The term ‘Budget’ is not mentioned in
Indian Constitution. The related term mentioned is ‘Annual Financial
Statement’.
What are the
constitutional requirements which make Budget necessary?
1. Article 265:
provides that ‘no tax shall be levied or collected except by authority of law’.
[ie. Taxation needs approval of Parliament.]
2. Article 266:
provides that ‘no expenditure can be incurred except with the authorisation of
the Legislature’ [ie. Expenditure needs approval of Parliament.]
3. Article 112:
President shall, in respect of every financial year, cause to be laid before
Parliament, Annual Financial Statement.
Budget Documents
The Annual Financial Statement is
one of the several budget documents presented by Finance Minister.
The Budget documents presented to
Parliament comprise, besides the Finance Minister’s Budget Speech, the
following:
1. Annual Financial Statement (AFS) – Article 112
2. Demands for Grants (DG) – Article 113
3. Appropriation Bill – Artice 114(3)
4. Finance Bill – Article 110 (a)
5. Memorandum Explaining the Provisions in the Finance Bill, 2014
6. Macro-economic framework for the relevant financial year – FRBM Act
7. Fiscal Policy Strategy Statement for the financial year – FRBM Act
8. Medium Term Fiscal Policy Statement – FRBM Act
9. Medium Term Expenditure Framework Statement – FRBM Act
10. Expenditure Budget Volume-1
11. Expenditure Budget Volume-2
12.Receipts Budget
13.Budget at a glance
14.Highlights of Budget
15. Status of Implementation of Announcements made in Finance Minister’s Budget Speech of the previous financial year.
There are also other related documents
like Detailed Demands for Grants, Outcome Budget, Annual Reports and Economic
Survey presented along with the budget documents in Parliament.
(The documents
shown at Serial 1, 2, 3 and 4 are mandated by Art. 112,113, 114(3) and 110(a)
of the Constitution of India respectively, while the documents at Serial 6,7, 8
and 9 are presented as per the provisions of the Fiscal Responsibility and
Budget Management Act, 2003. Other documents are in the nature of explanatory
statements supporting the mandated documents with narrative or other content in
a user friendly format suited for quick or contextual references. Hindi version
of all these documents is also presented to Parliament.)
Railway Budget
The Budget of the Indian Railways is
presented separately to Parliament and dealt with separately. But the receipts
and expenditure of the Railways form part of the Consolidated Fund of India and
the figures relating to them are included in the ‘Annual Financial Statement’.
Budget Presentation
In India, the Budget is presented to
Parliament on such date as is fixed by the President. Since 1999 the General
Budget is being presented at 11 A.M. on the last working day of February, i.e.
about a month before the commencement of the Financial year except in the year
when General Elections to Lok Sabha are held. In an election year, Budget may
be presented twice — first to secure Vote on Account for a few months and later
in full. From 2017-18 financial year the
budget is presented on February 1.
Vote on Account
The discussion on the Budget begins
a few days after its presentation. Since Parliament is not able to vote the
entire budget before the commencement of the new financial year (ie. within 1
month or so), the necessity to keep enough finance at the disposal of
Government in order to allow it to run the administration of the country
remains. A special provision is, therefore, made for “Vote on Account” by which
Government obtains the Vote of Parliament for a sum sufficient to incur
expenditure on various items for a part of the year.
Normally, the Vote on Account is taken
for two months only. But during election year or when it is anticipated that
the main Demands and Appropriation Bill will take longer time than two months,
the Vote on Account may be for a period exceeding two months.
So what exactly is Vote on Account?
Vote on Account is a special
provision in every budget (and not only in an interim budget) by which
Government obtains the Vote of Parliament for a sum sufficient to incur
expenditure on various items for a part of the year, usually two months. Vote
on Account deals only with expenditure part. But interim budget as well as full
budget has both receipt and expenditure side.
So presentation and passing of vote
on account is the first stage in the budget passing process. Vote on Account is
necessary for the working of the government till the period the full budget is
passed.
Budget Speech
The Budget speech of the Finance
Minister is usually in two parts. Part A deals with general economic survey of
the country while Part B relates to taxation proposals. He makes a speech
introducing the Budget and it is only in the
concluding part of his speech that the proposals for fresh taxation or
for variations in the existing taxes are disclosed by him. The ‘Annual
Financial Statement’ is laid on the Table of Rajya Sabha at the conclusion of
the speech of the Finance Minister in Lok Sabha.
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