Budget in Parliament

The enactment of the Budget in Parliament follows a well-defined multi-stage process, ensuring detailed scrutiny and legislative control over public finances.

1. Presentation of the Budget

• The Budget is presented in the Lok Sabha by the Finance Minister on behalf of the President. It includes the Annual Financial Statement along with the Budget Speech, which outlines the government’s fiscal policy, priorities, and major proposals for the coming financial year.
• In certain situations, the Budget may be presented in multiple parts, and each part is treated as an integral component of the overall Budget. No discussion on the Budget takes place on the day it is presented.
• The presentation of the Budget is accompanied by the Budget Speech, in which the Finance Minister outlines the government’s economic policies, fiscal priorities, and major proposals for the upcoming financial year.
• After the presentation of the Budget in the Lok Sabha, a copy thereof is simultaneously laid on the Table of the Rajya Sabha.  However, the Rajya Sabha can only discuss the Budget and does not have the power to vote on Demands for Grants.
• The presentation of the General Budget is followed by introduction of the Finance Bill, and thereafter, the Lok Sabha adjourns for the day. There is no Question Hour on the day of presentation of the General Budget in the House. 

2. General Discussion

• General discussion on the Budget is usually initiated first in the Lok Sabha and then in the Rajya Sabha as it is the prerogative of the Lok Sabha to discuss it and make modifications. 
• On a day appointed by the Speaker, subsequent to the day of presentation of the Budget and for such time as the Speaker may allot, the House is at liberty to discuss the Budget as a whole or any question of principle involved therein, but no motion can be moved nor is the Budget submitted to the vote of the House at this stage. 
• The Minister of Finance has a general right to reply at the end of the discussion. 
• The scope of discussion at this stage is confined to examination of the general scheme and the structure of the Budget. 
• The discussion has to be limited to the point whether the Items of expenditure ought to be Increased or decreased having regard to the importance of a particular item and also to the manner in which the Budget is framed. 
• The policy of taxation as expressed in the Budget and in the Speech of the Minister of Finance remains within the purview of general discussion. Grievances, which have no relation to the points raised in the Speech of the Minister of Finance or do not directly arise out of the proposed expenditure are not in order at this stage.

3. Vote on Account 

• Since the entire Budget process—from its presentation to the final voting on Demands for Grants and the passing of the Appropriation Bill—takes considerable time, the Constitution provides a mechanism to ensure that government functions are not disrupted.
• Under this provision,the Lok Sabha is empowered to make any grants in advance in respect of the estimated expenditure for a part of any financial year, pending the completion of the procedure for the voting of the Demands for Grants and passing of the connected Appropriation Bill. This arrangement is known as a Vote on Account.
• The primary objective of a Vote on Account is to ensure continuity in government operations until the budget is approved by Parliament.
• Typically, a Vote on Account is granted for a period of about two months, and the amount sanctioned is roughly one-sixth of the total estimated expenditure for the year. However, in an election year, it may be granted for a longer duration to accommodate delays in the formation of a new government.
• The concept of Vote on Account was first introduced in the Lok Sabha during the Budget Session of 1951, and it continues to play a crucial role in maintaining financial stability during the interim period.

4. Consideration of Demands for Grants by the Departmentally Related Standing Committees (DRSCs)

• After the General Discussion on the Budget in the Houses is over, the Houses are adjourned for a fixed period to enable the DRSCs to consider the Demands for Grants. 
• These Committees consider the Demands for Grants of the Ministries/Departments under their jurisdictions and make reports thereon to the Houses. 
• Thus, through the DRSCs the Parliament exercises effective control over the expenditure of the Executive as the Demands for Grants of all the Ministries/ Departments of the Government of India are subject to strict committee 
• Their recommendations help in informed debate, although they are not binding.

