Budget, Powers & Privileges | Polity for UPSC 2024 (Pre & Mains) PDF Download

 Page 1


Funds: 
The Cons)tu)on of India provides for the following three kinds of funds for the Central government: 
1. Consolidated Fund of India (Ar6cle 266) 
2. Public Account of India (Ar6cle 266) 
3. Con6ngency Fund of India (Ar6cle 267) 
Consolidated Fund of India: It is a fund to which all receipts are credited and all payments are debited. In 
other words, (a) all revenues received by the Government of India; (b) all loans raised by the Government by 
the issue of treasury bills, loans or ways and means of advances; and (c) all money received by the 
government in repayment of loans forms the Consolidated Fund of India. All the legally authorised 
payments on behalf of the Government of India are made out of this fund. No money out of this fund can 
be appropriated (issued or drawn) except in accordance with a parliamentary law. 
Public Account of India: All other public money (other than those which are credited to the Consolidated 
Fund of India) received by or on behalf of the Government of India shall be credited to the Public Account of 
India. This includes provident fund deposits, judicial deposits, savings bank deposits, departmental deposits, 
remiIances and so on. This account is operated by execu)ve ac)on, that is, the payments from this account 
can be made without parliamentary appropria)on. Such payments are mostly in the nature of banking 
transac)ons. 
Con6ngency Fund of India: The Cons)tu)on authorised the Parliament to establish a ‘Con)ngency Fund of 
India’, into which amounts determined by law are paid from )me to )me. Accordingly, the Parliament 
enacted the con)ngency fund of India Act in 1950. This fund is placed at the disposal of the president, and 
he can make advances out of it to meet unforeseen expenditure pending its authorisa)on by the 
Parliament. The fund is held by the ?nance secretary on behalf of the president. Like the public account of 
India, it is also operated by execu)ve ac)on.  
Budget: 
The budget is presented by the Finance Minister to Parliament each year during the Budget Session. The 
)ming may vary during an elec)on year. The Cons)tu)on refers to the budget as the ‘annual ?nancial 
statement’. In other words, the term ‘budget’ has nowhere been used in the Cons)tu)on. It is the popular 
name for the ‘annual ?nancial statement’ that has been dealt with in Ar6cle 112 of the Cons6tu6on.  
Some important documents that are tabled at the )me of presenta)on of the Union Budget include the 
following: 
The Annual Financial Statement: Summarises the expenditure and receipts of the government 
Budget at a Glance: Brief overview of the budget Expenditure Budget: Details the expenditure of various 
ministries and departments including the Demands for Grants for each ministry 
Receipts Budget: Details the tax and non-tax funding plan for the government 
Finance Bill: Details any changes to the exis6ng tax laws in the country 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
Page 2


Funds: 
The Cons)tu)on of India provides for the following three kinds of funds for the Central government: 
1. Consolidated Fund of India (Ar6cle 266) 
2. Public Account of India (Ar6cle 266) 
3. Con6ngency Fund of India (Ar6cle 267) 
Consolidated Fund of India: It is a fund to which all receipts are credited and all payments are debited. In 
other words, (a) all revenues received by the Government of India; (b) all loans raised by the Government by 
the issue of treasury bills, loans or ways and means of advances; and (c) all money received by the 
government in repayment of loans forms the Consolidated Fund of India. All the legally authorised 
payments on behalf of the Government of India are made out of this fund. No money out of this fund can 
be appropriated (issued or drawn) except in accordance with a parliamentary law. 
Public Account of India: All other public money (other than those which are credited to the Consolidated 
Fund of India) received by or on behalf of the Government of India shall be credited to the Public Account of 
India. This includes provident fund deposits, judicial deposits, savings bank deposits, departmental deposits, 
remiIances and so on. This account is operated by execu)ve ac)on, that is, the payments from this account 
can be made without parliamentary appropria)on. Such payments are mostly in the nature of banking 
transac)ons. 
Con6ngency Fund of India: The Cons)tu)on authorised the Parliament to establish a ‘Con)ngency Fund of 
India’, into which amounts determined by law are paid from )me to )me. Accordingly, the Parliament 
enacted the con)ngency fund of India Act in 1950. This fund is placed at the disposal of the president, and 
he can make advances out of it to meet unforeseen expenditure pending its authorisa)on by the 
Parliament. The fund is held by the ?nance secretary on behalf of the president. Like the public account of 
India, it is also operated by execu)ve ac)on.  
Budget: 
The budget is presented by the Finance Minister to Parliament each year during the Budget Session. The 
)ming may vary during an elec)on year. The Cons)tu)on refers to the budget as the ‘annual ?nancial 
statement’. In other words, the term ‘budget’ has nowhere been used in the Cons)tu)on. It is the popular 
name for the ‘annual ?nancial statement’ that has been dealt with in Ar6cle 112 of the Cons6tu6on.  
