflecting changes in the state administration following the reorganization of states.

Amendment Explanation:

The Constitution (Seventh Amendment) Act, 1956, restructured the administrative framework of India by eliminating the "Rajpramukh" as a designation for certain states. This change was aligned with the broader state reorganization scheme, simplifying terminologies and making governance more uniform. For Article 283, this amendment clarified the roles of Governors in the financial management of states, ensuring consistency across state and Union financial protocols.

Real-Life Example:

A practical application of Article 283 is evident in the creation and regulation of the Consolidated and Contingency Funds for COVID-19 relief efforts. These funds allowed for efficient management of emergency financial allocations for healthcare and social support, demonstrating the importance of Article 283 in times of crisis.

Historical Significance:

Article 283 has historically established a framework of financial discipline within the Union and State governments. By setting clear guidelines for fund custody and withdrawal, the article plays a vital role in safeguarding the integrity of public funds, helping to build public trust in the management of government finances.

Debates and Deliberations:

During the Constituent Assembly debates, members extensively discussed the necessity of Article 283 in ensuring financial integrity and discipline. Dr. B.R. Ambedkar highlighted the importance of clear protocols for managing Consolidated and Contingency Funds, emphasizing their role in addressing emergencies efficiently.

Pandit Hriday Nath Kunzru and Shri T.T. Krishnamachari debated the interim powers granted to Governors and the President, ensuring that temporary rules did not compromise legislative authority. The Assembly agreed on striking a balance between legislative oversight and executive flexibility in fund management.

In conclusion, the debates underscored the need for Article 283 as a cornerstone for financial governance, fostering trust and accountability across state and Union frameworks.

References:

• Indian Budgetary Process Documentation: Descriptions of fund management in India's budgetary practices reflect Article 283's influence in promoting transparency and accountability.
• Constituent Assembly Debates: Insights into the importance of structured fund management in democratic governance.