UPSC COURSE

VIDEO- 69

POLITY

PARLIAMENT

PART 4
 What exactly is a budget?

The budget can be defined as the most comprehensive report of the government’s finances in
which revenues from all the sources (Receipts)) and outlays for all activities (Expenditue) are consolidated.

In simple terms, the budget is an annual financial statement of the revenue and expenditure of a government.

Budget in the Indian Constitution

The term ‘Budget’ is not mentioned in the Indian Constitution; the

corresponding term used is ‘Annual Financial Statement’ (article 112).
What are the constitutional requirements which
make Budget necessary?

• Article 265: provides that ‘no tax shall be levied or collected except by
authority of law’. [ie. Taxation needs the approval of Parliament.]

• Article 266: provides that ‘no expenditure can be incurred except with the
authorisation of the Legislature’ [ie. Expenditure needs the approval of
Parliament.]

• Article 112: President shall, in respect of every financial year, cause to be

laid before Parliament, Annual Financial Statement. (Duty of president)
 Government Budgeting: Railway Budget Presentation

Until 2016 (for 92 years), the budget of the Indian Railways was presented separately to Parliament
and dealt with separately

The last Railway Budget was presented on 25 February 2016 by

Mr. Suresh Prabhu.

Since 2017, Railway Budget is merged with the Union Budget.

In 1924 based upon the recommendations of Acworth Committee, railway budget was separated from the
general budget.

Bibek Debroy committee recommendation to go for merger of railways budget with general budget
 Government Budgeting: Union Budget Presentation

In India, the Budget is presented to Parliament on such date as is fixed by

the President.

Between 1999 to 2016, the General Budget was presented at 11 A.M. on the
last working day of February.

However, since 2017, the Indian Budget is presented on 1 February.

As a convention, Economic Survey is also tabled in the Parliament – one day

prior to budget submission, ie on January 31.

Economic Survey is the flagship annual document of the Ministry of finance. It gives a detailed account of the
various sectors of the economy and overall economic scenario of the country in the past years and provides an
outline for the year ahead.
 What is an interim budget then?

• An interim budget in all practical sense is a full

budget but made by the government during the
last year of its term – ie. just before the election.

• An interim Budget is a complete set of accounts,

including both expenditure and receipts.

• But it may not contain big policy proposals.

Types of funds in India
Consolidated fund of India

• A fund to which all revenues received, loans raised & income received by
GOI are deposited

• All legally authorized payments on the behalf of GOI are made out of this
fund

• No money can be spent out of this fund except through grants made by
parliament
Public accounts of India

• All other public money except the one credited to consolidated fund shall
be credited to Public accounts of India. Ex- Remitances, NDRF etc

No need of Parliament’s approval (Executive Action)

Contingency fund of India

• Created in 1950, with a limit of merely 50 cr, raised to 500 cr in 2005, at the
disposal of the President to meet unforeseen expenditures – Operated by
Finance secretary.
• Contingency fund is used by the President where parliament’s approval
cannot be obtained .
• However, sanction of parliament is necessary to replenish this fund from
consolidated fund of India.
 Preparation of the budget

• The exercise of the preparation of the budget by the ministry of finance starts
sometimes around in the month of September every year. There is a budget
Division of the Department of Economic affair of the ministry of finance for this
purpose.

• The ministry of finance compiles and coordinates the estimates of the

expenditure of different ministers and departments and prepare an estimate or
a plan outlay.
Stages of Enactment of Budget:

• The finance minister presents

the budget in the Lok Sabha. He
makes his budget in the Lok
Sabha. Simultaneously, the copy
of the budget is laid on the table
of the Rajya Sabha. Printed copies
of the budget are distributed
among the members of the
parliament to go through the
details of the budgetary
provisions. A) Presentation of budget:
 B) General discussions:

Only the general principles of budget or the budget as a whole can be discussed. No motions of reduction of grants
or votes can be made. Finance minister has the right of reply at end of discussion. This happens in both houses.
Usually for 3 to 4 days.

C) Scrutiny by dept committees:

An in-depth scrutiny of demand for grants by department is made by each departmental standing committee of
parliament. Three to four weeks are given for this and the house remains in recess (Adjourned). The 24 departmental
standing committees make a report to the house at the end.
D) Voting on the demand for grants:

• The MP's of Lok Sabha study

and vote on each demand for
grant. The Lok Sabha only can
vote on demand for grants and
no voting is allowed on the
expenditure charged on the
consolidated fund of India.
 Expenditures
The expenditure embodied in the Budget Documents is of two types:

•The sums required for charged expenditures. These are non-votable.

•The sums required for other expenditures as mentioned in the Budget Documents. These are votable.

Charged Expenditures or Non-Votable Charges

Non-votable charges are called Charged Expenditures; and no voting takes place for the amount involved in these
expenditures for their withdrawal from Consolidated Fund of India. Although voting does not take place on such
charges, discussion can take place in any house of the parliament.

