Just there for the heck of it, this money is yours

In the balance sheet of the government, there are several transactions which form part of its accounts, but are done with money that does not belong to it.

Prominent entries in this category include small savings, railway funds, the central road fund, the sugar development fund, money from state provident funds, postal insurance, telecommunications fund and so forth. The government houses all this in the Public Account (PA).

The government acts like an intermediary or a banker and the monies kept in these accounts have to be paid back to their depositors. Prior to 1999-2000, small savings collections formed part of the CFI. They were delinked from the budget then ostensibly for transparency’s sake but with the clear benefit that the Centre’s fiscal deficit shrank. Now small savings receipts are parked in the PA as part of the National Small Savings Fund (NSSF).

Unlike in the case of the CFI, to make payments from the PA, there is no need to seek Parliament’s approval as the money does not belong to the government.

In some specific cases relating to the PA, the government sets aside a part of its revenues in separate funds like the Sugar Development Fund meant for modernisation of sugar mills, the oil cess and for depreciated assets of state owned undertakings.

The government withdraws these amounts from the CFI after obtaining Parliamentary approval and then keeps it in the PA for spending for a specific purpose. Later, the actual expenditure on these transactions is put to Parliamentary vote for approval.

As a last resort, the government can resort to dipping into the PA. All the receipts and disbursements under the PA are reflected in the annual financial statement laid before Parliament along with other budget papers.