Contingency fund

A contingencies fund or contingency fund is a fund for emergencies or unexpected outflows, mainly economic crises.

History

In the early part of the nineteenth Century the Civil Contingencies Fund was created in the United Kingdom. It is held by the Treasury, and its use is regulated by the Miscellaneous Financial Provisions Act 1946.[1] It may be used for urgent expenditure in anticipation that the money will be approved by Parliament, or for small payments that were not included in the year's budget estimates.

The Contingencies Fund Act 1974 sets the size of the fund as two percent of the amount of the government budget in the preceding year.[2]

When Parliament votes to approve the urgent expenditure, the monies are repaid into the Contingencies Fund. As Parliament is effectively forced to approve actions ex post facto (after they've happened), the Treasury's use of the fund is actually scrutinised in detail by the Public Accounts Committee.

European Union

The European Union plans vast contingency fund, racing to contain crisis.[3]

Spain

In Spain, the contingency fund is used in economic crisis for public work and similar stimulus activities . There is social security contingencies fund called reserve fund, to pay pensions.

India

The Constitution of India authorized[4] the parliament to establish a contingency fund of India. The Contingency Fund of India is established under article 267(1)of the Indian Constitution. It is in the nature of an imprest (money maintained for a specific purpose). Accordingly, parliament enacted the contingency fund of India act 1950.The fund is held by the Finance Secretary (Department of Economic Affairs) on behalf of the President of India and it can be operated by executive action. The Contingency Fund of India exists for disasters and related unforeseen expenditures.[5] In 2005, it was raised from 50 to Rs 500 crore.[6] Approval of the Parliament of India for such expenditure and for withdrawal of an equivalent amount from the Consolidated Fund is subsequently obtained to ensure that the corpus of the Contingency Fund remains intact. Similarly, Contingency Fund of each State Government is established under Article 267(2) of the Constitution – this is in the nature of an imprest placed at the disposal of the Governor to enable him/her to make advances to meet urgent unforeseen expenditure, pending authorization by the State Legislature. Approval of the Legislature for such expenditure and for withdrawal of an equivalent amount from the Consolidated Fund is subsequently obtained, whereupon the advances from the Contingency Fund are recouped to the Fund. The corpus varies across states and the quantum is decided by the State legislatures.[7]

See also

Look up contingency fund in Wiktionary, the free dictionary.

Notes

  1. ↑ http://www.statutelaw.gov.uk/content.aspx?LegType=All+Legislation&searchEnacted=0&extentMatchOnly=0&confersPower=0&blanketAmendment=0&sortAlpha=0&PageNumber=0&NavFrom=0&parentActiveTextDocId=1089598&ActiveTextDocId=1089598&filesize=16480
  2. ↑ http://www.statutelaw.gov.uk/content.aspx?LegType=All+Primary&PageNumber=56&NavFrom=2&parentActiveTextDocId=1222914&ActiveTextDocId=1222914&filesize=7062
  3. ↑ Schneider, Howard (10 May 2010). "Europe announces vast contingency fund, racing to contain crisis". The Washington Post.
  4. ↑ INDIAN POLITY BY M LAXMIKANT PAGE NO :22.29 ,Contingency fund of india
  5. ↑ "Government Account". Government of India. Retrieved 20 April 2011.
  6. ↑ "Contingency fund limit raised to Rs 500 crore". TNN. 10 March 2005. Retrieved 20 April 2011.
  7. ↑ http://www.arthapedia.in/index.php?title=Contingency_Fund_of_India

References

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