All receipts and disbursements of the State Government are shown in three separate parts, namely,

  • Part I ------Consolidated Fund,
  • Part II -----Contingency Fund and
  • Part III ----Public Account.

Consolidated Fund. -

Under article 266 ibid., all revenues received by a State Government, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all money received by that Government in repayment of loans from one consolidated fund, called "the Consolidated Fund of the State." No moneys out of this Fund can be appropriated except in accordance with law and for the purposes and in the manner provided in the Constitution.

Contingency Fund. -

Under Article 267 (2) ibid., the State Legislature has established a Contingency Fund which is of the nature of an imprest and enables the Executive Government to meet unforeseen expenditure pending its authorisation by the Legislature by the law.

(See the Uttar Pradesh Contingency Fund Act, 1950 and the rules framed there under in Appendix F).

Public Account. -

Receipts and disbursements, such as deposits, reserve funds, remittances, etc., which do not form part of the ‘Consolidated Fund’ are included in the Public Account of the State. Disbursements from the Public Account are not subject to a vote by the Legislature as they are not moneys issued out of the Consolidated Fund.

4. Division of the Consolidated Fund. -

The main divisions of the Consolidated Fund are:

  • Revenue Account
  • Capital Account
  • Debt (comprising Debt and Loans and Advances)

Revenue Account. -

is the account of (i) the current income of Government derived mainly from taxes and duties, fees for services rendered, fines and penalties, etc., and (ii) expenditure met from that income. The difference between such income and expenditure represents the revenue surplus, or deficit, as the case may be, for the year.

Capital Account. -

is the account of expenditure incurred with the object either or increasing concrete assets of a material character or of reducing recurring liabilities, such as those for future pensions by payment of the capitalised value. It also includes receipts arising generally from sale of concrete assets intended to be applied as a set - off to Capital expenditure. Expenditure on Capital account is usually met from borrowed funds or accumulated cash balances.

  • Note -- The decision whether expenditure shall be met from current revenues or from borrowed funds rests with the Executive cum the Legislature (vide Article 33 of the Audit Code).
  • Note -- Capital expenditure may be broadly defined as expenditure incurred with the object of either increasing concrete assets of material and permanent character or of reducing recurring liabilities. It is, however, not essential that the concrete assets should be productive in character or that they should even be revenue producing.

(a) After it has been decided to incur expenditure for the creation of a new or additional asset, the classification of expenditure between "Capital" and "Revenue" is made as follows :

(i) Capital bears all charges for the first construction of a project as well as charges for intermediate maintenance of the work while not opened for service and bears also charges for such further additions and improvements as may be sanctioned under the rules made by competent authority.

(ii) Revenue bears all subsequent charges for maintenance and all working expenses. These embrace all expenditure on the working and upkeep of the project and also on such renewals, replacements and such additions, improvements or extensions as under rules made by competent authority are debitable to the Revenue Account. In the case, however, of works of renewals and improvements, which partake both of a Capital and Revenue nature it is sometimes impracticable to draw a hard and fast line between what is properly debitable to Capital or to Revenue, but an equitable distribution of burdens between present and future generations is aimed at.

Debt. - This division comprises loans raised by Government, loans of a purely temporary nature classed as "Floating Debt" (such as Treasury Bills and Ways and Means Advances), as well as other loans classed as "Permanent Debt" and ‘Loans and Advances made by Government,’ together with repayments of the former and recoveries of the latter. Transactions connected with these are recorded under Public Debt and Loans and Advances by the State Government, both on the receipt and the disbursement sides.

Divisions of Public Account.- There are six main divisions of the Public Account, namely,

  • Small savings, Provident Fund etc.
  • Reserve Fund
  • Deposit and Advances
  • Suspense and Miscellaneous
  • Remittance
  • Cash Balances.

The first four divisions comprise receipts and payments in respect of which Government incurs a liability to repay the moneys received or has a claim to recover the amounts paid, together with repayments of the former and recoveries of the latter. The last two divisions embraces all merely adjusting heads, under which appear remittances of cash between treasuries and transfers between different accounting circles. The initial debits or credits to the heads in this division are cleared eventually by corresponding receipts or payments either within the same circle of account or in another account circle.

Sections and Heads of Account. – With in each of the divisions mentioned in paras. 4 and 5 above, the transactions are grouped in Sections and sectors e.g.