Some important documents that are tabled at the )me of presenta)on of the Union Budget include the 
following: 
The Annual Financial Statement: Summarises the expenditure and receipts of the government 
Budget at a Glance: Brief overview of the budget Expenditure Budget: Details the expenditure of various 
ministries and departments including the Demands for Grants for each ministry 
Receipts Budget: Details the tax and non-tax funding plan for the government 
Finance Bill: Details any changes to the exis6ng tax laws in the country 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
Medium Term Fiscal Strategy Document : Sets three-year rolling targets for select ?scal indicators as per 
the Fiscal Responsibility and Budget Management Act. 
Earlier, the Government of India has two budgets, namely, the Railway Budget and the General Budget. 
While the former consists of the es)mates of receipts and expenditures of only the Ministry of Railways, 
the laIer consists of the es)mates of receipts and expenditure of all the ministries of the Government of 
India (except the railways). The Railway Budget was separated from the General Budget in 1921 on the 
recommenda)ons of the Acworth CommiSee. Then the country’s gross domes)c product (GDP) mostly 
depended on railway's revenue, in fact, then the Railway Budget was 84 per cent of the general budget. But 
over the years, the size of the rail budget diminished in comparison with the general budget. 
In August 2016, the Central Government decided to merge the railway budget into the general budget. For 
this purpose, the Finance Ministry has cons)tuted a ?ve-member commiIee comprising the o?cials of both 
the Finance Ministry and the Railway Ministry to work out the modali)es for the merger. Earlier, NITI Aayog 
(Na)onal Ins)tu)on for Transforming India), which cons)tuted a commiIee headed by economist and NITI 
Aayog member Bibek Debroy, produced a whitepaper and recommended that the Bri)sh-era prac)se 
should be phased out. 
Cons6tu6onal Provisions with regard: 
The Cons)tu)on of India contains the following provisions with regard to the enactment of budget: 
1. The President shall in respect of every ?nancial year cause to be laid before both the Houses of 
Parliament a statement of es)mated receipts and expenditure of the Government of India for that year. 
2. No demand for a grant shall be made except on the recommenda)on of the President. 
3. No money shall be withdrawn from the Consolidated Fund of India except under appropria)on made by 
law. 
4. No money bill imposing tax shall be introduced in the Parliament except on the recommenda)on of the 
President, and such a bill shall not be introduced in the Rajya Sabha. 
5. No tax shall be levied or collected except by authority of law. 
6. Parliament can reduce or abolish a tax but cannot increase it. 
7. The Cons)tu)on has also de?ned the rela)ve roles or posi)on of both the Houses of Parliament with 
regard to the enactment of the budget in the following way: 
A. A money bill or ?nance bill dealing with taxa)on cannot be introduced in the Raiya Sabha—it must be 
introduced only in the Lok Sabha. 
B. The Rajya Sabha has no power to vote on the demand for grants; it is the exclusive privilege of the Lok 
Sabha. 
C. The Rajya Sabha should return the Money bill (or Finance bill) to the Lok Sabha within fourteen days. 
The Lok Sabha can either accept or reject the recommenda)ons made by Rajya Sabha in this regard. 
8. The es)mates of expenditure embodied in the budget shall show separately the expenditure charged on 
the Consolidated Fund of India and the expenditure made from the Consolidated Fund of India. 
9. The budget shall dis)nguish expenditure on revenue account from other expenditure. 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
Page 3


Funds: 
The Cons)tu)on of India provides for the following three kinds of funds for the Central government: 
1. Consolidated Fund of India (Ar6cle 266) 
2. Public Account of India (Ar6cle 266) 
3. Con6ngency Fund of India (Ar6cle 267) 
Consolidated Fund of India: It is a fund to which all receipts are credited and all payments are debited. In 
other words, (a) all revenues received by the Government of India; (b) all loans raised by the Government by 
the issue of treasury bills, loans or ways and means of advances; and (c) all money received by the 
government in repayment of loans forms the Consolidated Fund of India. All the legally authorised 
payments on behalf of the Government of India are made out of this fund. No money out of this fund can 
be appropriated (issued or drawn) except in accordance with a parliamentary law. 
Public Account of India: All other public money (other than those which are credited to the Consolidated 
Fund of India) received by or on behalf of the Government of India shall be credited to the Public Account of 
India. This includes provident fund deposits, judicial deposits, savings bank deposits, departmental deposits, 
remiIances and so on. This account is operated by execu)ve ac)on, that is, the payments from this account 
can be made without parliamentary appropria)on. Such payments are mostly in the nature of banking 
transac)ons. 
