The Constitution of India
Article 266
Consolidated Funds and public accounts of India and of the States
(1) Subject to the provisions of article 267 and to the provisions of this Chapter with respect to the assignment of the whole or part of the net proceeds of certain taxes and duties to States, all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled “the Consolidated Fund of India”, and all revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled “the Consolidated Fund of the State”.
(2) All other public moneys received by or on behalf of the Government of India or the Government of a State shall be credited to the public account of India or the public account of the State, as the case may be.
(3) No moneys out of the Consolidated Fund of India or the Consolidated Fund of a State shall be appropriated except in accordance with law and for the purposes and in the manner provided in this Constitution.
Why this exists
The framers wanted financial discipline built into the Constitution itself, modeled on the British parliamentary practice of the 'Consolidated Fund'. By pooling government income into one fund and requiring legislative approval (through Appropriation Acts) before spending, the Article ensures the executive cannot spend public money on its own authority — Parliament and State Legislatures control the purse strings, reinforcing democratic accountability over public finance.
How courts read it
Courts have generally treated Article 266(3) as a strict constitutional safeguard: government spending without proper appropriation or beyond sanctioned limits is unconstitutional. Judicial review in cases involving unauthorized expenditure or diversion of public funds has repeatedly emphasized that the Consolidated Fund cannot be touched except through law (typically Appropriation Acts under Articles 114 and 204), reinforcing legislative control over the executive's financial actions.
Common misconceptions
- Myth: The government can spend money from the Consolidated Fund whenever it wants for any public purpose.
Fact: Article 266(3) requires that spending from the Consolidated Fund be authorized by law (usually an Appropriation Act) and only for constitutionally permitted purposes. - Myth: All government money is in the Consolidated Fund.
Fact: Some money, like funds held in trust or deposits, goes into the separate Public Account under Article 266(2), not the Consolidated Fund.