I. Receipts Heads (Revenue Account)

A. Tax Revenue

  • Taxes on Income & Expenditure
  • Taxes on Property & Capital Transaction
  • Taxes on Commodities & Services

B. Non-Tax Revenue

  • Fiscal Services
  • Interest Receipt
  • Other non Tax Revenue
    • General Services
    • Social Services
    • Economic Services

C. Grant –in – aid and Contribution

II. PAYMENT HEADS (Revenue Account)

A. General Services

  • Ingredients of State
  • Fiscal Services
  • Interest Payment & Servicing of Debt
  • Administrative Services
  • Pension & Miscellaneous General Services
  • Defence Services

B. Social Services

  • Education, Sports Arts and Culture
  • Health & Family Welfare
  • Water Supply, Sanitation, Housing & Urban Development
  • Infomation & Broadcasting
  • Welfare of Schedule Caste/Schedule Tribes & Other Backward class
  • Labour, Labour welfare
  • Social Welfare & Nutrition
  • Others

C. Economic Services

  • Agriculture and Allied activities
  • Rural Development
  • Special Areas programme
  • Irrigation & Flood programme
  • Energy
  • Industry & Minerals
  • Transport
  • Communication
  • Science & Technology & Environment
  • General Economic Services

Pattern of Head of Account:- The coding pattern to show the allocation of purchase medicine in T.B. clinic of a district can be shown as follows:

B. Social Services

b. Health & Family welfare

2210-Medical and Public Health

01- Urban Health Services-Allopathic

200- Other Health Services

01- Centrally Sponsored Schemes under

Central Plan

01- Supply of anti T.B. Medicines

39- Medicines & Chemicals

Major Head
Sub-major Head
Minor Head
Detail Head
Standard Object

Coding Pattern

Major head (Major Functional Department)

A four digit code has been allotted to the Major Head, the first digit indicates whether the Major Head is of Revenue Receipt or Revenue Expenditure or Capital Expenditure Head or Loan Head. On the basis of requirement, addition 2 to the first digit of Major Head the revenue receipt. That Major Head will be corresponding Revenue Expenditure. If need arises, addition of 2 in first digit of Major Head of revenue expenditure, the major head will be corresponding capital. Addition of 2 in first digit of major head of capital expenditure will be corresponding loan account .

  • 0401 Crop Husbandry (Revenue Receipt)
  • 2401 Crop Husbandry (Revenue Expenditure)
  • 4401 Capital Outlay on Crop Husbandry (Capital Account)
  • 6401 Loans for Crop Husbandry (Loan and advances account)

If the first digit major head is "0" or "1" the Head of Account will represent Revenue Receipt , "2" or "3" will represent revenue expenditure, "4" or "5" Capital Account "6" or "7" Loan and Advances and "8" or "9" Public account .

In a few cases, however ,where the transactions are not sufficient, the operations have been combined under specific level of Head of Account.

Sub-Major Head (Important Unit of Functions/area) (if any)

In case, where major functional unit(major head) have distinct unit of operation( Sub major function), two digit code is allotted under Major head. Nomenclature "General" has been allotted code "80", so that, uniformity can be maintained for general transactions in all sub major head under any major head. Sub major head may or may not exist .

Minor Head (Programmes)

The department has no relevance without programmes. There fore, three digit minor head code has been prescribed under major head or sub major head (if any). Codes from "001" to "100" and a few codes from "750" to "900" have been reserved for certain standardised Minor Heads. For example, "001" to "250" will represent Direction and Administration. Codes from "101" is reserved for in the Revenue Expenditure and "201" on the Capital and Loan accounts. Code "900" and "901" have been reserved for Deduct refund. The code for other miscellaneous transaction is "800", while the codes for Other Grants /Other Schemes etc. is "600". If the State Govt. feels that certain additional Minor head is to be added, the matter should be referred and prior permissions is must from Ministry of Finance, Department of Expenditure control(Controller General Accounts), Govt. Of India.

Sub-Head and Below

On the basis of requirement, the state government, can classify Schemes (sub-head), sub-schemes ( Detail-head) and unit of expenditure / appropriation under each minor head Each sub-head, detail head, and unit of appropriation (standard object) will have 2 digit code and its description. The State Government may reserve certain sub head (code) for specific schemes / purposes.

In the case of expenditure on public works, under major head 2059-public works, the following are the Sub-Major Heads and Minor Heads there in:

01 Office Buildings

  • 052 Machinery & Equipment
  • 053 Maintenance and Repairs
  • 101 Construction-General Pool Office Accommodation
  • 103 Furnishing
  • 104 Lease Charge
  • 799 Suspense
  • 800 Other Expenditure

60 Other Buildings

  • 052 Machinery & Equipment
  • 053 Maintenance and Repairs
  • 101 Construction-General Pool Office Accommodation
  • 103 Furnishing
  • 104 Lease Charge
  • 799 Suspense
  • 800 Other Expenditure

80 General

  • 001 Direction and Administration
  • 003 Training
  • 004 Planning & Researc
  • 051 Construction
  • 052 Machinery and Equipment
  • 102 Maintenance and Repairs
  • 103 Furnishings
  • 104 Lease Charge
  • 105 Public Works Workshops
  • 799 Suspense
  • 800 Other Expenditure

Please see the classification of major and medium Irrigation, Forest etc. in the list of major and minor heads of accounts of Union and States being published by Govt. of India, through Department of expenditure control (Controller General Accounts) Govt. Of India.