5. Discussion and Voting on Demands for Grants

• Demands for Grants
  • The estimates of expenditure from the Consolidated Fund of India, included in the Budget statement and required to be voted by the Lok Sabha, are submitted in the form of Demands for Grants. 
  • The Demands for Grants are not formally presented or laid on the Table of the Lok Sabha. These form part of the Budget papers and are distributed to Members alongwith Budget documents. 
  • The Lok Sabha has the power to assent; or to refuse to assent to any Demand or to assent to any Demand subject to reduction of the amount specified therein. 
  • Each Demand first gives the total of ‘voted’ and ‘charged’ expenditure as also the ‘revenue’ and ‘capital’ expenditure included in the Demand separately, and also the grand total of the amount of expenditure for which Demand is presented. This is followed by the estimates of expenditure under different heads. 
  • The estimates of expenditure ‘charged’ on the Consolidated Fund of India are not submitted to the Vote of the House. The House has, however, every right to discuss the same. Members may also ask for any information relating to those items. 
• Discussion on Demands for Grants 
  • After the Budget is presented, the discussion on Demands for Grants is organized in a structured manner. The Minister of Parliamentary Affairs, in consultation with leaders of political parties, determines the order and time allocation for discussing the demands of different ministries.
  • These proposals are then placed before the Business Advisory Committee.
  • The Business Advisory Committee after considering the proposals submitted by the Government makes a report to the House. 
  • After the adoption of the report by the House, the allocation of time to various Ministries whose Demands for Grants are to be discussed in the House, is published in Bulletin Part.
  •  The Minister of Parliamentary Affairs, after consulting the programme and convenience of the Ministers concerned, prepares a timetable showing the dates on which the Demands of the various Ministries would be taken up in the House and forwards the same to the Lok Sabha Secretariat.
  • The Demands for Grants are not formally moved in the House by the Minister(s) concerned. These are deemed to have been moved and are proposed from the Chair. 
  • However, a Minister can initiate discussion on the Demands for Grants relating to the Ministry concerned. 
  • At the time of discussion on the Demands for Grants in respect of a Ministry, the debate is essentially confined to a matter which is under the administrative control of that Ministry and each head of the Demand as is put to the Vote of the House. 
  • At this stage, it is open to the Members to disapprove a policy pursued by a particular Ministry or to suggest measures of economy in the administration of that Ministry or to focus attention of the Ministry to specific local grievances. 
• Cut Motions
  • When the Demands for Grants are discussed, motions can be moved for reducing the amount of any Demand for Grant. These motions are called Cut Motions. 
  • Cut Motion is a device for initiating discussion on Demands for Grants, so that the attention of the House is drawn to the matter specified in a Cut Motion. 
  • The Cut Motions are normally tabled by Members of the Opposition. The Members of the Treasury Benches (Government Party) do not generally table such notices, as it may amount to a vote of censure against their own Government. 
  • Cut Motions may be divided into the following three categories:-
    • Disapproval of Policy Cut;
    • Economy Cut; and 
    • Token Cut. 
  • It is the Speaker who decides whether a cut motion is or not admissible. 
• Disapproval of Policy Cut: 
  • Where the object of a motion is to disapprove of the policy underlying a demand, its form is “that the amount of the demand be reduced to 1”. 
  • While giving notices for such Cut Motions, the Members have to indicate in precise terms the particulars of the policies which they propose to discuss. 
  • The discussions are confined to the specific points mentioned in the notices and are open to the Members to advocate alternative policies. 
• Economy Cut: 
  • If it is contended that an economy in the expenditure can be effected, the form of the motion is “that the amount of the demand be reduced by a specified amount” . 
  • The amount suggested for reduction may be either a lump sum reduction in the Demand or omission or reduction of an item in the Demand. 
  • The Members giving notices have to indicate briefly and precisely the particular matters on which discussions are sought to be raised and their speeches should be confined to the discussion as to how economy can be effected. 
• Token Cut: 
  • In order to ventilate a specific grievance within the sphere of the responsibility of the Government of India, a motion moved in the form ”that the amount of the demand be reduced by 100″ is called a Token Cut. 
  • The discussion on such a motion is limited to a particular grievance specified in the motion. 

• Guillotine 
  • On the last day of the days allotted for discussion on the Demands for Grants at the time fixed in advance, the Speaker shall put all the outstanding Demands for Grants to the vote of the House. This process is known as Guillotine. 
  • It is a device for bringing the debate on financial proposals to an end within a specified time. Consequently, outstanding Demands have to be voted by the House without discussion. 
  • When the time for applying the Guillotine is reached, the Speaker asks the Member or the Minister whoever is in the possession of the House to resume the seat, and the Cut Motions which have been moved are immediately put to vote and disposed of. 
  • The Demands for Grants which are under discussion are then put to vote and disposed of. 
  • Thereafter, cut motions to the Outstanding Demands for Grants which have been moved are disposed of and the Outstanding Demands guillotined. 

