·
The Constitution refers to the
budget as the ‘annual
financial statement’. In other words, the term
‘budget’ has nowhere been used in the Constitution. It is the popular name for
the ‘annual financial statement’ that has been dealt with in Article 112 of the Constitution.
·
The budget is a statement of the estimated receipts and expenditure of the Government of India in a financial year, which begins on 1
April and ends on 31 March of the following year.
·
In addition to the estimates of
receipts and expenditure, the budget contains certain other elements. Overall,
the budget contains the following:
1. Estimates of revenue and capital receipts;
2. Ways and means to raise the revenue;
3. Estimates of expenditure;
4. Details of the actual receipts and expenditure of the closing
financial year and the reasons for any deficit or surplus in that year; and
5. Economic and financial policy of the coming year, that is, taxation
proposals, prospects of revenue, spending programme and introduction of new
schemes/projects.
·
The Government of India has two
budgets, namely, the Railway Budget and the General Budget. While the former
consists of the estimates of receipts and expenditures of only the Ministry of
Railways, the latter consists of the estimates of receipts and expenditure of
all the ministries of the Government of India (except the railways).
·
The Railway Budget was
separated from the General Budget in 1921 on the recommendations of the Acworth Committee. The reasons or objectives of this separation are as follows:
1. To introduce flexibility in railway finance.
2. To facilitate a business approach to the railway policy.
3. To secure stability of the general revenues by providing an assured
annual contribution from railway revenues.
4. To enable the railways to keep their profits for their own
development (after paying a fixed annual contribution to the general revenues).
Constitutional Provisions
The Constitution of India contains the
following provisions with regard to the enactment of budget:
1. The President shall in respect of every financial year cause to be
laid before both the Houses of Parliament a statement of estimated receipts and
expenditure of the Government of India for that year.
2. No demand for a grant shall be made except on the recommendation of
the President.
3. No money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law.
4. No money bill imposing tax shall be introduced in the Parliament
except on therecommendation of the President, and such a bill shall not be
introduced in the Rajya Sabha.
5. No tax shall be levied or collected except by authority of law.
6. Parliament can reduce or abolish a tax but cannot increase it.
7. The Constitution has also defined the relative roles or position of
both the Houses of Parliament with regard to the enactment of the budget in the
following way:
(a) A money bill or finance bill dealing with taxation cannot be
introduced in the Rajya Sabha—it must be introduced only in the Lok Sabha.
(b) The Rajya Sabha has no power to vote on the demand for grants; it is
the exclusive privilege of the Lok Sabha.
(c) The Rajya Sabha should return the Money bill (or Finance bill) to
the Lok Sabha within fourteen days. The Lok Sabha can either accept or reject
the recommendations made by Rajya Sabha in this regard.
8. The estimates of expenditure embodied in the budget shall show
separately the expenditure charged
on the Consolidated Fund of India and the
expenditure made from the Consolidated Fund of India.
9. The budget shall distinguish expenditure on revenue account from
other expenditure.
Charged Expenditure
·
The budget consists of two
types of expenditure—the expenditure ‘charged’ upon the Consolidated Fund of
India and the expenditure ‘made’ from the Consolidated Fund of India.
·
The charged expenditure is non-votable by the Parliament, that is, it can only be discussed by the Parliament, while the
other type has to be voted by the Parliament.
·
The list of the charged
expenditure is as follows:
1. Emoluments and allowances of the President and other expenditure
relating to his office.
2. Salaries and allowances of the Chairman and the Deputy Chairman of
the Rajya Sabha and the Speaker and the Deputy Speaker of the Lok Sabha.
3. Salaries, allowances and pensions of the judges of the Supreme
Court.
4. Pensions of the judges of high courts.
5. Salary, allowances and pension of the Comptroller and Auditor
General of India.
6. Salaries, allowances and pension of the chairman and members of the
Union Public Service Commission.
7. Administrative expenses of the Supreme Court, the office of the
Comptroller and Auditor General of India and the Union Public Service
Commission including the salaries, allowances and pensions of the persons
serving in these offices.
8.The debt charges
for which the Government of India is liable, including interest, sinking fund
charges and redemption charges and other expenditure relating to the raising of
loans and the service and redemption of debt.
9. Any sum required to satisfy any judgement, decree or award of any
court or arbitral tribunal.
10. Any other expenditure declared by the Parliament to be so charged.
'Sinking Fund'
·
A means of repaying funds
that were borrowed through a bond issue. The issuer makes periodic payments
to a trustee who retires part of the issue by purchasing the bonds in the
open market.
|
Stages in Enactment
The budget goes through the following six
stages in the Parliament:
1.
Presentation of budget.
2.
General discussion.
3.
Scrutiny by departmental
committees.
4.
Voting on demands for
grants.