This means that they have to be paid in any case, whether the budget is passed or not passed. Following are the
charged expenditures:
 Charged Expenditures or Non-Votable Charges

These expenditures are sanctioned by constitution itself:

•Emoluments, allowances & expenditure of President & his office

•Salary & allowances of chairman / Deputy chairman of RS + Speaker / Deputy speaker of Lok Sabha

•Debt charged for which GOI is liable

•Salaries, allowances & pensions of SC judges , CAG, Chairman & Members of UPSC

•Any sum required to satisfy any judgement or award of any court or tribunal.

•Administrative expenses of S.C , Office of CAG, UPSC including salary, allowances, & pension of the person
serving in these offices.

•Any other expenses declared by parliament to be charged.

Lok sabha MP's can move motion for reduction of a grant called CUT Motions;
Motions can be moved to reduce demand for grants. Such motions are called cut
motions. If a cut motion is adopted by Parliament and the government does not have the
numbers, it is obliged to resign.

There are three types of cut motions:-

Disapproval of Policy Cut is moved to reduce the amount of the demand to

INR 1/-’ representing disapproval of the policy underlying the demand.

Economy Cut motion is moved to reduce the amount of the demand by a

specified amount representing the economy that can be effected.
Token Cut motion is moved to reduce the amount of the demand by INR 100/- in
order to ventilate a specific grievance which is within the sphere of the responsibility of the
Government of India.

When due to lack of time, demand of grants are put to vote by

Guillotine speaker whether they are discussed or not in the house on last
working day of allotted time (26 Days) .
E) Appropriation bill and Finance bills:

• After the demands for grants are voted by the parliament, the Appropriation Bill is introduced,
considered and passed by the appropriation of the Parliament. It provides the legal authority for
withdrawal of funds of what is known as the Consolidated Fund of India. No amendment can be
introduced.

• After the passing of the appropriation bill, finance bill (Income side of Budget) is discussed and passed.
At this stage, the members of the parliament can suggest and make some amendments which the finance
minister can approve or reject.

• Appropriation bill and Finance bill are sent to Rajya Sabha. The Rajya Sabha is required to send back
these bills to the Lok Sabha within fourteen days with or without amendments. However, Lok Sabha may or
may not accept the bill.

President for his assent.

 Vote on Account (Power of Lok Sabha (not of Rajya sabha)

Vote on Account is a grant in advance to enable the government to carry on until the voting of demands for
grants and the passing of the Appropriation Bill and Finance Bill. Vote-on-account deals only with the
expenditure side of the government’s budget.

It is passed after the general discussion on budget is over.

Financial Year
1st April – 31st March
As a convention, a vote-on-account is treated as a formal
matter and passed by Lok Sabha without discussion.

Vote-on-account deals only with the expenditure side of the

government’s budget.

Vote on Account was frequently used until 2016 when the

Budget was presented on the last working day of
February. However, since 2017, the budget presentation
date was advanced to February 1. This helped the
executive to use almost 2 months time to get the full-
budget passed in the same financial year.
 Other Grants

1. Supplementary grant: Amount authorised by parliament is found insufficient

2. Additional grant: extra amount is needed that wasn’t dealt with earlier

3. Excess grant: Amount is spent in excess of the authorised amount; this has to be
approved by the Public accounts committee.

4. Vote of credit: for meeting an unexpected demand

5. Exceptional grant: sanctioned for a special purpose

6. Token grant: funds to meet a new expenditure can be met by transferred from one head
to another.
 Important Facts related to Budget:

•The first Union Budget of Independent Indiawas presented by the first Finance Minister of
Independent India, Sir R.K. Shanmugham Chetty, on November 26, 1947.

•Indira Gandhi, the then prime minister who also held the finance portfolio, she became
the first woman finance minister of India to present a Budget in Parliament.

•In 2001, Yashwant Sinha, broke the colonial practice of announcing the Union Budget at
5 in the evening. Instead, he delivered his Budget speech at 11 am on the last working
day of February.

•Former prime minister of India Morarji Desai, who presented 10 Union Budgets in his
role as finance minister, is crediting with presenting the highest number of Union Budgets
in the history of Independent India.

•The Budget presented by Finance Minister Arun Jaitley for the financial year 2017-18
was unprecedented in that, for the first time ever, a Railway Budget was not presented
separately. This practice was discontinued and both Union Budget and Railway Budget
were merged and presented together.
 Important Committees of Parliament:
The Parliamentary committees are of two types

1.Standing Committees (permanent)

2.Ad hoc Committees (informal, temporary)

STANDING COMMITTEES:

The Standing Committees are permanent

committees.

The Standing Committees are constituted

every year
Standing Committees are of the following kinds :
1.Financial Standing Committees (FSC)

2.Department Related Standing Committees (DRSC)

3.Others Standing Committees (OSC)

Financial Standing Committees

There are three important Standing Committees dealing with financial affairs.