Con6ngency Fund of India: The Cons)tu)on authorised the Parliament to establish a ‘Con)ngency Fund of 
India’, into which amounts determined by law are paid from )me to )me. Accordingly, the Parliament 
enacted the con)ngency fund of India Act in 1950. This fund is placed at the disposal of the president, and 
he can make advances out of it to meet unforeseen expenditure pending its authorisa)on by the 
Parliament. The fund is held by the ?nance secretary on behalf of the president. Like the public account of 
India, it is also operated by execu)ve ac)on.  
Budget: 
The budget is presented by the Finance Minister to Parliament each year during the Budget Session. The 
)ming may vary during an elec)on year. The Cons)tu)on refers to the budget as the ‘annual ?nancial 
statement’. In other words, the term ‘budget’ has nowhere been used in the Cons)tu)on. It is the popular 
name for the ‘annual ?nancial statement’ that has been dealt with in Ar6cle 112 of the Cons6tu6on.  
Some important documents that are tabled at the )me of presenta)on of the Union Budget include the 
following: 
The Annual Financial Statement: Summarises the expenditure and receipts of the government 
Budget at a Glance: Brief overview of the budget Expenditure Budget: Details the expenditure of various 
ministries and departments including the Demands for Grants for each ministry 
Receipts Budget: Details the tax and non-tax funding plan for the government 
Finance Bill: Details any changes to the exis6ng tax laws in the country 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
Medium Term Fiscal Strategy Document : Sets three-year rolling targets for select ?scal indicators as per 
the Fiscal Responsibility and Budget Management Act. 
Earlier, the Government of India has two budgets, namely, the Railway Budget and the General Budget. 
While the former consists of the es)mates of receipts and expenditures of only the Ministry of Railways, 
the laIer consists of the es)mates of receipts and expenditure of all the ministries of the Government of 
India (except the railways). The Railway Budget was separated from the General Budget in 1921 on the 
recommenda)ons of the Acworth CommiSee. Then the country’s gross domes)c product (GDP) mostly 
depended on railway's revenue, in fact, then the Railway Budget was 84 per cent of the general budget. But 
over the years, the size of the rail budget diminished in comparison with the general budget. 
In August 2016, the Central Government decided to merge the railway budget into the general budget. For 
this purpose, the Finance Ministry has cons)tuted a ?ve-member commiIee comprising the o?cials of both 
the Finance Ministry and the Railway Ministry to work out the modali)es for the merger. Earlier, NITI Aayog 
(Na)onal Ins)tu)on for Transforming India), which cons)tuted a commiIee headed by economist and NITI 
Aayog member Bibek Debroy, produced a whitepaper and recommended that the Bri)sh-era prac)se 
should be phased out. 
Cons6tu6onal Provisions with regard: 
The Cons)tu)on of India contains the following provisions with regard to the enactment of budget: 
1. The President shall in respect of every ?nancial year cause to be laid before both the Houses of 
Parliament a statement of es)mated receipts and expenditure of the Government of India for that year. 
2. No demand for a grant shall be made except on the recommenda)on of the President. 
3. No money shall be withdrawn from the Consolidated Fund of India except under appropria)on made by 
law. 
4. No money bill imposing tax shall be introduced in the Parliament except on the recommenda)on of the 
President, and such a bill shall not be introduced in the Rajya Sabha. 
5. No tax shall be levied or collected except by authority of law. 
6. Parliament can reduce or abolish a tax but cannot increase it. 
7. The Cons)tu)on has also de?ned the rela)ve roles or posi)on of both the Houses of Parliament with 
regard to the enactment of the budget in the following way: 
A. A money bill or ?nance bill dealing with taxa)on cannot be introduced in the Raiya Sabha—it must be 
introduced only in the Lok Sabha. 
B. The Rajya Sabha has no power to vote on the demand for grants; it is the exclusive privilege of the Lok 
Sabha. 
C. The Rajya Sabha should return the Money bill (or Finance bill) to the Lok Sabha within fourteen days. 
The Lok Sabha can either accept or reject the recommenda)ons made by Rajya Sabha in this regard. 
8. The es)mates of expenditure embodied in the budget shall show separately the expenditure charged on 
the Consolidated Fund of India and the expenditure made from the Consolidated Fund of India. 
9. The budget shall dis)nguish expenditure on revenue account from other expenditure. 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
10. The expenditure charged on the Consolidated Fund of India shall not be submiIed to the vote of 
Parliament. However, it can be discussed by the Parliament.  
Types of Expenditure in the Budget: 
he budget consists of two types of expenditure—the expenditure ‘charged’ upon the Consolidated Fund of 
India and the expenditure ‘made’ from the Consolidated Fund of India. The charged expenditure is non-
votable by the Parliament, that is, it can only be discussed by the Parliament, while the other type has to be 
voted by the Parliament. The list of the charged expenditure is as follows: 
1. Emoluments and allowances of the President and other expenditure rela)ng to his o?ce. 
2. Salaries and allowances of the Chairman and the Deputy Chairman of the Rajya Sabha and the Speaker 
and the Deputy Speaker of the Lok Sabha. 