5.
Passing of appropriation
bill.
6.
Passing of finance bill.
Presentation of Budget
·
The budget is presented in two
parts—Railway Budget and General Budget. Both are governed by the same procedure.
·
The introduction of Railway
Budget precedes that of the General Budget. While the former is presented to
the Lok Sabha by the railway minister in the third week of February, the latter is
presented to the Lok Sabha by the finance minister on the last working day of February.
·
The Finance Minister presents
the General Budget with a speech known as the ‘budget speech’. At the end of the
speech in the Lok Sabha, the budget is laid before the Rajya Sabha, which can only discuss
it and has no power to vote on the demands for grants.
General Discussion
·
The general discussion on
budget begins a few days after its presentation. It takes place in both the
Houses of Parliament and lasts usually for three to four days.
·
During this stage, the Lok
Sabha can discuss the budget as a whole or on any question of principle
involved therein but no cut
motion can be movednor can the budget be submitted to the vote of the House. The finance minister has a general right of reply at
the end of the discussion.
Scrutiny by Departmental Committees
·
After the general discussion on
the budget is over, the Houses are adjourned for about three to four weeks.
During this gap period, the 24
departmental standing committees of Parliament
examine and discuss in detail the demands for grants of the concerned ministers
and prepare reports on them. These reports are submitted to both the Houses of
Parliament for consideration.
·
The standing committee system
established is 1993 (and expanded in 2004) makes parliamentary financial control over
ministries much more detailed, close, in-depth and comprehensive.
Voting on Demands for Grants
·
In the light of the reports of
the departmental standing committees, the Lok Sabha takes up voting of demands
for grants. The demands are presented ministrywise. A demand becomes a grant
after it has been duly voted.
·
Two points should be noted in
this context. One, the voting of demands for grants is the exclusive privilege of the Lok Sabha, that is, the Rajya Sabha has no power of voting the demands.
·
Second, the voting is confined
to the votable part of the
budget—the expenditure charged on the
Consolidated Fund of India is not submitted to the vote (it can only be
discussed).
·
While the General Budget has a
total of 109 demands (103 for civil expenditure and 6 for defence
expenditure), the Railway Budget has 32 demands.
Each demand is voted separately by the LokSabha. During this stage, the members
of Parliament can discuss the details of the budget. They can also move motions
to reduce any demand for grant. Such motions are called as ‘cut motion’, which are of three kinds:
(a)
Policy
Cut Motion It represents the disapproval of the
policy underlying the demand. It states that the amount of the demand be
reduced to Re 1. The members can also advocate an alternative policy.
(b)
Economy
CutMotion It represents the economy that can be
affected in the proposed expenditure. It states that the amount of the demand
be reduced by a specified amount (which may be either a lumpsum reduction in
the demand or ommission or reduction of an item in the demand).
(c)
Token
Cut Motion It ventilates a specific grievance
that is within the sphere of responsibility of the Government of India. It
states that the amount of the demand be reduced by Rs 100.
A cut motion, to be admissible, must
satisfy the following conditions:
(i)
It should relate to one demand only.
(ii)
It should be clearly expressed
and should not contain arguments or defamatory statements.
(iii)
It should be confined to one
specific matter.
(iv)
It should not make suggestions
for the amendment or repeal of existing laws.
(v)
It should not refer to a matter
that is not primarily the concern of Union government.
(vi)
It should not relate to the
expenditure charged on the Consolidated Fund of India.
(vii)
It should not relate to a
matter that is under adjudication by a court.
(viii)
It should not raise a question
of privilege.
(ix)
It should not revive discussion
on a matter on which a decision has been taken in the same session.
(x)
It should not relate to a
trivial matter.
·
The significance of a cut
motion lies in:
(a) facilitating the initiation of concentrated discussion on a specific
demand for grant; and
(b) upholding the principle of responsible government by probing the
activities of the government.
·
However, the cut motion do not
have much utility in practice. They are only moved and discussed in the House
but not passed as the government enjoys majority support. Their passage by the
Lok Sabha amounts to the expressions of want of parliamentary confidence in the
government and may lead to its
resignation.
·
In total, 26 days are
allotted for the voting of demands. On the last day the Speaker puts all the
remaining demands to vote and disposes them whether they have been discussed by
the members or not. This is known as ‘guillotine’.
Passing of Appropriation Bill
·
The Constitution states that ‘no
money shall be withdrawn from the Consolidated Fund of India except under
appropriation made by law’. Accordingly, an appropriation bill is
introduced to provide for the appropriation, out of the Consolidated Fund of
India, all money required to meet:
(a)
The grants voted by the Lok
Sabha.
(b)
The expenditure charged on the
Consolidated Fund of India.
