Budget & Parliamentary Control

Notes

The word "Budget" is not used in the Constitution; Art. 112 calls it the "Annual Financial Statement", laid before Parliament for every financial year (1 April to 31 March). Since 2017, the Union Budget is presented on 1 February and the Railway Budget has been merged with it. The Finance Minister presents it in the Lok Sabha.

Constitutional provisions

Art. 265: No tax can be levied or collected except by authority of law.
Art. 266: Three funds: Consolidated Fund of India, Public Account of India, and (Art. 267) Contingency Fund of India.
Consolidated Fund: all revenues, loans and repayments; expenditure only after Parliamentary appropriation.
Public Account: money held by the Government as a banker (provident funds, small savings); no Parliamentary appropriation needed.
Contingency Fund: a corpus at the disposal of the President (managed by the Finance Secretary) for unforeseen expenditure; later recouped by Parliament.

Budget stages

Presentation of the Budget and the Finance Minister's speech.
General discussion (no voting).
Scrutiny by Departmentally Related Standing Committees during a recess.
Voting on Demands for Grants: only in the Lok Sabha; the Rajya Sabha only discusses.
Appropriation Bill (Art. 114): authorises withdrawal from the CFI; a Money Bill. Amendments that vary the amount or purpose of a grant are not allowed.
Finance Bill: gives effect to the Government's taxation proposals; also a Money Bill (see Topic 56). The Provisional Collection of Taxes Act, 1931 allows taxes to take effect from the Budget day.

Expenditure

Charged on the CFI (non-votable; only discussed): emoluments of the President; salaries of the Chairman and Deputy Chairman of the Rajya Sabha, Speaker and Deputy Speaker of the Lok Sabha; salaries and pensions of Supreme Court and High Court judges; salary of the CAG; debt charges of the Union; any sum required to satisfy a court judgment or decree.
Voted: all other expenditure.

Cut motions (reduce a demand)

Policy cut (Disapproval of Policy Cut): reduces the demand to ₹1; shows disapproval of the policy.
Economy cut: reduces the demand by a specified amount; aims at economy.
Token cut: reduces the demand by ₹100; to ventilate a specific grievance.
A guillotine is applied on the last day, and all remaining demands are put to the vote without discussion.

Special grants

Vote on Account (Art. 116): advance grant for about four months, usually in an election year, pending the Budget.
Supplementary Grant, Additional Grant (new service), Excess Grant (spent beyond the grant; considered after the year by the PAC), Vote of Credit (for an unexpected demand too large to be specific) and Exceptional Grant (for a special purpose).

Parliamentary control

Before: Budget scrutiny, DRSCs, FRBM Act (2003) fiscal targets.
During: Voting on grants, cut motions, Appropriation Bill.
After: CAG audit, PAC, COPU, Estimates Committee.

Key Points

Art. 112 "Annual Financial Statement"; presented 1 February since 2017.
Three funds: Consolidated, Public Account, Contingency.
Charged expenditure is not voted upon (judges' salaries, CAG, debt charges).
Demands for Grants are voted only in the Lok Sabha.
Cut motions: policy (₹1), economy, token (₹100).

MCQs

Q1. The "Annual Financial Statement" is mentioned in: (a) Art. 110 (b) Art. 112 (c) Art. 114 (d) Art. 116 Ans: (b).

Q2. Which of the following is NOT subject to the vote of Parliament? (a) Salaries of Union ministers (b) Salaries of Supreme Court judges (c) Grants for the Defence Ministry (d) Demand for Railways Ans: (b). Charged on the Consolidated Fund of India.

Q3. A "Token Cut" reduces a demand by: (a) ₹1 (b) ₹100 (c) A specified amount (d) 50% Ans: (b).