3. Salaries, allowances and pensions of the judges of the Supreme Court. 
4. Pensions of the judges of high courts. 
5. Salary, allowances and pension of the Comptroller and Auditor General of 
India. 
6. Salaries, allowances and pension of the chairman and members of the Union Public Service Commission. 
7. Administra)ve expenses of the Supreme Court, the o?ce of the Comptroller and Auditor General of 
India and the Union Public Service Commission including the salaries, allowances and pensions of the 
persons serving in these o?ces. 
8. The debt charges for which the Government of India is liable, including interest, sinking fund charges and 
redemp)on charges and other expenditure rela)ng to the raising of loans and the service and 
redemp)on of debt. 
9. Any sum required to sa)sfy any judgement, decree or award of any court or arbitral tribunal. 10. Any 
other expenditure declared by the Parliament to be so charged.  
Stages in presenta6on of the Budget: 
The Finance Minister presents the General Budget with a speech known as the ‘budget speech’. At the end 
of the speech in the Lok Sabha, the budget is laid before the Rajya Sabha, which can only discuss it and has 
no power to vote on the demands for grants. 
Ager the budget is tabled, a general discussion on the broad budget measures takes place. No vo)ng takes 
place at this stage. No cut mo)on can be moved nor can the budget be submiIed to the vote of the House. 
The ?nance minister has a general right of reply at the end of the discussion. 
Parliament may go into recess for about three weeks while detailed es)mates of ministries’ expenditure, 
called Demands for Grants, are examined by the Departmentally Related Standing CommiIees during this 
gap period, the 24 departmental standing commiIees of Parliament examine and discuss in detail the 
demands for grants of the concerned ministers and prepare reports on them. These reports are submiIed to 
both the Houses of Parliament for considera)on. 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
Page 4


Funds: 
The Cons)tu)on of India provides for the following three kinds of funds for the Central government: 
1. Consolidated Fund of India (Ar6cle 266) 
2. Public Account of India (Ar6cle 266) 
3. Con6ngency Fund of India (Ar6cle 267) 
Consolidated Fund of India: It is a fund to which all receipts are credited and all payments are debited. In 
other words, (a) all revenues received by the Government of India; (b) all loans raised by the Government by 
the issue of treasury bills, loans or ways and means of advances; and (c) all money received by the 
government in repayment of loans forms the Consolidated Fund of India. All the legally authorised 
payments on behalf of the Government of India are made out of this fund. No money out of this fund can 
be appropriated (issued or drawn) except in accordance with a parliamentary law. 
Public Account of India: All other public money (other than those which are credited to the Consolidated 
Fund of India) received by or on behalf of the Government of India shall be credited to the Public Account of 
India. This includes provident fund deposits, judicial deposits, savings bank deposits, departmental deposits, 
remiIances and so on. This account is operated by execu)ve ac)on, that is, the payments from this account 
can be made without parliamentary appropria)on. Such payments are mostly in the nature of banking 
transac)ons. 
Con6ngency Fund of India: The Cons)tu)on authorised the Parliament to establish a ‘Con)ngency Fund of 
India’, into which amounts determined by law are paid from )me to )me. Accordingly, the Parliament 
enacted the con)ngency fund of India Act in 1950. This fund is placed at the disposal of the president, and 
he can make advances out of it to meet unforeseen expenditure pending its authorisa)on by the 
Parliament. The fund is held by the ?nance secretary on behalf of the president. Like the public account of 
India, it is also operated by execu)ve ac)on.  
Budget: 
The budget is presented by the Finance Minister to Parliament each year during the Budget Session. The 
)ming may vary during an elec)on year. The Cons)tu)on refers to the budget as the ‘annual ?nancial 
statement’. In other words, the term ‘budget’ has nowhere been used in the Cons)tu)on. It is the popular 
name for the ‘annual ?nancial statement’ that has been dealt with in Ar6cle 112 of the Cons6tu6on.  
Some important documents that are tabled at the )me of presenta)on of the Union Budget include the 
following: 
The Annual Financial Statement: Summarises the expenditure and receipts of the government 
Budget at a Glance: Brief overview of the budget Expenditure Budget: Details the expenditure of various 
ministries and departments including the Demands for Grants for each ministry 
Receipts Budget: Details the tax and non-tax funding plan for the government 
Finance Bill: Details any changes to the exis6ng tax laws in the country 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
Medium Term Fiscal Strategy Document : Sets three-year rolling targets for select ?scal indicators as per 
the Fiscal Responsibility and Budget Management Act. 
Earlier, the Government of India has two budgets, namely, the Railway Budget and the General Budget. 
