Prime Minister of India in Kannada for UPSC | ಭಾರತದ ಪ್ರಧಾನ ಮಂತ್ರಿ

Budgetary Process in India - Stages in Enactment of Budget

1. Presentation of Budget 

 The budget is presented in the Lok Sabha by the Finance Minister, traditionally on the last working day of February, but since 2017, it has been advanced to 1st February. It can be presented in parts, and no discussion takes place on the presentation day. The budget speech outlines the proposals, after which the budget is laid before the Rajya Sabha, which can discuss but not vote on it.

The key documents presented include:

1. Budget Speech
2. Annual Financial Statement
3. Demands for Grants
4. Appropriation Bill
5. Finance Bill
6. Statements under the FRBM Act
7. Expenditure Budget
8. Receipts Budget
9. Expenditure Profile
10. Memorandum on Finance Bill
11. Budget at a Glance
12. Outcome Budget

The Economic Survey, previously presented alongside the budget, is now presented separately, typically a day or a few days before the budget. Prepared by the Finance Ministry, it provides an overview of the national economy, highlighting key trends, challenges, and opportunities.

2. General Discussion

The general discussion on the budget begins a few days after its presentation and lasts for 3–4 days in both Houses of Parliament. During this stage, members discuss the budget as a whole or its principles but cannot move cut motions or vote. The Finance Minister concludes the discussion with a reply.

3. Scrutiny by Departmental Committees

After the general discussion, Parliament adjourns for 3–4 weeks, allowing the 24 Departmental Standing Committees to examine and report on the demands for grants of specific ministries. These reports, introduced in 1993 and expanded in 2004, enhance the depth and comprehensiveness of financial control over ministries.

4. Voting on Demands for Grants

Process

• The Lok Sabha votes on demands for grants presented ministry-wise, based on recommendations from Departmental Standing Committees.
• A demand becomes a grant once approved.
• Exclusivity: Only the Lok Sabha can vote on demands for grants; the Rajya Sabha can discuss but not vote.
• Limitations: Only the votable part of the budget (not charged expenditure) is subject to voting.

Cut Motions

MPs may propose cut motions to suggest reductions in specific demands for grants. These are of three types:

1. Policy Cut Motion:

   • Disapproves the policy underlying the demand.
   • Proposes reducing the amount to ₹1.

2. Economy Cut Motion:

   • Suggests savings in proposed expenditure.
   • Proposes reducing the demand by a specific amount.

3. Token Cut Motion:

   • Highlights a specific grievance within the government’s responsibility.
   • Proposes reducing the demand by ₹100.

Policy Cut Motion: By reducing the amount to ₹1, MPs signal a complete rejection of the policy while emphasizing the need for an alternative approach. This is primarily used to highlight significant disagreements with government policies during parliamentary debates.

Token Cut Motion: is like raising a small flag in Parliament to draw attention to a specific problem that the government has not addressed.

For example:

• Imagine there's a lack of proper infrastructure in rural schools.
• An MP may propose to reduce the budget by ₹100 (a very small, symbolic amount).
• The purpose is not to cut the actual money but to highlight this issue and force the government to explain or take action.

It’s called a "token" motion because ₹100 is just a symbol to bring focus to the problem, not to reduce the funding in reality.

Conditions for Cut Motions

Cut motions must meet specific criteria, such as:

• Relating to one demand only.
• Being concise and specific without arguments or defamatory language.
• Not addressing matters outside the Union government's purview or charged expenditures.
• Avoiding trivial matters or issues pending before judicial bodies.

Significance

• Facilitates detailed discussions on specific grants.
• Ensures accountability by probing government actions.
• However, cut motions rarely pass due to the ruling party's majority in the Lok Sabha. Their passage would indicate a lack of parliamentary confidence in the government, potentially leading to its resignation.

Guillotine

On the final day allotted for discussing demands for grants, the Speaker disposes of all pending demands through a 'guillotine', regardless of whether they were discussed.

5. Passing of Appropriation Bill

The Appropriation Bill is introduced to authorize the withdrawal of funds from the Consolidated Fund of India for:

1. Grants voted by the Lok Sabha.
2. Expenditure charged on the Consolidated Fund of India.

Key Features

• Amendments that alter the amount or purpose of any grant or charged expenditure are not allowed.
• Once passed by Parliament and assented to by the President, the bill becomes the Appropriation Act, allowing the government to legally withdraw funds.

