Article 150

Article 150 of the Constitution of India lays down the framework for maintaining and standardising the form of accounts for both the Union and State governments. It ensures uniformity, accuracy, and transparency in the financial records of public authorities across the nation. By requiring that the form of accounts be prescribed by the President of India on the advice of the Comptroller and Auditor-General (CAG), the Article establishes a balance between executive authority and professional expertise in financial management.

Constitutional Text

Article 150 states:

“The accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the Comptroller and Auditor-General of India, prescribe.”

This concise provision establishes a constitutional partnership between the executive (the President) and the constitutional auditor (the CAG) in determining how the financial accounts of the Union and States are structured and maintained.

Objective and Purpose

The main purpose of Article 150 is to ensure uniformity, transparency, and accuracy in the financial accounting of public funds across India. It provides a standardised system of government accounting, thereby facilitating effective comparison, audit, and oversight of financial activities by the CAG, Parliament, and State Legislatures.
The Article also ensures that:

• Government accounts are maintained according to professional and technical standards.
• Financial reporting aligns with the needs of legislative scrutiny and public accountability.
• The independence and expertise of the CAG guide the form and content of financial records.

Role of the President

The President of India has the constitutional authority to prescribe the form in which the accounts of both the Union and the States are maintained. However, this power is not absolute — it must be exercised in consultation with and based on the advice of the CAG.
This arrangement ensures that:

• Executive decisions regarding accounting procedures are guided by technical expertise, not political considerations.
• A uniform national accounting system is maintained, enabling meaningful comparison between the finances of the Union and States.
• The constitutional principle of checks and balances is upheld between the executive and the audit authority.

Role of the Comptroller and Auditor-General (CAG)

The CAG of India plays a central and expert role under Article 150. As the constitutional auditor and financial advisor, the CAG:

• Advises the President on the form, classification, and structure of government accounts.
• Ensures that the accounting format facilitates effective audit, control, and financial reporting.
• Updates the accounting standards periodically to align with evolving international best practices and fiscal management systems.

The CAG’s advice covers areas such as:

• Classification of expenditure and revenue;
• Consolidation of funds (Consolidated Fund, Contingency Fund, and Public Account);
• Procedures for financial statements and budgeting;
• Introduction of accrual-based accounting reforms in government institutions.

Relationship with Other Constitutional Provisions

Article 150 is closely linked with other financial provisions of the Constitution:

• Article 148: Establishes the office of the Comptroller and Auditor-General of India.
• Article 149: Defines the duties and powers of the CAG.
• Article 151: Provides for the submission and presentation of the CAG’s audit reports to Parliament and State Legislatures.
• Article 266 and Article 267: Define the structure of the Consolidated Fund and Contingency Fund.

Together, these provisions form a comprehensive constitutional framework for financial accountability, audit, and public expenditure management in India.

Significance of Article 150

1. Uniformity in Accounting:The Article ensures that all Union and State accounts follow a consistent form, making financial data comparable and comprehensible across jurisdictions.
2. Transparency and Accountability:Standardised accounts facilitate accurate financial reporting, enabling Parliament, State Legislatures, and the public to evaluate how funds are raised and spent.
3. Financial Discipline:A uniform accounting structure enhances fiscal discipline and ensures that all receipts and expenditures are properly recorded and monitored.
4. Audit Efficiency:By providing a consistent format, Article 150 simplifies the audit process for the CAG, improving the accuracy and reliability of audit reports.
5. Professional Oversight:The involvement of the CAG ensures that accounting systems are designed and updated by financial experts rather than by the executive alone.

Historical Context and Evolution

The provision for uniform accounting practices has its origins in the Government of India Act, 1935, under which the Auditor-General of India played a similar advisory role in maintaining the accounts of the Dominion and Provincial Governments.
After Independence, the framers of the Constitution retained and strengthened this mechanism, entrusting the CAG with a constitutional advisory role to ensure the professionalism and neutrality of government accounting practices.
In modern times, the CAG’s advisory function under Article 150 has been instrumental in:

• Implementing accrual-based accounting systems;
• Introducing Programme and Performance Budgets; and
• Enhancing transparency in fiscal reporting through digital accounting reforms.

Judicial Perspective

While there have been no major Supreme Court judgments directly interpreting Article 150, the judiciary has consistently recognised the importance of financial accountability and transparency as integral to constitutional governance.
Cases such as Comptroller and Auditor General of India v. Union of India (2018) reaffirmed the CAG’s authority to ensure that public funds are managed and reported responsibly, indirectly reinforcing the constitutional intent of Article 150.

Practical Implementation

The accounting structure prescribed under Article 150 has led to the creation of a uniform national system for government accounts, comprising:

• Three major funds:
  • The Consolidated Fund,
  • The Contingency Fund, and
  • The Public Account.
• Classification codes for revenue and expenditure heads, enabling systematic financial reporting.
• Standardised financial statements, including the Annual Finance Accounts and Appropriation Accounts.

The CAG’s advice also underpins the General Financial Rules (GFR) and the Accounting Standards for Government, which are periodically updated to reflect modern accounting practices.

Challenges in Implementation

Despite the robust constitutional and institutional framework, Article 150 faces certain practical challenges:

1. Variations Among States:Some States lag in adopting uniform accounting reforms, leading to inconsistencies in financial reporting.
2. Evolving Financial Systems:With the growth of Public-Private Partnerships (PPP) and off-budget borrowings, new accounting approaches are needed to ensure comprehensive fiscal disclosure.
3. Technological Adaptation:The transition from traditional bookkeeping to digital and accrual-based systems requires capacity building and institutional adaptation.
4. Coordination Challenges:Effective implementation depends on seamless cooperation between the Union, States, and the CAG’s office.

Importance for Good Governance

Article 150 contributes significantly to good governance and fiscal transparency by:

• Providing a reliable financial framework for government operations;
• Enhancing the credibility of fiscal data presented to Parliament and State Legislatures;
• Strengthening citizen trust in public institutions through transparent financial reporting; and
• Enabling effective audit and legislative oversight over government expenditure.

In the broader perspective, this Article ensures that the financial management of the Indian state remains uniform, expert-driven, and constitutionally accountable.

Constitutional Significance

Article 150 stands as a cornerstone of India’s public financial accountability system. By entrusting the President to prescribe the form of accounts in consultation with the CAG, the Constitution embeds a mechanism for expert oversight, ensuring that financial records are consistent, reliable, and transparent.