While the former consists of the es)mates of receipts and expenditures of only the Ministry of Railways, 
the laIer consists of the es)mates of receipts and expenditure of all the ministries of the Government of 
India (except the railways). The Railway Budget was separated from the General Budget in 1921 on the 
recommenda)ons of the Acworth CommiSee. Then the country’s gross domes)c product (GDP) mostly 
depended on railway's revenue, in fact, then the Railway Budget was 84 per cent of the general budget. But 
over the years, the size of the rail budget diminished in comparison with the general budget. 
In August 2016, the Central Government decided to merge the railway budget into the general budget. For 
this purpose, the Finance Ministry has cons)tuted a ?ve-member commiIee comprising the o?cials of both 
the Finance Ministry and the Railway Ministry to work out the modali)es for the merger. Earlier, NITI Aayog 
(Na)onal Ins)tu)on for Transforming India), which cons)tuted a commiIee headed by economist and NITI 
Aayog member Bibek Debroy, produced a whitepaper and recommended that the Bri)sh-era prac)se 
should be phased out. 
Cons6tu6onal Provisions with regard: 
The Cons)tu)on of India contains the following provisions with regard to the enactment of budget: 
1. The President shall in respect of every ?nancial year cause to be laid before both the Houses of 
Parliament a statement of es)mated receipts and expenditure of the Government of India for that year. 
2. No demand for a grant shall be made except on the recommenda)on of the President. 
3. No money shall be withdrawn from the Consolidated Fund of India except under appropria)on made by 
law. 
4. No money bill imposing tax shall be introduced in the Parliament except on the recommenda)on of the 
President, and such a bill shall not be introduced in the Rajya Sabha. 
5. No tax shall be levied or collected except by authority of law. 
6. Parliament can reduce or abolish a tax but cannot increase it. 
7. The Cons)tu)on has also de?ned the rela)ve roles or posi)on of both the Houses of Parliament with 
regard to the enactment of the budget in the following way: 
A. A money bill or ?nance bill dealing with taxa)on cannot be introduced in the Raiya Sabha—it must be 
introduced only in the Lok Sabha. 
B. The Rajya Sabha has no power to vote on the demand for grants; it is the exclusive privilege of the Lok 
Sabha. 
C. The Rajya Sabha should return the Money bill (or Finance bill) to the Lok Sabha within fourteen days. 
The Lok Sabha can either accept or reject the recommenda)ons made by Rajya Sabha in this regard. 
8. The es)mates of expenditure embodied in the budget shall show separately the expenditure charged on 
the Consolidated Fund of India and the expenditure made from the Consolidated Fund of India. 
9. The budget shall dis)nguish expenditure on revenue account from other expenditure. 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
10. The expenditure charged on the Consolidated Fund of India shall not be submiIed to the vote of 
Parliament. However, it can be discussed by the Parliament.  
Types of Expenditure in the Budget: 
he budget consists of two types of expenditure—the expenditure ‘charged’ upon the Consolidated Fund of 
India and the expenditure ‘made’ from the Consolidated Fund of India. The charged expenditure is non-
votable by the Parliament, that is, it can only be discussed by the Parliament, while the other type has to be 
voted by the Parliament. The list of the charged expenditure is as follows: 
1. Emoluments and allowances of the President and other expenditure rela)ng to his o?ce. 
2. Salaries and allowances of the Chairman and the Deputy Chairman of the Rajya Sabha and the Speaker 
and the Deputy Speaker of the Lok Sabha. 
3. Salaries, allowances and pensions of the judges of the Supreme Court. 
4. Pensions of the judges of high courts. 
5. Salary, allowances and pension of the Comptroller and Auditor General of 
India. 
6. Salaries, allowances and pension of the chairman and members of the Union Public Service Commission. 
7. Administra)ve expenses of the Supreme Court, the o?ce of the Comptroller and Auditor General of 
India and the Union Public Service Commission including the salaries, allowances and pensions of the 
persons serving in these o?ces. 
8. The debt charges for which the Government of India is liable, including interest, sinking fund charges and 
redemp)on charges and other expenditure rela)ng to the raising of loans and the service and 
redemp)on of debt. 
9. Any sum required to sa)sfy any judgement, decree or award of any court or arbitral tribunal. 10. Any 
other expenditure declared by the Parliament to be so charged.  
Stages in presenta6on of the Budget: 
The Finance Minister presents the General Budget with a speech known as the ‘budget speech’. At the end 
of the speech in the Lok Sabha, the budget is laid before the Rajya Sabha, which can only discuss it and has 
no power to vote on the demands for grants. 
Ager the budget is tabled, a general discussion on the broad budget measures takes place. No vo)ng takes 
place at this stage. No cut mo)on can be moved nor can the budget be submiIed to the vote of the House. 