The introduction of any new major or minor head and abolition or change of nomenclature of any of the existing major or minor heads require the prior approval of the comptroller and Auditor General of India.

Preparation of the budget estimates and their transmission to the Finance Department. - Under the rules made by the Governor for the convenient transaction of the business of the State Government and the instructions issued there under, the Finance Department is responsible for the preparation of the annual budget. The budget is prepared on the basis of the material furnished by the departmental officers and the administrative departments of the Secretariat. The Heads of Departments (Controlling officer) and other estimating officer must submit the budget estimates latest by 31st October to the concerned Administrative Departments of Government at Secretariat. Before sending the estimates to the Government, the estimating officers must scrutinise and examine the estimate thoroughly and all formalities must be completed at concerned levels. Administrative Department will compile the estimates under specific grant and different levels of head of accounts latest by November 15.

The Administrative Department in Government will discuss and seek the comment of Chief Accounting authority (Account General) and submit the estimates to Finance Department latest by November 30. In case the Administrative Department prepare estimates for their own purpose, they must prepare latest by November 30.

Proposal relating to 'new expenditure'. - The estimates referred to above take cognisance only of what are called 'standing sanctions,' i.e. all revenues based on existing laws, rules and orders and all expenditure incurred by virtue of existing rules and orders. Proposals which involve a reduction or an increase in revenue otherwise than in pursuance of authorised Codes, Manuals and Rules and proposals for new expenditure (See Chapter VIII) are submitted to Government separately in proper time. The provision of funds for 'new expenditure' depends on the position of the resources available and the necessity and urgency of each proposal.

After the finalisation of the Budget with the inclusion of provision therein for new expenditure, it is presented, under Article 202 of the Constitution, to both Houses of the state Legislative Assembly on the recommendation of the Governor. After the grants have been voted by the Legislative Assembly, a bill to provide for the appropriation out of the Consolidated Fund of the State of all moneys required to meet the voted as well as the charged expenditure is introduce in the Legislative Assembly. When the Appropriation Bill is passed by both Houses of the Legislature and it has also received the assent of the Governor, the amounts shown therein can be expended during the financial year concerned.

Other Estimates. - Occasions may arise for approaching the Legislature with proposals for Votes on Account, Votes of Credit and Exceptional Grants, besides supplementary estimates. These are dealt with in Chapters II and XIV.

Authorisation of expenditure. - Except where the expenditure is covered by standing sanctions or necessary powers have been delegated to the administrative departments and subordinate authorities in this behalf with the concurrence of Finance Department, provision of funds in the budget by itself conveys no sanction to the subordinate authorities to incur expenditure. The following conditions must be satisfied before the public money is spent:

i) The expenditure should be sanctioned by the authority competent to sanction such expenditure (in the case of works expenditure incurred by the Engineering Departments this sanction means both administrative approval as well as technical sanction),

(ii) Sufficient funds should have been provided for the expenditure in the Appropriation Act or by re-appropriation by the authority competent to sanction re-appropriation (See Chapter XIV) and

(iii) No breach of the standards of financial propriety, which are mentioned below, is involved:

I - The expenditure should not be prima facie more than the occasion demands. Every Government servant should exercise the same vigilance and care in respect of expenditure from public moneys under his control as a person of ordinary prudence would exercise in respect of expenditure of his own money.

II - Public money should not be utilised for the benefit of a particular person or section of the community unless -

(a) the amount of expenditure involved is insignificant, or

(b) a claim for the amount can be enforced in a court of law, or

(c) the expenditure is in pursuance of a recognised policy or custom.

III - No authority should exercise its power of sanctioning expenditure to pass an order directly or indirectly to its own advantage.

IV - The amount of allowances, such as travelling allowances, granted to meet expenditure of a particular type, should be so regulated that the allowances are not on the whole sources of profit to the recipients.

Committee on Estimates. - There is a Committee on Estimates constituted by the Legislative Assembly to examine such of the estimates as may seem fit to the Committee or are specifically referred to it by the House. (For rules relating to constitution and the functions of this Committee see Chapter XVII).

Committee on Public Accounts. - The Appropriation Act has the effect of determining the objects on which money may be spent from the Consolidated Fund of the State and the amount which can be spent on each object. The amount of expenditure which can be incurred is thus strictly controlled by the Legislature, as expressed by the demands votes by the Legislative Assembly, are actually compiled with is investigated and brought to the notice of the Legislative Assembly by the Committee on Public Accounts. (For the constitution and functions of this Committee see Chapter XVI).