Budget of India and Procedure of its Approval in Parliament

Budget of India and Procedure of its Approval in Parliament

  • (Article 79 to 122 of Part V)
  • Parliament is the legislative organ of the Union Government.
  • Since, India has a Parliamentary system, hence Parliament occupies the central Position.
  • Indian Parliament has three broad parts, namely – The President, Lok Sabha and Rajya Sabha.

Budget of India in Parliament

  • Also known as Annual Financial Statement 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.
  • The Budget contains the following, besides the estimates of Revenues and Expenditures –
      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.
      5. Economic and financial policy of the coming year, that is, taxation proposals, prospects of revenue, spending programme and introduction of new schemes/projects.
  • Previously, there were two separate budgets namely, General Budget and Railway Budget.
  • The Railway Budget was separated from the General Budget in 1921 on recommendation of Acworth Committee.
  • Now, both the budgets are merged together in 2017 Budget. For this, Central Government formed a Committee comprising of officials both the Finance Ministry and Railway Ministry in August 2016.

Budget of India and Procedure of its Approval in Parliament, Presentation of budget, General discussion, Scrutiny by departmental committees, Voting on demands for grants, Passing of appropriation bill, Passing of finance bill, etc.

Constitutional Provisions

  • For enactment of the Budget, Constitution have following provisions –
      1. The President shall present a statement of estimated receipts and expenditures of Government of India for the year before both the House of the Parliament.
      2. No money shall be withdrawn from the Consolidated Funds of India except under Appropriation made by law.
      3. Money bill for imposing tax can be introduced on the recommendation of President only, which cannot be introduced in Rajya Sabha.
      4. Parliament can reduce or abolish a tax but cannot increase it.
      5. No tax shall be levied or collected except by authority of law.
      6. The Houses of Parliament should follow the following according to the Constitution –
      7. A money bill or Finance bill dealing with taxation can only be introduced in Lok Sabha only.
      8. Rajya Sabha has no power to vote on demands of Grants which is exclusive privilege of Lok Sabha.
      9. Rajya Sabha should return the Money Bill within 14 days to Lok Sabha. Lok Sabha can either accept or reject the recommendations made by Rajya Sabha.
      10. The budget shall distinguish expenditure on revenue account from other expenditure.
      11. The expenditure charged on the Consolidated Fund of India shall not be submitted to the vote of Parliament.

Charged Expenditure

  • The Budget has two types of Expenditure –
      1. Expenditure CHARGED on Consolidated Fund of India – Non votable by the Parliament but can be discussed.
      2. Expenditure MADE from Consolidated Fund of India – Votable in Parliament.


Stages in Enactment of Budget of India

  • 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.
    1. Presentation of Budget

      • General Budget 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 where it can only be discussed.
    1. General Discussion

      • Few days after the presentation of the Budget, Discussion on it takes place in both the Houses.
      • Lok Sabha can discuss the budget but no cut motion can be moved nor can the Budget be submitted for vote of the House.
      • The finance minister has right of reply at the end of the discussion.
    1. Scrutiny by Departmental Committees

      • After General Discussion, the Houses are adjourned for about 3 – 4 weeks.
      • During this period, the Departmental Standing Committees examines and discuss in detail the demands for grants of the concerned ministers and prepare reports on them.
      • These reports are submitted to both the house for Consideration.
      • This system makes parliamentary financial control over ministries much more detailed and inclusive.
    1. Voting on Demands for Grants

      • After going through the reports of Standing Committees, the Lok Sabha takes up Voting of demands for grants.
      • A demand become a Grant after it has been duly voted.
      • The Lok Sabha has exclusive privilege in voting for the Grants, Rajya Sabha has no powers in voting.
      • Voting is confined to votable part of the budget only.
      • 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 which are called as ‘Cut Motion’. It is of following types –

a. Policy Cut Motion

              • Represents the disapproval of the policy of the demand.
              • States that amount of demand be reduced to Rs. 1.
              • The members can also advocate an alternative policy.

b. Economy Cut Motion

              • Represents the economy that can be affected in the proposed expenditure.
              • States that the amount of the demand be reduced by a specified amount.

c. Token Cut Motion

              • States that the amount of the demand be reduced by Rs 100.


        • A Cut Motion is Significant because
            1. It facilitating the initiation of concentrated discussion on a specific demand for grant
            2. It Uphold the principle of responsible government by examining the activities of the government.
        • In total, 26 days are allotted for the voting of demands. On last day, all the remaining demands are put to vote and are disposed whether discussed or not.
    1. Passing of Appropriation Bill

      • An appropriation bill is introduced to provide for the appropriation, out of the Consolidated Fund of India, all money required to meet –
      • The grants voted by the Lok Sabha.
      • The expenditure charged on the Consolidated Fund of India.
      • No amendment can be made to the Appropriation bill in either House of Parliament that effect the amount or altering its destination of any voted Grants.
      • The Appropriation Bill becomes the Appropriation Act after assent by the President. This act authorises the payments from the Consolidated Fund of India.

Vote on Account

          • All these steps takes time for completion, but for carrying out its normal activities Government needs funds after 31st
          • To overcome this, the Constitution of India authorises Lok Sabha to make any grant in advance in respect to the estimated expenditure for a part of financial year. This Provision is known as Vote on Account.
          • It is passed 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.
    1. Passing of Finance Bill

      • They are introduced to give effect to the financial proposals of the Government for the following year.
      • Amendments can be moved in the case of finance bill.
      • The Financial Bill must be enacted within 75 days, according to the Provisional Collection of Taxes Act, 1931.
      • The Finance Act legalises the income side of the budget and completes the process of the enactment of the budget.

Other Grants

  • Under extraordinary Conditions or special circumstances, the Parliament makes various other grants in addition to budget. These are –
    1. Supplementary Grant
      • Granted when the amount authorised by the Parliament for a particular service for the current financial year is found to be insufficient for that year.
    2. Additional Grant
      • Granted when a need has arisen during the current financial year for additional expenditure upon some new service not expected in the budget for that year.
    3. Excess Grant
      • 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.
    4. Exceptional Grant
      • Granted for a special purpose and forms no part of the current service of any financial year.
    5. Vote of Credit
      • 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 of India.


So, this post was all about the Budget of India or Annual Financial Statement of India and procedure for its approval in Parliament.

In Next Post (Click Here), we will learn about the different types of Funds as mentioned in Constitution of India.

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