·
No such amendment can be
proposed to the appropriation bill in either house of the Parliament thatwill
have the effect of varying the
amount or altering the destination of any grant
voted, or of varying the amount of any expenditure charged on the
Consolidated Fund of India.
·
The Appropriation Bill becomes
the Appropriation Act after it is assented to by the President. This act
authorises (or legalises) the payments from the Consolidated Fund of India.
This means that the government cannot withdraw money from the Consolidated Fund
of India till the enactment of the appropriation bill. This takes time and
usually goes on till the end of April. But the government needs money to carry
on its normal activities after 31 March (the end of the financial year). To
overcome this functional difficulty, the Constitution has authorised the Lok
Sabha to make any grant in
advance in respect to the estimated expenditure
for a part of the financial year, pending the completion of the voting of the
demands for grants and the enactment of the appropriation bill. This provision
is known as the ‘vote on account’. It is passed
(or granted) after the general discussion on budget is over. It is generally
granted for two months for an amount equivalent to one-sixth of the total estimation.
Passing of Finance Bill
·
The Finance Bill is introduced
to give effect to the financial proposals of the Government of India for the
following year. It is subjected to all the conditions applicable to a Money Bill. Unlike the Appropriation Bill, the amendments (seeking to reject or reduce a
tax) can be moved in the case of finance bill.
·
According to the Provisional
Collection of Taxes Act of 1931, the Finance Bill must be enacted (i.e., passed
by the Parliament and assented to by the president) within 75 days.
·
The Finance Act legalises the
income side of the budget and completes the process of the enactment of the
budget.
·
In addition to the budget that
contains the ordinary estimates of income and expenditure for one financial
year, various other grants are made by the Parliament under extraordinary or
special circumstances:
·
Supplementary
Grant It is granted when the amount authorised
by the Parliament through the appropriation act for a particular service for
the current financial year is found to be insufficient for that year.
·
Additional
Grant It is granted when a need has arisen
during the current financial year for additional expenditure upon some new
service not contempleted in the budget for that year.
·
Excess
Grant It is granted when money has been spent on any
service during a financial year
in excess of the amount granted for that service
in the budget for that year. It is voted by the Lok Sabha after the financial
year. Before the demands for excess grants are submitted to the Lok Sabha for
voting, they must be approved
by the Public Accounts Committee of Parliament.
·
Vote
of Credit It is granted for meeting an unexpected demand upon the resources of India, when on account of the magnitude or
the indefinite character of the service, the demand cannot be stated with the
details ordinarily given in a budget. Hence, it is like a blank cheque given to the Executive by the Lok Sabha.
·
Exceptional
Grant It is granted for a special purpose and forms no part of the current service of anyfinancial year.
·
Token
Grant It is granted when funds to meet the
proposed expenditure on a new service can be made available by reappropriation. A demand for the grant of a token sum (of Re 1) is submitted to
the vote of the Lok Sabha and if assented, funds are made available.
Reappropriation involves transfer
of funds from one head to another. It does not involve any additional expenditure.
·
Supplementary, additional,
excess and exceptional grants and vote of credit (first five grants) are
regulated by the same procedure which is applicable in the case of a regular
budget.
The Constitution of India provides for the
following three kinds of funds for the Central government:
1.
Consolidated Fund of India
(Article 266)
2.
Public Account of India
(Article 266)
3.
Contingency Fund of India
(Article 267)
Consolidated Fund of India
·
It is a fund to which all receipts are credited and all payments are
debited. In other words,
(a) all revenues received by the Government of India;
(b) all loans raised by the Government by the issue of treasury bills,
loans or ways and means of advances; and
(c) all money received by the government in repayment of loans forms the
Consolidated Fund of India.
·
All the legally authorised
payments on behalf of the Government of India are made out of this fund. No
money out of this fund can be appropriated (issued or drawn) except in
accordance with a parliamentary law.
Public Account of India
·
All other public money (other
than those which are credited to the Consolidated Fund of India) received by or
on behalf of the Government of India shall be credited to the Public Account of
India.
·
This includes provident
fund deposits, judicial deposits, savings bank deposits, departmental deposits,
remittances and so on. This account is operated by executive action, that is, the payments from this account can by made without
parliamentary appropriation. Such payments are mostly in the nature of banking
transactions.
Contingency Fund of India
·
The Constitution authorised the
Parliament to establish a ‘Contingency Fund of India’, into which amounts determined by law are paid from time to time. Accordingly, the Parliament enacted the
Contingency Fund OfIndia Act in
1950.
·
This fund is placed at the disposal of the president, and he can make advances out of it to meet unforeseen expenditure pending its authorisation by the Parliament. The fund is held by
the finance secretaryon behalf
of the president. Like the public account of
India, it is also operated by executive
action.
No comments:
Post a Comment