The ?nance minister has a general right of reply at the end of the discussion. 
Parliament may go into recess for about three weeks while detailed es)mates of ministries’ expenditure, 
called Demands for Grants, are examined by the Departmentally Related Standing CommiIees during this 
gap period, the 24 departmental standing commiIees of Parliament examine and discuss in detail the 
demands for grants of the concerned ministers and prepare reports on them. These reports are submiIed to 
both the Houses of Parliament for considera)on. 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
The standing commiIee system established in 1993 (and expanded in 2004) makes parliamentary ?nancial 
control over ministries much more detailed, close, in-depth and comprehensive. 
In the light of the reports of the departmental standing commiIees, the Lok Sabha takes up vo)ng of 
demands for grants. The demands are presented ministry wise. A demand becomes a grant ager it has been 
duly voted. Two points should be noted in this context. One, the vo)ng of demands for grants is the 
exclusive privilege of the Lok Sabha, that is, the Rajya Sabha has no power of vo)ng the demands. Second, 
the vo)ng is con?ned to the votable part of the budget—the expenditure charged on the Consolidated Fund 
of India is not submiIed to the vote (it can only be discussed).  
Each demand is voted separately by the Lok Sabha. During this stage, the members of Parliament can 
discuss the details of the budget. During the discussion on Demands for Grants, MPs can move Cut 
Mo)ons. These are a form of ini)a)ng discussion on the Demands for Grants. By conven)on, Cut Mo)ons 
are considered similar to a NoCon?denceMo)on. Cut Mo)ons are of three categories: 
1. Disapproval of a Policy Cut: Calls for the demand from a ministry to be reduced to Re 1. It represents 
disapproval of the policy underlying the demand.  
2. Economy Cut: Calls for the demand from a ministry to be reduced by a speci?c amount to reduce 
expenditure. 
3. Token Cut: Calls for the demand from a ministry to be reduced by Rs 100 to express a speci?c grievance. 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
Page 5


Funds: 
The Cons)tu)on of India provides for the following three kinds of funds for the Central government: 
1. Consolidated Fund of India (Ar6cle 266) 
2. Public Account of India (Ar6cle 266) 
3. Con6ngency Fund of India (Ar6cle 267) 
Consolidated Fund of India: It is a fund to which all receipts are credited and all payments are debited. In 
other words, (a) all revenues received by the Government of India; (b) all loans raised by the Government by 
the issue of treasury bills, loans or ways and means of advances; and (c) all money received by the 
government in repayment of loans forms the Consolidated Fund of India. All the legally authorised 
payments on behalf of the Government of India are made out of this fund. No money out of this fund can 
be appropriated (issued or drawn) except in accordance with a parliamentary law. 
Public Account of India: All other public money (other than those which are credited to the Consolidated 
Fund of India) received by or on behalf of the Government of India shall be credited to the Public Account of 
India. This includes provident fund deposits, judicial deposits, savings bank deposits, departmental deposits, 
remiIances and so on. This account is operated by execu)ve ac)on, that is, the payments from this account 
can be made without parliamentary appropria)on. Such payments are mostly in the nature of banking 
transac)ons. 
Con6ngency Fund of India: The Cons)tu)on authorised the Parliament to establish a ‘Con)ngency Fund of 
India’, into which amounts determined by law are paid from )me to )me. Accordingly, the Parliament 
enacted the con)ngency fund of India Act in 1950. This fund is placed at the disposal of the president, and 
he can make advances out of it to meet unforeseen expenditure pending its authorisa)on by the 
Parliament. The fund is held by the ?nance secretary on behalf of the president. Like the public account of 
India, it is also operated by execu)ve ac)on.  
Budget: 
The budget is presented by the Finance Minister to Parliament each year during the Budget Session. The 
)ming may vary during an elec)on year. The Cons)tu)on refers to the budget as the ‘annual ?nancial 
statement’. In other words, the term ‘budget’ has nowhere been used in the Cons)tu)on. It is the popular 
name for the ‘annual ?nancial statement’ that has been dealt with in Ar6cle 112 of the Cons6tu6on.  
Some important documents that are tabled at the )me of presenta)on of the Union Budget include the 
following: 
The Annual Financial Statement: Summarises the expenditure and receipts of the government 
Budget at a Glance: Brief overview of the budget Expenditure Budget: Details the expenditure of various 
ministries and departments including the Demands for Grants for each ministry 
Receipts Budget: Details the tax and non-tax funding plan for the government 
Finance Bill: Details any changes to the exis6ng tax laws in the country 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
Medium Term Fiscal Strategy Document : Sets three-year rolling targets for select ?scal indicators as per 
the Fiscal Responsibility and Budget Management Act. 
Earlier, the Government of India has two budgets, namely, the Railway Budget and the General Budget. 
