• UGI USER
  • Sep 09, 2026
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PAC Flags Cess Funds Not Transferred to Reserve

PAC FLAGS FAILURE TO TRANSFER CESS COLLECTIONS TO DESIGNATED FUNDS

Why in the News?

The Public Accounts Committee (PAC) has criticised several Union ministries for failing to transfer more than ₹9,222 crore collected through earmarked cesses into their designated Public Account reserve funds. The committee observed that retaining such collections in the Consolidated Fund of India weakens transparency, legislative oversight and sound public financial management.

PAC: ₹9,222 Cr Cess Not Moved to Designated Funds

PAC AND PARLIAMENTARY FINANCIAL OVERSIGHT

  • Audit Function: The PAC examines government expenditure and reports of the Comptroller and Auditor General (CAG) to ensure parliamentary control over public finances.
  • Financial Scrutiny: The committee investigates whether expenditure has been incurred according to Parliamentary authorisation, financial rules and legislative intent.
  • Executive Accountability: PAC recommendations strengthen executive accountability by identifying financial irregularities and requiring ministries to explain deviations.
  • CAG Linkage: The CAG’s audit reports constitute an important basis for PAC examination, creating an institutional mechanism for legislative scrutiny of government accounts.
  • Systemic Lapses: Failure to transfer earmarked cess collections demonstrates how administrative non-compliance can undermine Parliament’s intended financial controls.

CESS MANAGEMENT AND PUBLIC FINANCIAL TRANSPARENCY

  • Earmarked Revenue: A cess is generally imposed for a specific purpose, and its utilisation should remain consistent with the legislative objective for which it was collected.
  • Fund Diversion: Retaining designated collections within the Consolidated Fund of India can obscure whether the revenue is being utilised for its intended purpose.
  • Legislative Oversight: Delayed transfer into designated funds may weaken Parliament’s ability to monitor collection, allocation and utilisation of purpose-specific revenues.
  • Audit Trail: A comprehensive audit trail mechanism can ensure that cess collections are tracked from assessment and collection through transfer and final utilisation.
  • Fiscal Governance: Transparent management of cesses promotes fiscal discipline, accountability and outcome-oriented public expenditure, strengthening public financial management.

CONSOLIDATED FUND AND PUBLIC ACCOUNT OF INDIA

●      Consolidated Fund: Under Article 266(1), all revenues received by the Government of India, loans raised and loan repayments received constitute the Consolidated Fund of India.

●      Public Account: Under Article 266(2), other public money received by or on behalf of the government is credited to the Public Account of India.

●      Parliamentary Control: Withdrawals from the Consolidated Fund generally require parliamentary authorisation through mechanisms such as Appropriation Acts.

●      Public Account Control: Money in the Public Account is held by the government in a fiduciary capacity, with different withdrawal arrangements compared with the Consolidated Fund.

●      Financial Accountability: The CAG, PAC and Parliament collectively provide institutional checks over government receipts and expenditure, forming an important pillar of financial accountability..