Which of the following statements is/are correct regarding the financial administration of cesses in India?
1. Cesses collected by the Union Government are directly deposited into the Public Account of India without entering the Consolidated Fund of India.
2. The failure to transfer collected cesses to their designated reserve funds can lead to an understatement of the government's fiscal deficit.

Question

Accepted Answer

2 only — Statement 1 is incorrect because all taxes and cesses are first credited to the Consolidated Fund of India (Article 266) before being transferred to dedicated reserve funds in the Public Account. Statement 2 is correct because retaining cesses in the Consolidated Fund makes general revenues appear higher, artificially lowering the reported fiscal deficit.

CAG Report on Union Government Accounts 2023-24

Cabinet Rationalises Royalty Rates for Critical Minerals