While the former consists of the es)mates of receipts and expenditures of only the Ministry of Railways, 
the laIer consists of the es)mates of receipts and expenditure of all the ministries of the Government of 
India (except the railways). The Railway Budget was separated from the General Budget in 1921 on the 
recommenda)ons of the Acworth CommiSee. Then the country’s gross domes)c product (GDP) mostly 
depended on railway's revenue, in fact, then the Railway Budget was 84 per cent of the general budget. But 
over the years, the size of the rail budget diminished in comparison with the general budget. 
In August 2016, the Central Government decided to merge the railway budget into the general budget. For 
this purpose, the Finance Ministry has cons)tuted a ?ve-member commiIee comprising the o?cials of both 
the Finance Ministry and the Railway Ministry to work out the modali)es for the merger. Earlier, NITI Aayog 
(Na)onal Ins)tu)on for Transforming India), which cons)tuted a commiIee headed by economist and NITI 
Aayog member Bibek Debroy, produced a whitepaper and recommended that the Bri)sh-era prac)se 
should be phased out. 
Cons6tu6onal Provisions with regard: 
The Cons)tu)on of India contains the following provisions with regard to the enactment of budget: 
1. The President shall in respect of every ?nancial year cause to be laid before both the Houses of 
Parliament a statement of es)mated receipts and expenditure of the Government of India for that year. 
2. No demand for a grant shall be made except on the recommenda)on of the President. 
3. No money shall be withdrawn from the Consolidated Fund of India except under appropria)on made by 
law. 
4. No money bill imposing tax shall be introduced in the Parliament except on the recommenda)on of the 
President, and such a bill shall not be introduced in the Rajya Sabha. 
5. No tax shall be levied or collected except by authority of law. 
6. Parliament can reduce or abolish a tax but cannot increase it. 
7. The Cons)tu)on has also de?ned the rela)ve roles or posi)on of both the Houses of Parliament with 
regard to the enactment of the budget in the following way: 
A. A money bill or ?nance bill dealing with taxa)on cannot be introduced in the Raiya Sabha—it must be 
introduced only in the Lok Sabha. 
B. The Rajya Sabha has no power to vote on the demand for grants; it is the exclusive privilege of the Lok 
Sabha. 
C. The Rajya Sabha should return the Money bill (or Finance bill) to the Lok Sabha within fourteen days. 
The Lok Sabha can either accept or reject the recommenda)ons made by Rajya Sabha in this regard. 
8. The es)mates of expenditure embodied in the budget shall show separately the expenditure charged on 
the Consolidated Fund of India and the expenditure made from the Consolidated Fund of India. 
9. The budget shall dis)nguish expenditure on revenue account from other expenditure. 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
10. The expenditure charged on the Consolidated Fund of India shall not be submiIed to the vote of 
Parliament. However, it can be discussed by the Parliament.  
Types of Expenditure in the Budget: 
he budget consists of two types of expenditure—the expenditure ‘charged’ upon the Consolidated Fund of 
India and the expenditure ‘made’ from the Consolidated Fund of India. The charged expenditure is non-
votable by the Parliament, that is, it can only be discussed by the Parliament, while the other type has to be 
voted by the Parliament. The list of the charged expenditure is as follows: 
1. Emoluments and allowances of the President and other expenditure rela)ng to his o?ce. 
2. Salaries and allowances of the Chairman and the Deputy Chairman of the Rajya Sabha and the Speaker 
and the Deputy Speaker of the Lok Sabha. 
3. Salaries, allowances and pensions of the judges of the Supreme Court. 
4. Pensions of the judges of high courts. 
5. Salary, allowances and pension of the Comptroller and Auditor General of 
India. 
6. Salaries, allowances and pension of the chairman and members of the Union Public Service Commission. 
7. Administra)ve expenses of the Supreme Court, the o?ce of the Comptroller and Auditor General of 
India and the Union Public Service Commission including the salaries, allowances and pensions of the 
persons serving in these o?ces. 
8. The debt charges for which the Government of India is liable, including interest, sinking fund charges and 
redemp)on charges and other expenditure rela)ng to the raising of loans and the service and 
redemp)on of debt. 
9. Any sum required to sa)sfy any judgement, decree or award of any court or arbitral tribunal. 10. Any 
other expenditure declared by the Parliament to be so charged.  
Stages in presenta6on of the Budget: 
The Finance Minister presents the General Budget with a speech known as the ‘budget speech’. At the end 
of the speech in the Lok Sabha, the budget is laid before the Rajya Sabha, which can only discuss it and has 
no power to vote on the demands for grants. 
Ager the budget is tabled, a general discussion on the broad budget measures takes place. No vo)ng takes 
place at this stage. No cut mo)on can be moved nor can the budget be submiIed to the vote of the House. 
