(1) The fund to or with the control or management of which the local authority of a municipality, cantonment or district is entitled or entrusted shall, notwithstanding anything in any enactment respecting the purposes to which that fund may be applied be applicable, subject to the control of the ¹[appropriate Government], to the payment of expenses incidental to the exercise of the powers and functions which may be vested in or exercised by a local authority under this Act.
     (2) The fund shall also be applicable, with the previous sanction of the ¹[appropriate Government], to a guarantee of the payment of interest on money to be applied, with the concurrence in writing of the local authority, within the limits of the local area under its control, to any of the purposes to which the fund might be applied by the local authority under subsection (1).
     ²[(3) In this section, "the appropriate Government" means the Government, Central or State, whose executive authority extends over the local authority in question.]