Budget 2026: Understanding India's Public Account - a trust, not a treasury

The Public Account of India comprises funds that the government holds in trust on behalf of individuals, organisations, and other bodies, rather than funds owned by the government itself. These deposits include savings from the public and employees, security deposits from contractors, and amounts set aside for expenditure on designated projects. The government assumes the role of banker or trustee, managing these resources while being obligated to return them to their rightful owners. This arrangement distinguishes the Public Account from other government funds and highlights the government's fiduciary duty towards public money.

Constitutionally defined by Article 266, the Public Account includes funds received by the government for specific purposes, such as Provident Funds, Small Savings, and reserve or special funds. The money in this account is not available for general government expenditure and must be repaid to depositors. An important attribute of the Public Account is that it does not require parliamentary approval for disbursement, as the government merely manages rather than owns these funds. However, if money is transferred from the Consolidated Fund for a specific purpose, parliamentary approval is necessary.

The structure of the Public Account is categorised under five main heads: Small Savings, Provident Fund and Other Accounts; Reserve Funds; Deposits and Advances; Suspense and Miscellaneous; and Remittances. Examples of transactions include investments in schemes such as Post Office Savings Certificates, contributions to Government Provident Fund (GPF) and Public Provident Fund (PPF), and security deposits submitted by contractors. Each of these categories reflects the diversity of entities and purposes for which the government acts as a custodian.

A defining characteristic of the Public Account is that its balances do not represent government property but the liabilities of the government to the account holders. This feature means the government is responsible for full repayment to the depositors. According to the context, "Funds belong to the depositors and must be returned eventually." These obligations reinforce the principle that the Public Account operates fundamentally as a trust rather than a source of direct government revenue.

Operationally, transactions out of the Public Account do not need legislative approval, allowing for efficient management and timely disbursement of funds as required by depositors. The government exercises executive discretion, making payments or withdrawals directly in response to the needs of account holders. For allocations transferred from the Consolidated Fund into the Public Account for designated expenditure, a parliamentary vote is required, preserving oversight for such movements.

The Public Account serves as an essential mechanism for the government to manage a broad spectrum of financial obligations on behalf of the public, employees, and other entities. Its existence delineates a clear boundary between public money held in trust and funds available for governmental use and ensures transparency in the handling of resources that must ultimately be returned to their depositors. This structure supports a robust financial system in which individual contributions and investments are kept separate from state-owned assets.