Constitutional Provisions for Budget in India

 Constitutional provisions relating to Budget

-By Shreya Verma

Generally, a budget deals with an idea or overview as to how a particular amount of money is to be spent in a given period. It is made on the basis of income and available resources and how to use it intelligibly to meet the needs and to get maximum benefit. Similarly, budget of a nation works. A budget is needed so as to allocate finances and resources equitably. Since there was a limit to the sources there is a need for proper budgeting to allocate scarce resources for various government activities like human resource development, agriculture, defence, etc. A budget is preceded by an economic survey in which the current income is evaluated and an estimate of expenditure is made. Indian Parliament is based upon the 'Westminster model' as per which, the power of purpose of the country is restricted in the hands of chosen representatives.

Provisions under Indian constitution: Though, Indian Constitution nowhere mentions the word 'budget' it is dealt with, as 'Annual Financial statement' under Article 112. Articles 112-116 constitutes the budget of Union Government and the appropriation thereof. The financial statement takes into account the per the period of one financial year commences from 1st April till 31st March of the coming year. It consists of estimated income and expenditure for that year. This estimated expenditure is shown in different heads, Firstly, the sums charged upon the Consolidated funds of India and Secondly, the sums required to meet other expenditure out of the Consolidated funds of India.

 The budget is presented in the Parliament by the president in both the houses of parliament. Article 112 provides for the annual financial statement showing the income and expenditure. The budget mentions the fixed budget and proposed budget separately. The fixed expenditure has been laid down in the constitution itself and are open to discussion under Article 113(1) but are not subjected to vote. After the statement has been made under Article 112 it is presented to the house of People (Lok Sabha) who have the authority to grant such demands. This demand for grant can be made only by the recommendation of the President. After the Grant has been made, an appropriation Bill under Article 114 is passed and the money so estimated and granted by the Lok Sabha is withdrawn from the Consolidated Fund of India. The procedure for withdrawal of funds from the Consolidated funds is laid down in Art. 114, which lays that no money can be taken out unless the Appropriation Act is passed. A boll known as Appropriation Bill is passed in Lok Sabha that specifies all the grants made by Lok Sabha and the expenditure charged on Consolidated fund of India as shown in previous statement before the parliament.

 No money apart from this can be withdrawn from the consolidated fund except for supplemental or exceptional grants under Articles 115 and 116 of the constitution. Supplementary grant can be sought when the funds for a particular funds is found to be insufficient or when a need has been arisen for a new service in a particular financial year. It is withdrawn in the same manner as the appropriation Bill. And an exceptional grant is made to meet an unexpected demand (Like medical expenses in the time of pandemic) upon the resources of India, when on the account of indefinite character of the services, the demand cannot be stated with details ordinarily given in an Annual Financial Statement.

After a few days of presentation of budget, the discussion on the budget begins. The budget is discussed in two stages in Lok Sabha, first, there is a general discussion on the budget as a whole in which the broad outlines of the budget and the principles and policies underlying it are discussed. After this, the house is adjourned and during this time the demands and grants of various Ministries and departments of government are made to be scrutinized by the concerned standing committee. And after these standing committees are presented to the house, the house proceeds to discuss and vote on the demands of grants ministry-wise. Lok Sabha has the power to assent or refuse to give assent any demand or even to reduce the amount of grant sought by the government.

Along with the annual financial statement the government presents the following documents: 

  • an explanatory memorandum briefly explaining the nature of recess and expenditure during the current year and the next year; 

  • the reasons for variation in the estimates for the 2 years; 

  • the books of demand showing the provisions ministry-wise; and 

  • a separate demand for each department and service of the ministry.



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