The Parliamentary Budget process is crucial for understanding India’s financial management. It involves detailed discussions and voting on demands for grants, where the Lok Sabha holds exclusive voting authority. Various types of grants and the mechanisms for passing the Appropriation and Finance Bills ensure government accountability. This process reflects the commitment to responsible governance and effective financial oversight.
Understanding India’s Annual Financial Statement: The Parliamentary Budget Process
Voting on Demands For Grants
- Discussion on Demand for Grants: After the recess, a discussion takes place on the Demand For Grants ministry-wise, followed by a vote in the Lok Sabha.
- Exclusive Voting Authority of the Lok Sabha: Two important points should be highlighted in this context.
- Firstly, the exclusive authority to vote on demands for grants lies with the Lok Sabha; the Rajya Sabha does not possess the power to vote on these demands.
- Secondly, the voting process is restricted to the votable section of the budget, as the expenditure charged on the Consolidated Fund of India is not subject to a vote; it can only be discussed.
- Individual Voting on Demands: Each demand is individually voted upon by the Lok Sabha during this stage.
- Types of Cut Motions: Members of Parliament can delve into the details of the budget and propose motions to reduce any demand for a grant. These motions, termed ‘cut motions,’ come in three types:
- Policy Cut Motion: This signals disapproval of the policy underlying the demand, suggesting a reduction in the demand to ₹1.
- Members can also propose an alternative policy.
- Economy Cut Motion: This highlights potential savings in the proposed expenditure.
- It proposes a specified reduction in the demand, either as a lump sum or the omission or reduction of an item in the demand.
- Token Cut Motion: This addresses a specific grievance within the responsibility of the Government of India, proposing a reduction of ₹100 in the demand.
- Policy Cut Motion: This signals disapproval of the policy underlying the demand, suggesting a reduction in the demand to ₹1.
- Conditions for Admissibility of Cut Motions: For a cut motion to be admissible, it must meet certain conditions:
-
- It should pertain to a single demand.
- It must be clearly expressed and free from arguments or defamatory statements.
- It should focus on one specific matter.
- It must not suggest amendments or the repeal of existing laws.
- It should address matters primarily concerning the Union government.
- It must not relate to expenditure charged on the Consolidated Fund of India.
- It should not concern a matter under court adjudication.
- It should not raise a question of privilege.
- Significance of Cut Motions: The significance of a cut motion lies in initiating concentrated discussion on a specific demand for grants and upholding the principle of responsible government by scrutinizing government activities.
- Practical Challenges with Cut Motions: However, in practice, cut motions are often moved and discussed but not passed, as the government typically enjoys majority support.
- Their passage by the Lok Sabha signifies an expression of Parliamentary lack of confidence in the government and may lead to its resignation
- Guillotining of Other Demands: On the last day of the days allotted for discussion ,other Demand for Grants are ‘guillotined’, i.e. they are voted upon together.
- Passage into Appropriation Bill: After the Demand for Grants are passed, they are consolidated for passage into an Appropriation Bill.
- This Bill seeks to withdraw funds from the Consolidated Fund of India for the sanctioned expenditure.
- No changes can be made to the Appropriation Bill to alter the voted grants or the expenditure charged on the Consolidated Fund of India.
- Consideration of the Finance Bill: The Finance Bill is also taken up for consideration and passing.
- This Bill includes all the proposed amendments to the various tax laws.
- Timeframe for Passing the Finance Bill: According to the Provisional Collection of Taxes Act,1931 the financial bill must be passed within 75 days.
- The Rajya Sabha only has a recommendatory role in passing the Appropriation and Finance Bills as they are Money Bills.
- Extraordinary Grants by Parliament: 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:
Types of Grants
Supplementary Grant (Article 115 ) : Issued when Budgeted funds are insufficient for a particular service for the year.
- Additional Grant (Article 115) : Allocated for new services, unforeseen at the budget’s formulation.
- Excess Grant (Article 115 ) : Provided when spending exceeds the budgeted amount, it requires Lok Sabha vote post-financial year and approval by the Public Accounts Committee.