The ?nance minister has a general right of reply at the end of the discussion. 
Parliament may go into recess for about three weeks while detailed es)mates of ministries’ expenditure, 
called Demands for Grants, are examined by the Departmentally Related Standing CommiIees during this 
gap period, the 24 departmental standing commiIees of Parliament examine and discuss in detail the 
demands for grants of the concerned ministers and prepare reports on them. These reports are submiIed to 
both the Houses of Parliament for considera)on. 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
The standing commiIee system established in 1993 (and expanded in 2004) makes parliamentary ?nancial 
control over ministries much more detailed, close, in-depth and comprehensive. 
In the light of the reports of the departmental standing commiIees, the Lok Sabha takes up vo)ng of 
demands for grants. The demands are presented ministry wise. A demand becomes a grant ager it has been 
duly voted. Two points should be noted in this context. One, the vo)ng of demands for grants is the 
exclusive privilege of the Lok Sabha, that is, the Rajya Sabha has no power of vo)ng the demands. Second, 
the vo)ng is con?ned to the votable part of the budget—the expenditure charged on the Consolidated Fund 
of India is not submiIed to the vote (it can only be discussed).  
Each demand is voted separately by the Lok Sabha. During this stage, the members of Parliament can 
discuss the details of the budget. During the discussion on Demands for Grants, MPs can move Cut 
Mo)ons. These are a form of ini)a)ng discussion on the Demands for Grants. By conven)on, Cut Mo)ons 
are considered similar to a NoCon?denceMo)on. Cut Mo)ons are of three categories: 
1. Disapproval of a Policy Cut: Calls for the demand from a ministry to be reduced to Re 1. It represents 
disapproval of the policy underlying the demand.  
2. Economy Cut: Calls for the demand from a ministry to be reduced by a speci?c amount to reduce 
expenditure. 
3. Token Cut: Calls for the demand from a ministry to be reduced by Rs 100 to express a speci?c grievance. 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
A cut mo)on, to be admissible, must sa)sfy the following condi)ons: 
(i) It should relate to one demand only. 
(ii) It should be clearly expressed and should not contain arguments or defamatory statements. (iii) It should 
be con?ned to one speci?c maIer. 
(iv) It should not make sugges)ons for the amendment or repeal of exis)ng laws. 
(v) It should not refer to a maIer that is not primarily the concern of Union government. 
(vi) It should not relate to the expenditure charged on the Consolidated Fund of India. 
(vii) It should not relate to a maIer that is under adjudica)on by a court. 
(viii) It should not raise a ques)on of privilege. 
(ix) It should not revive discussion on a maIer on which a decision has been taken in the same session. 
(x) It should not relate to a trivial maIer. 
The signi?cance of a cut mo)on lies in: (a) facilita)ng the ini)a)on of concentrated discussion on a speci?c 
demand for grant; and (b) upholding the principle of responsible government by probing the ac)vi)es of the 
government. However, the cut mo)on do not have much u)lity in prac)ce. They are only moved and 
discussed in the House but not passed as the government enjoys majority support. Their passage by the Lok 
Sabha amounts to the expressions of want of parliamentary con?dence in the government and may lead to 
its resigna)on. 
In total, 26 days are alloIed for the vo)ng of demands. On the last day the Speaker puts all the remaining 
demands to vote and disposes them whether they have been discussed by the members or not. This is 
known as ‘guillo)ne’. 
The Cons)tu)on states that ‘no money shall be withdrawn from the Consolidated Fund of India except 
under appropria)on made by law’. Accordingly, an appropria)on bill is introduced to provide for the 
appropria)on, out of the Consolidated Fund of India, all money required to meet: 
(a) The grants voted by the Lok Sabha. 
(b) The expenditure charged on the Consolidated Fund of India. 
No such amendment can be proposed to the appropria)on bill in either house of the Parliament that will 
have the e?ect of varying the amount or altering the des)na)on of any grant voted, or of varying the 
amount of any expenditure charged on the Consolidated Fund of India. The Appropria)on Bill becomes the 
Appropria)on Act ager it is assented to by the President.  
This act authorises (or legalises) the payments from the Consolidated Fund of India. This means that the 
government cannot withdraw money from the Consolidated Fund of India )ll the enactment of the 
appropria)on bill. This takes )me and usually goes on )ll the end of April. But the government needs money 
to carry on its normal ac)vi)es ager 31 March (the end of the ?nancial year).  
To overcome this func)onal di?culty, the Cons)tu)on has authorised the Lok Sabha to make any grant in 
advance in respect to the es)mated expenditure for a part of the ?nancial year, pending the comple)on of 
the vo)ng of the demands for grants and the enactment of the appropria)on bill. This provision is known as 
the ‘vote on account’. It is passed (or granted) ager the general discussion on budget is over.  
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com