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Q. What is Contingency Fund and what is its purpose?

Ans. According to the provisions of Article 267(1), Parliament may by law establish a Contingency Fund of India in the nature of an imprest. Such sums of money shall be deposited into this fund as may be determined by law made by Parliament. The Contingency Fund of India shall be placed at the disposal of the President who shall make advances out of this fund to meet unforeseen expenditure pending authorization by Parliament. The money withdrawn out of Contingency Fund is paid back to it as and when Parliament authorizes such unforeseen expenditure. The basic purpose behind this fund is to meet some immediate and urgent expenditure which can not be authorised immediately by Parliament.

Similarly, under the provisions of Article 267(2) the Legislature of a State by law may establish a Contingency Fund of the State in the nature of an imprest. Such sums of money shall be paid into this fund as is determined by the law made by the State Legislature. This fund shall be placed at the disposal of the Governor who can make advances out of this fund to meet some unforeseen expenditure, pending authorization of such expenditure by the State Legislature.
The Government of India or of a State cannot make any expenditure out of the Consolidated Funds without the authorisation of such expenditure by Parliament or the State Legislature, as the case may be. If a situation may arise when the money is needed to meet some unexpected expenditure and the concerned Legislature will take time to authorize such expenditure, the money can be taken out the Contingency Fund by the President or the Governor to meet such urgent expenditure.

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