Vote on Account

Let me explain it simply:

The government needs permission from Parliament to take money out of the Consolidated Fund of India to pay for its expenses. For this, an Appropriation Bill is introduced.

Once the bill is passed by Parliament and signed by the President, it becomes the Appropriation Act, which legally allows the government to spend money.

Why is 'Vote on Account' Needed?

The process of passing the Appropriation Bill takes time (usually until the end of April). But the government needs money to keep working from April 1 (new financial year).

To solve this problem:

• A Vote on Account is passed as a temporary measure.
• It allows the government to use a small portion of the budget (usually for 2 months).
• This ensures there is no disruption in government activities while the full budget is being approved.

Think of it as giving the government a temporary allowance until the full budget is finalized.

Don’t worry, I’ll explain with an example to make it clear:

Scenario 1: Regular Year (No Elections)

• The Union Budget is presented on 1 February and passed by March.
• This means the government has enough time to approve the budget before the financial year starts on 1 April.
• No need for a vote-on-account because everything is on schedule.

Scenario 2: Election Year (Example: General Elections in May)

Here’s what happens:

1. Interim Budget in February:

   • Before the elections, the government presents an Interim Budget in February.
   • This is a temporary budget to cover basic expenses like salaries, subsidies, and essential programs.
   • It does not include new policies because the outgoing government doesn’t want to bind the incoming one.

2. Vote-on-Account:

   • The government asks for a vote-on-account to spend money for 3-5 months (April to June) until the new government takes over.
   • Example: If ₹12 lakh crore is the annual budget, it gets approval for ₹3 lakh crore (1/4th of the budget for 3 months).

3. Regular Budget After Elections:

   • Elections are held in May, and a new government takes charge.
   • In July, the new government presents the Regular Budget, which includes all its policies and plans for the entire year.

Why Was the Budget Date Advanced (Post-2017)?

• Earlier, the budget was presented in late February, and the approval process stretched into April or May, leading to reliance on a vote-on-account every year.
• Now, by presenting the budget on 1 February, the government can pass the full budget before 31 March, avoiding a vote-on-account except in election years.

Simple Example:

• Imagine you’re running a shop, and elections mean you’re handing it over to a new manager soon.
• Interim Budget: You only plan for basic operations (like salaries and rent) for 3 months.
• Vote-on-Account: You ask for enough money to keep the shop running temporarily.
• Regular Budget: Once the new manager takes over, they create a full plan for the rest of the year.

Other Grants made by Parliament under special circumstances:

Types of Grants:

1. Supplementary Grant:

   • Why? If the amount allocated for a particular service in the budget is insufficient during the financial year.
   • Example: If ₹500 crore was allocated for disaster relief, but more is needed due to unforeseen calamities, a supplementary grant is made.

2. Additional Grant:

   • Why? When a new service or expenditure not included in the original budget arises.
   • Example: A new government scheme or unforeseen international commitments.

3. Excess Grant:

   • Why? If the government spends more than what was approved in the budget.
   • Process: Must be approved by the Public Accounts Committee before being voted on by the Lok Sabha.
   • Example: If ₹700 crore was approved for education, but ₹750 crore was spent, an excess grant covers the difference.

4. Vote of Credit:

   • Why? For unexpected and large-scale expenses that cannot be detailed in the budget.
   • Example: A sudden war or natural disaster requiring immediate, large, and undefined spending.
   • Think of it as a blank cheque given to the government.

5. Exceptional Grant:

   • Why? For a specific purpose that does not relate to the current financial year’s regular services.
   • Example: Hosting a global summit or commemorating a historic event.

6. Token Grant:

   • Why? When funds can be made available by reappropriation (shifting funds between existing allocations).
   • How? A token sum of ₹1 is granted to signify approval for the transfer.
   • Example: Funds for a new project can be sourced from unutilized money in another head of expenditure.

Key Points:

• Reappropriation: Moving funds from one purpose to another, without extra spending.
• Procedure: All grants (except Token Grant) follow the same steps as the regular budget.
• These grants ensure flexibility in managing unforeseen or extraordinary situations.

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