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Posted by on Feb 22, 2014 in Union Legislature |

Budget – Demand for Grants and Appropriation Bill

The Article 112 of the Constitution states that at the dawn of every financial year, the President shall lay down a statement of estimated receipts and expenditures of Govt of India for upcoming year. This statement is called ‘Annual Financial Statement’ and popularly known as the Budget. The actual document contains:-

  • Estimates of revenue, receipts and expenditure;
  • Details of the receipts and expenditure of closing financial year and explanation for any deficit or surplus;
  • Ways and means to increase revenue;
  • An explanation of Economic & financial policy and spending programme of govt in next financial year.
  • The Govt of India has two budgets say i) General Budget and ii) Railway Budget. The reason behind different budget for railways are size of Indian railways, directly use of profits in development of railways only and in other words as railways is a lifeline of country and symbol of unity in diversity.

Presentation of Budget

  • The rules of procedure say that the budget is presented to parliament on date fixed by President. Generally, the General Budget is presented on last working day of Feb (except year of election) by Finance Minister and Railway Budget is in third week of Feb by Railway minister.
  • The Finance minister makes a speech in LS introducing the budget includes only concluding part of it mainly taxation proposals. After budget speech in LS, the budget is laid on table of RS. No discussion is held on day of presentation.

Demand for Grants

  • General Discussion – Generally after few days of presentation of Budget as decided by Speaker, the budget is discussed in parliament but only outlines of budget and voting or motion can be moved. It lasts for 4 to 5 days only. The Finance Minister has right to reply at end of every discussion.
  • Standing Committee – After general discussion is over, the houses are adjourned for fix period say 3-4 weeks. During this period, Demand for Grants of various Ministries/Dept is considered by respective Standing Committees. The Committees shall submit their report before the Parliament in a fix time period and report shall be persuasive in nature. The system of consideration by Standing Committee is introduced in 1993-94 for comprehensive or detailed analysis.
  • Voting on Demand for Grants – After reports of Standing Committees, the house proceeds to discussion and Voting on Demand of Grants as per time allotted by speaker. The Voting on grants is exclusive privilege of LS and voting of charged expenditure on Consolidated Fund of India (CFI) is not permitted.
  • Cut Motions – the motions are used to reduce Demand for Grants are known as ‘Cut Motions’. These are categorized in three types:-
    • Disapproval of Policy Cut – It reduces the amount of demand to Rs 1 and represents disapproval of policy underlying the demand. The discussion is confined to specific point under notice and it is open for the member to advocate for alternative policy.
    • Economy Cut – This motion is used to reduce amount of demand by specific amount either a lump sum reduction or omission of an item from Demand.
    • Token Cut – It says that amount of demand shall be reduced by Rs 100 and this highlights a specific grievance to Govt of India. The discussion is confined to that grievance only.

The Cut Motion principle is upholding the principle of responsibility of govt but in practice it doesn’t have much utility as majority govt passed grants as desired.

  • Admissibility of Cut Motions – A cut motion, to be admissible, must satisfy following conditions:-
    • It should relate to one demand only;
    • Confined to one specific matter;
    • It should not relate to matters a) which are not deal by Govt of India, b) which are under inquiry of court of law or tribunal, c) of charged expenditure on CFI, d) of privilege, e) of amendment or repeal of existing laws and f) which are trivial in nature.

At the last day of allotted time (generally 26 days), all the demand for grants are put on vote whether discussed or not and this is called ‘Guillotine’.

Appropriation Bill

  • After the grants have been passed by LS, a bill is introduced for appropriation out of CFI of all money as required for demand for grants and expenditure charged on CFI. The procedure to pass Appropriation bill is same as of Money Bill.
  • No such amendments can be proposed to alter amount of any grant and expenditure charged on CFI, and the decision of Speaker on admissibility of amendment is final.
  • Vote on Account – As whole budget process takes around 2months (end about last of April) and crosses current financial year. So constitution authorize parliament to make any grant in advance through Vote on Account for estimated expenditure of earlier part until budget process is over. This is passed by LS after general discussion and almost without any opposition.

Finance Bill

  • “Finance Bill” introduced every year to give effect to the financial proposals of the Government of India for the next following financial year and includes a Bill to give effect to supplementary financial proposals for any period. It is treated as money bill but amendment can be moved.
  • It contains a declaration under Provision Collection of Taxes, 1931 which declared that provision of imposing or increasing in duties of custom & excise come into force immediately after its introduction and the bill shall be passed by Parliament within 75days from introduction.

Other Grants

  • Supplementary Grant – It is granted when grant authorized by Parliament for current financial year is found to be insufficient.
  • Additional Grant – it is granted for additional expenditure upon some new service not included in budget for that year.
  • Excess Grant – it is granted when money spent on any service is more than allotted in budget for that year. It is voted by LS after approval of Public Accounts Committee.
  • Vote of Credit – it is granted to meet any unexpected expenditure. It is a kind of Blank Cheque.
  • Exceptional Grant – It is granted for special purpose and forms no part of current service.
  • Token Grant – When funds to meet proposed expenditure on a new service can be made available by re appropriation, a demand for the grant of a token sum (of Rs 1) may be submitted to the vote of the House and, if the House assents to the demand, funds are made available.
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