Budgetary Procedure – Enactments of Budget in the Parliament

It is also called as ‘enactments of budget’ which means converting

the two bills into acts. The passage in Parliament has five stages:
1.Presentation of the budget with the Finance Minister’s speech
2.General discussion of the budget. After this, there is an
adjournment of houses so that standing committees scrutinize the
demand for grants for a month.
3.Voting on demand for grants in Lok Sabha
4.Passing of appropriation bills
5.Passing of Finance bills.
Article 112 of the Constitution enjoins upon the President of India to
get the budget presented before both of the houses of Parliament.
Being a Money Bill, it has to be presented to the Lok Sabha first and
must classify the charge on the Consolidated Fund and expenditure on
the Consolidated Fund of India separately.
There is a prescribed legislative procedure in each house and
the Rajya Sabha should not delay it for more than fourteen
days. The Consolidated Fund, Contingency Fund, and public account
transactions are updated to appraise the Parliament which operates
the Consolidated Fund at the President’s disposal and takes stock of
public account assets and liabilities without voting on them. The
budget in India had to pass through three readings without any
committee stage.
Budget Presentation
The first reading is called the presentation of the budget which includes the
following documents:
•The economic survey report,
•Economic classification of the budget,
•Annual reports of the ministries,
•An explanatory memorandum on the budget,
•An Appropriation Bill, and
•A Finance Bill containing the taxation proposals.
The Budget is presented on 1st February (until 2016, it was presented on the
last working day of February) so that it can materialize before the
commencement of the new financial year which starts on 1st April. The
finance minister presents the General Budget with a speech known as
the ‘budget speech’. At the end of the budget 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 demand for grants.
General Discussion
The general discussion on a budget takes place during the budget
session. It lasts 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 motion is moved or submitted for
the vote of the House. The finance minister has a right to reply at
the end of the discussion. After the general discussion on budget,
the Lok Sabha takes upvoting of demands for grants.
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.
Voting on Demands for Grants
They are presented ministry-wise and demand becomes a grant after
it has been voted. The voting of demands for grants is the exclusive
privilege of the Lok Sabha and not of Rajya Sabha. The voting is
confined to the votable part of the budget but the expenditure
charged on the Consolidated Fund of India can only be discussed.
The General Budget has totally of 109 demands (103 for civil
expenditure and 6 for defense expenditure), the Railway Budget has
32 demands. Each demand is voted separately by the Lok Sabha.
During this stage, the members of Parliament can discuss the details
of the budget. They can also move to reduce any demand for
grants. But increase or upward revisions of estimates are not
permissible.
The members who propose a reduction of grant bring three kinds
of cut motions which are either withdrawn or dropped because their
passing will be tantamount to a vote of no confidence in the
government. Still, to attract the attention of the government, the cut
motions are moved to bring moral pressure on the executive.
These cut motions are:
(1) Token Cut Motion: It expresses a specific grievance that is
within the sphere of responsibility of the government. It states
that the amount of the demand be reduced by Rs 100. On the
26th day, the Speaker puts all the remaining demands to vote and
disposes of them whether they have been discussed by the
members or not. This is called as ‘Guillotine closer’.
(2) Policy Cut Motion shows disapproval of the policy underlying
a demand. It states that the amount of the demand be reduced
to Re 1.
(3) Economy Cut Motion asks for the economy in the proposed
expenditure. It states that the amount of the demand be
reduced by a specified amount which may be either a lump-sum
reduction or omission or reduction of an item in the demand.
Article 113 and 114 provide for the presentation of various kinds of demands
for grants by the Parliament. Some of them are:
(1) Vote on 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.
(2) Vote on accounts
Vote on Account is a grant in advance to enable the government to carry
on until the voting of demands for grants and the passing of the Appropriation
Bill and Finance Bill.
(3) Vote on exceptional grants
It is granted for a special purpose and forms no part of the current service of any
financial year.
(4) Supplementary grants
It is granted when the amount authorized by the Parliament through the
appropriation act for a particular service for the current financial year is found
to be insufficient for that year.
(5) Excess grants
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.
(6) Token grants
It is granted when funds to meet the proposed expenditure on a
new service can be made available by reappropriation. 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 the transfer of funds from one head to
another. It does not involve any additional expenditure.
In addition to the budget, various other kinds of grants are made by the
Parliament under extraordinary or special circumstances. When the amount
authorized by the Parliament through the Appropriation Act for a particular
service for the current financial year is found to be insufficient for the purposes
of that year supplementary grants are sanctioned by the Parliament.
Similarly, when a need has arisen during the current financial year for additional
expenditure upon some new service not contemplated in the budget, Parliament
may consider additional grants. Excess grants are given 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. Only, if approved by the
Public Accounts Committee to meet an unexpected demand upon resources and if
the account is huge or of indefinite character, the vote on credit is resorted to
like a blank cheque given to the executive by the Lok Sabha.
For special purposes that form no part of the current service of any financial year,
exceptional grants can be made. Parliament makes token grants available if funds
to meet the proposed expenditure on a new service are available by re-
appropriation. Demand for the grant of a token sum (of Re 1) is submitted to the
vote of the Lok Sabha and if assented, funds follow. Supplementary, additional,
excess, and exceptional grants and vote of credit are regulated by the same
procedure which is applicable in the case of a regular budget.
 Passing of Appropriation Bill
The Appropriation Bill and Finance Bill after the debate is put to vote
on the floor of the Parliament sequentially. The Appropriation Bill
comes first and then the Finance Bill has to make revenue provisions for
the stipulated expenditure sanctioned by the Parliament. No
amendment can be proposed to the Appropriation Bill in either
house of the Parliament which will have the effect of varying the
amount or altering the destination of any grant voted.
The Appropriation Bill becomes the Appropriation Act after it is
assented to by the President. This Act authorizes the payments from
the Consolidated Fund of India. If the government needs money to
carry on its normal activities after 31st March, the Constitution
authorizes the Lok Sabha to make a grant in advance in respect to
the estimated expenditure for a part of the financial year, pending
the enactment of the Appropriation Bill. This ‘Vote on Account’ is
passed after a general discussion on budget and is generally granted for
two months for an amount equivalent to one-sixth of the total
estimation.
Passing of Finance Bill
The Finance Bill when passed legalizes the income side of the
budget. According to the Provisional Collection of Taxes Act 1931,
the Finance Bill in India has to be passed within 75 days. The bill
gives effect to supplementary financial proposals for any period.
It is a money bill for procedural purposes and unlike the Appropriation
Bill, the members can move amendments to reject or reduce a tax in a
prescribed manner. The proposals for new taxation require the previous
consent of the President before the presentation.