- Vote of Credit (Article 116): For unexpected demands, akin to a blank cheque from Lok Sabha to the Executive, due to the service’s large scale or indefinite nature.
- Exceptional Grant (Article 116): Given for special purposes outside of the regular services of the financial year.
- Token Grant: Approved when the expense on a new service is met through reappropriation; entails voting for a token sum (Re 1) to reallocate funds, without additional spending.
Passing of Appropriation Bill (Article 114)
- Constitutional Requirement for Withdrawal of Funds: The Constitution stipulates that “no money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law.”
- Introduction of the Appropriation Bill: Following the voting and approval of grants by the Lok Sabha, an Appropriation Bill is introduced. This bill aims to allocate funds from the Consolidated Fund of India for:
- Grants voted by the Lok Sabha.
- Expenditure charged on the Consolidated Fund of India.
- Restrictions on Amendments to the Appropriation Bill: No amendments can be proposed to the appropriation bill in either house of Parliament that would alter the amount or destination of any voted grant or the amount of any expenditure charged on the Consolidated Fund of India.
- Conversion of Appropriation Bill into Appropriation Act: Upon receiving the President’s assent, the Appropriation Bill becomes the Appropriation Act.
-
- This act legitimizes payments from the Consolidated Fund of India, signifying that the government cannot withdraw money from it without the enactment of the appropriation bill.
- Timeline for the Appropriation Process:This process typically extends until the end of April.
- Provision for Vote on Account: However, as the government requires funds to sustain normal activities beyond March 31 (the end of the financial year), the Constitution authorizes the Lok Sabha to make a grant in advance for part of the financial year.
- This provision, known as the ‘Vote on Account,’ is granted after the general budget discussion and is usually for two months, equivalent to one-sixth of the total estimate.
- Extension of Vote on Account: In an election year, when the Lok Sabha is dissolved or a new Lok Sabha is constituted, the Vote on Account may be extended for a longer period, typically 3 to 5 months.
- Changes to the Budget Session Timeline: Since 2017, the Budget session has been advanced to January 31, with the Union Budget presented on February 1.
- This change aims to eliminate the need for a Vote on Account by enabling Parliament to pass a single Appropriation Bill before the end of the financial year.
- Interim Budget Presentation: In the year of General Elections to the Lok Sabha, an Interim Budget is presented.
- After the elections and the assumption of office by the new government, the Regular Budget is presented on a date determined by the new government.
Passing of the Finance Bill
- Definition of the Finance Bill: The term ‘Finance Bill’ refers to the bill typically introduced every year to put into effect the financial plans of the Government of India for the upcoming fiscal year.
- Proposals in the Finance Bill: This bill encompasses proposals for supplementary financial matters for any specific period. It is subject to the same conditions as a Money Bill.
- Amendments to the Finance Bill: Unlike the Appropriation Bill, amendments, including those aiming to reject or reduce a tax, can be proposed for the Finance Bill.
- Discussion Opportunities for Members: During this stage, members have the opportunity to discuss various topics, such as general administration, local grievances falling under the Government of India’s jurisdiction, or the government’s monetary and financial policies.
- Timeframe for Enactment of the Finance Bill: As per the Provisional Collection of Taxes Act of 1931, the Finance Bill must be enacted—meaning passed by Parliament and approved by the President—within 75 days.
- Role of the Finance Act: The Finance Act serves to legalize the income side of the budget and concludes the budget enactment process.
| Must Read | |
| Current Affairs | Editorial Analysis |
| Upsc Notes | Upsc Blogs |
| NCERT Notes | Free Main Answer Writing |
Conclusion
In conclusion, the Parliamentary Budget process is essential for ensuring that government spending aligns with national priorities.
- Through voting on demands for grants and the approval of appropriation and finance bills, Parliament plays a vital role in financial oversight.
- The system of grants provides flexibility to address unforeseen expenditures, while the recent changes aim to streamline the budget process.
- Overall, these mechanisms uphold democratic principles and foster transparency in financial governance.