6.Consideration and Passing of the Appropriation Bill 

After the Demands for Grants are voted, the Appropriation Bill is introduced to authorize the withdrawal of money from the Consolidated Fund of India. This Bill must be passed by Parliament for the government to spend funds

• The assent by Lok Sabha of the Demands for Grants does not by itself authorise the issue of money out of the Consolidated Fund of India to meet the grants. 
• The Constitution lays down that no money shall be withdrawn from the Consolidated fund of India except under appropriation made by law. 
• The relevant Appropriation Act is, therefore, the sole legal authority for the appropriation of money from the Consolidated fund of India to meet the grants assented by Lok Sabha. 
• The Appropriation Bill is introduced in the Lok Sabha after the Demands for Grants have been voted by the Lok Sabha. Introduction of the Bill cannot be opposed. 
• No amendment can be proposed to this bill that would change the amount or alter the purpose of any grant.
• The debate on the Appropriation Bill is restricted to matters of public importance or administrative policy implied in the grants covered by the Bill which have not already been raised while the relevant Demands for Grants were under discussion. 
• After the Lok Sabha passes the Appropriation Bill, it is transmitted to the Rajya Sabha for its recommendations. 
• The Rajya Sabha has to return the Bill within 14 days from the date of its receipt to the Lok Sabha with or without recommendation(s). 
• The Lok Sabha may either accept or reject all or any of the recommendations of the Rajya Sabha.
• Once passed by Parliament and assented to by the President, it becomes the Appropriation Act, which legally authorizes government expenditure. 

7. Consideration and Passing of the Finance Bill 

• The finance Bill is Introduced in the Lok Sabha immediately after the General Budget is presented by the Minister of Finance. 
• The motion for leave to introduce a Finance Bill cannot be opposed. 
• The finance Bill is introduced in the Lok Sabha with the recommendation of the President as provided in the Constitution. 
•  Money Bill: It invariably attracts the provisions of sub-clause (a) of Article 110(1) of the Constitution, namely the imposition, abolition, remission, alteration or regulation of any tax, and is certified by the Speaker as a Money Bill. 
• The finance Bill seeks to give effect to the financial proposals of the Government of India for the next financial year. 
• The Finance Bill submits to the jurisdiction of the Houses all the Acts which it deals with e.g. the Income Tax Act, Central Excise Act, Central Sales Tax Act, etc. and the House can amend all or any of such Acts to the extent they are dealt with in this Finance Bill. 
• There may be more than one Finance Bill during a year. 
  • Usually in an election year, the Budget is presented twice and two Finance Bills are introduced. 
• The Finance Bill usually contains a declaration under the Provisional Collection of Taxes Act, 1931 to the effect that certain provisions of the Bill relating to imposition or increase in duty of customs or excise shall come into force immediately. 
• According to Section 4 of the said Act, the declared provisions come into force on the expiry of the day on which the Bill is introduced and cease to have the force of law on the expiry of the seventy fifth day after the day on which the Bill was introduced. As such the Finance Bill is required to be passed and assented to within a period of seventy five days of its introduction. Therefore, as a convention, the Finance Bill is not referred to the Standing Committee for examination and report thereon.
• Unlike the Appropriation Bill, the amendments (seeking to reject or reduce a tax) can be moved in the case of a finance bill.
• During the discussion on the Finance Bill, members can discuss matters relating to general administration, local grievances within the sphere of the responsibility of the Government of India, or monetary or financial policy of the Government. 
• A member can discuss any action of the Government of India but actions of a State Government cannot be criticised in the discussion of a Finance Bill. 
• The Finance Bill containing the annual taxation proposals is considered and passed by the Lok Sabha only after the Demands for Grants have been voted and the total expenditure is known. There is, however, no statutory bar to consider a Bill containing permanent taxation measures before the Demands for Grants have been voted. 
• After the Finance Bill has been passed by the Lok Sabha, it is transmitted to the Rajya Sabha for its recommendations. 
• A Finance Bill, being a Money Bill, is required to be returned by the Rajya Sabha within a period of 14 days from the date of its receipt with or without recommendation(s). If the Rajya Sabha returns the Bill with its recommendation(s), the Lok Sabha may either accept or reject all or any of the recommendations made by the Raj ya Sabha. If, however, the Bill is not returned by the Rajya Sabha within the stipulated period of 14 days, it is deemed to have been passed by both the Houses of Parliament at the expiration of the said period in the form in which it was passed by the Lok Sabha.