The constitution under article 112 provides for ‘Annual Financial Statement’, which is popularly known as Budget. It is through the annual budget that the government gets sanction for the mobilisation of financial resources. 

Stages involved in the Passage of Budget

• Presentation of Budget: Budget is presented in the Parliament by the Union Finance Minister on 1st February. The Union Finance Minister presents the Budget with a budget speech in the Parliament. The budget is then presented in both houses of Parliament.

• General Discussion: 

• This process begins a few days after the budget presentation. 

• Members of Parliament deliberate on the major policies proposed in the budget during such discussion. 

• This discussion lasts for around four days and no motion is moved at this stage nor the budget is put to vote. 

• At the end of the discussion, the Finance minister replies to the concerns raised by members of the parliament.

• Scrutiny by departmental committees:

• Once the general discussion on the Budget concludes the Houses of the parliament are adjourned for about three weeks. 

• During this period of three weeks, the department related standing committees scrutinise the bills, demand for grants of each department and ministry. 

• These committees submit their report on the Budget documents to both the houses for consideration.

• Voting on demand for grants: 

• This stage involves detailed discussion followed by voting on demand for grants of various ministries. 

• The demands are presented ministry wise and each demand is voted only by the Lok Sabha (Rajya Sabha has no power to vote on Demand for Grants).

• Appropriation Bill:

• The Constitution mandates that no money can be withdrawn from the Consolidated Fund of India without enactment of law by the Parliament. 

• Consequently, a bill that includes all the demands for grants approved by the Lok Sabha and expenditures charged against the Consolidated Fund of India is presented in the Lok Sabha. This bill is referred to as the Appropriation bill.

1. 1. • Passing of the Appropriation Bill gives legal effect to the voted demands and authorises the government to withdraw money from the Consolidated Fund of India.

• Finance Bill: 

1. • All the financial proposals of the Union Government for the upcoming financial year are incorporated in this bill.
   • Passage of this is the last stage in enactment of the budget.
   • Provisional Collection of taxes (Amendment) Act 1964, mandates that the finance bill must be passed by the Parliament and assented to by the President within 75 days of its introduction in the Parliament.

Cut Motions in Budget

Cut motions are part of the budgetary process which seeks to reduce the amounts demanded by various ministries and departments through ‘demand for grants’. These can be introduced only in the Lok Sabha and the decision to allow the cut motion rests solely with the Speaker of the Lok Sabha. They seldom get passed as the government enjoys majority in the Lok Sabha.

Following are the types of cut motions:

• Policy Cut Motion: 
  • Form of motion: It includes the statement “the amount of demand be reduced to ₹ 1.” 
  • Purpose: To convey total disapproval of the policy behind the ‘demand for grant.’.

• Economy Cut Motion: 
  • Form of Motion: It states that “the amount of the demand be reduced to ….(a specified amount)”. 
  • Purpose: To express concern for the economy that would be affected due to proposed demand.
• Token Cut Motion: 
  • Form of Motion: It states that “the amount of the demand be reduced by ₹ 100”. 
  • Purpose: To express a particular grievance for which the Government of India is responsible.

Funds Under the Indian Constitution

• Consolidated Fund of India

• It is mentioned in Article 266 (1) provides for this fund. This article also provides for Consolidated Funds of States. 

• No money can be withdrawn from this fund except through a law of the Parliament. 

• Following are the deposits made in the Consolidated Fund of India:

• All revenues received by the Government of India;

• All loans raised by the Government of India;

• All the money received by the government in the form of recovery of loans.

• Public Account of India

1. 1. • It is mentioned in Article 266 (2). This article also provides for Public accounts of states. 
      • Public money, other than which is deposited in the Consolidated Fund of India, is deposited under this account. It includes:
        • Provident Fund deposits,
        • Judicial deposits,
        • Departmental deposits,
        • Remittances, etc.
      • This account is under the control of the government. No Parliamentary approval is required to withdraw money from this account.

• Contingency Fund of India

• It is mentioned in Article 267. This article also provides for Contingency Funds of states. 

• The Contingency Fund of India is held by the Finance secretary on behalf of the President. 

• This fund is used to meet unforeseen expenditure that might have arisen due to some calamity or any such event. 

• The amount of money that needs to be deposited in this fund is decided by the Parliament through a law.

Types of Grants in Indian Parliament

Under extraordinary or special circumstances, various grants are made by the Parliament. This is in addition to the money sanctioned in the Budget. Following are the types of grants:

• Supplementary Grant: If the funds authorized by Parliament in the Appropriation Act for a specific service are deemed inadequate, the Lok Sabha allocates additional funds through this grant. 
• Additional Grant: If a necessity arises for extra spending during a financial year for a new service that was not included in the budget’s demand for grants, the Lok Sabha provides additional funds through this grant. 
• Excess Grant: This is granted by the Lok Sabha when expenditures on any service exceed the amount that was authorized for that service. Before the request for Excess Grants is presented to the Lok Sabha for a vote, it must receive approval from the Public Accounts Committee. 
• Exceptional Grant: This grant is provided for a specific and unique purpose that does not fall under the current financial service of any fiscal year. 
• Token Grant: This grant is issued when funds for anticipated expenditures on a new service can be obtained by re-appropriation, which refers to moving funds from one service to another, without incurring any extra costs. 
• Vote of Credit: This is given to address an unforeseen financial demand, similar to a blank cheque issued to the Government by the Lok Sabha