BUDGET IN PARLIAMENT (ANNUAL FINANCIAL STATEMENT)

Meaning and Background
Annual budgeting in India began in 1860. The Constitution does not use the word ‘budget’; instead, Article 112 calls it the Annual Financial Statement. It presents the estimated receipts and expenditures of the Government of India for a financial year. The financial year runs from 1 April to 31 March.

Contents of the Budget
• Estimates of revenue and capital receipts  
• Ways and means of raising revenue  
• Estimates of expenditure  
• Details of actual receipts and expenditure of the previous year  
• Reasons for deficit or surplus  
• Government’s economic and financial policy for the coming year  

Railway Budget, separated since 1924, was merged into the Union Budget in 2017.

Constitutional Provisions
• The President lays the Annual Financial Statement before both Houses.  
• No demand for a grant can be made except on the President’s recommendation.  
• No money can be withdrawn from the Consolidated Fund of India except through an Appropriation Act.  
• Money Bills imposing taxation can only be introduced in Lok Sabha with the President’s recommendation.  
• Parliament may reduce or abolish a tax but cannot increase it.  
• Rajya Sabha cannot vote on demands for grants; it may only discuss the budget.  
• Expenditure charged on the Consolidated Fund of India is not subject to vote.  
• The budget must distinguish between revenue and other expenditure.

Stages of the Budget
1. Presentation of the Budget  
2. General Discussion  
3. Scrutiny by Departmental Standing Committees  
4. Voting on Demands for Grants  
5. Passing of the Appropriation Bill  
6. Passing of the Finance Bill  

1. Presentation of Budget
• Presented by the Finance Minister on 1st February each year.  
• Economic Survey is presented a day or two before.  
• No discussion takes place on the day of presentation.  
• Rajya Sabha may discuss but cannot vote on grants.

Budget documents include: Annual Financial Statement, Budget Speech, Demands for Grants, Appropriation Bill, Finance Bill, Expenditure Budget, Receipts Budget, Expenditure Profile, Budget at a Glance, FRBM-related statements etc.

2. General Discussion
• Held in both Houses, usually for 3–4 days.  
• Only broad principles are discussed; no cut motions allowed.  
• Finance Minister replies at the end.

3. Scrutiny by Departmental Committees
• 24 Parliamentary Standing Committees examine Demands for Grants of each ministry.  
• Detailed scrutiny enhances financial oversight.  
• Committee reports are placed before Parliament.

4. Voting on Demands for Grants (Lok Sabha only)
• Only votable expenditure is submitted for voting.  
• Each ministry’s demand is voted separately.

Cut Motions (to reduce allocations):
1. Policy Cut – amount reduced to Re 1 to oppose underlying policy.  
2. Economy Cut – reduced by a specific amount to suggest savings.  
3. Token Cut – reduced by ₹100 to raise a specific grievance.

Conditions for Cut Motions
Cut motions must be specific, clear, relate to one demand, and not deal with charged expenditure or matters pending in court or unrelated to Union jurisdiction.

5. Passing of Appropriation Bill
• Enables withdrawal of funds from the Consolidated Fund of India.  
• Covers both voted grants and charged expenditure.  
• No amendments allowed that alter allocations.  
• After Presidential assent, it becomes the Appropriation Act.

Vote on Account
• Temporary provision allowing government to withdraw funds before the Appropriation Act is passed.  
• Generally approved for two months (around 1/6th of total annual expenditure).

6. Passing of Finance Bill
• Introduced to give effect to taxation proposals.  
• Must be passed within 75 days.  
• Amendments are permissible.  
• After Presidential assent, it becomes the Finance Act.

Charged Expenditure (Non-Votable)
Charged expenditure includes:
• President’s salary and office expenses  
• Salaries of Presiding Officers of Parliament  
• Judges of Supreme Court and High Courts  
• CAG, UPSC Chairperson and Members  
• Administrative expenses of SC, CAG, UPSC  
• Interest payments, loan repayments, debt charges  
• Court decrees and awards  
• Any expenditure declared charged by Parliament  

Types of Government Funds

1. Consolidated Fund of India (Article 266)
• Main fund of the Government of India.  
• Includes all revenues, loans, and recoveries.  
• All government expenditure must be approved by Parliament.

2. Contingency Fund of India (Article 267)
• Established by an Act of Parliament (1950).  
• At the disposal of the President for urgent, unforeseen expenditure.  
• Finance Secretary operates the fund on President’s behalf.

3. Public Account of India (Article 266)
• Includes money held in trust (PF deposits, judicial deposits, small savings etc.).  
• Does not require parliamentary approval for withdrawals.  
• Managed through executive action.

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Subject: Polity

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