Contingency fund
No one actually knows what is there ahead of us. Do you?
We may run out of money, food or we may hit by a natural disaster and loose everything (Remember Chennai Floods 2015). In order to meet these unexpected situations we keep certain amount as savings or in insurance or some other forms. Likewise our constitution under article 267 authorised the government of India to keep a certain percent of amount under contingency fund of India to meet the unexpected situations.
- In India contingency fund is governed by “contingency fund of India act 1950”
- The funds are kept under hands of president (fund held by finance secretary on behalf of president)
- The amount from this fund can be used by president in unexpected situations without the approval of the parliament.
- The amount determined by law goes to this fund every year.
- Usually very little amount is kept under this fund.(in 2005 the funds are raised and kept at 500 crore)
- For state government the contingency fund is in accordance with article 267(2).
The method of maintaining contingency fund can be followed by individuals or any organisations. It may be helpful to meet the immediate requirements of cash due to unforeseen situations.
Note: many countries across the world have this type of provision like Spain, Britain….and they have their own rules.
Contingency is what I’ve been talking about through all my comments - you must have a back up if you are to make investments, so that if you investments fail then you still have some income to live on.
It can be useful for the country to have a national contingency fund for times of natural disaster. Otherwise the economy would rely on loans from other countries which would increase international debt.