1.Public Accounts Committee

2.Estimates Committee
3. Public Undertakings Committee
 PUBLIC ACCOUNTS COMMITTEE (PAC):

The PAC was set up in the year 1921. The PAC was set up under the provisions of the Government of India Act of
1919.

The strength of PAC is 22 members.

The members are elected from both Lok Sabha and the Rajya Sabha from amongst its members.

Out of 22 members of PAC 15 are elected from Lok Sabha and the remaining 7 are elected from the Rajya Sabha.

All the members are elected through proportional representation by means of a single transferable vote.

NOTE: With the above process of election most of the parties will have representation in the PAC.

The term of office of a member is 1 year.

In the year 1967, a convention was established that the Speaker must appoint only opposition party members as
the Chairman of the PAC.

Note: The above point is very important.

Ministers cannot be members of this committee.

 FUNCTION OF PUBLIC ACCOUNTS COMMITTEE:

The Comptroller and Auditor General verify the accounts and the report is submitted to the President of India.

The report of CAG is laid before the Parliament by the President.

The PAC will examine the annual audit reports of the Comptroller and Auditor General.

Finally, the report of the PAC is submitted back to the Parliament.

The report of the PAC is discussed in Parliament.

The report of PAC is criticized as the ‘Post Mortem” report.

Hence CAG IS CONSIDERED AS friend, Philosopher, AND Guide OF THE PAC.

 Estimates Committee

The estimates committee was set up in the year 1950.

In fact, in the year 1921 standing financial committee was set up.

This committee is also called the “Economy Committee”.

The strength of Estimates committees is 30.

All the 30 members of the Estimates Committee are drawn from Lok Sabha only.

The 30 members are elected by the Lok Sabha through proportional representation by means of a
single transferable vote.

The term of office of a member of the Estimates Committee is 1 year.

The Chairman of the Estimates Committee is appointed by the Speaker from amongst the members.

Ministers cannot be members of this committee.

 Functions of the Estimates Committee:

The Estimates Committee examines whether the money is well laid out within the limits of policy implied
in the estimates.

The estimates committee also suggests alternative policies in order to bring about efficiency and
economy in the administration
 COMMITTEE ON PUBLIC UNDERTAKINGS

The Committee on Public Undertakings was established in the year 1964 on the recommendation
of the Krishna Menon committee report.

In the year 1974, the strength of CoPU is increased to 22.

Out of 22 (15+7) members, 15 members are drawn from the Lok Sabha and 7 members are drawn
from the Rajya Sabha.

The term of the office of a member is 1 year.

The members are elected through the proportional representation by means of a single
transferable vote.

Ministers cannot be members of this committee.

The chairman of CoPU is appointed by the Speaker.

The Chairman should be a member of Lok Sabha only.

 THE FUNCTIONS OF COMMITTEE ON PUBLIC UNDERTAKINGS:

The CoPU examines the reports and accounts of Public undertakings

The CoPU examines the reports of the Comptroller and Auditor General on Public Undertakings.
 DEPARTMENTAL STANDING COMMITTEES:
At present, the number is 24.

These committees exercise control over all the departments in the government.

The strength of each standing committee is 31.

Out of this 21 are drawn from Lok Sabha.

Remaining 10 drawn from the Rajya Sabha.

The members from the Lok Sabha are nominated by the Speaker.

The members from the Rajya Sabha are nominated by the Chairman.

The term of office of each member is 1 year.

Ministers cannot be members of any standing committee.

The Chairman of 16 committees is appointed by the Speaker.

The chairman of the remaining 8 committees is appointed by the Chairman.

 Department-related Standing Committees

•Agriculture and Farmers Welfare

•Food Processing Industries
1 Committee on Agriculture 1 year
•Animal Husbandry, Dairying and
Fisheries
Committee on Chemicals and
2 Chemicals and Fertilizers 1 year
Fertilizers
•Coal
3 Committee on Coal and Steel •Mines 1 year
•Steel
4 Committee on Commerce Commerce and Industry 1 year
5 Committee on Defence Defence 1 year
 Others Standing Committees (OSC)

BUSINESS ADVISORY COMMITTEE (BAC)

IN LOK SABHA:

The Speaker of the Lok Sabha is the chairman of Business Advisory Committee in Lok Sabha

The Business Advisory Committee in Lok Sabha consists of 15 members including the Speaker.

IN RAJYA SABHA:

The Chairman of Rajya Sabha acts as the Chairman of the BAC.

It consists of 11 members including the Chairman.
COMMITTEE ON PRIVATE MEMBERS BILLS AND RESOLUTIONS:

This committee is present only in Lok Sabha.

The Rajya Sabha does not have a committee on private members bills and resolution.

The Deputy Speaker is the Chairman of this committee.

The strength of the committee is 15 members including the Deputy Speaker.

This function in Rajya Sabha is performed by the Business Advisory Committee.

COMMITTEE ON GOVERNMENT ASSURANCES:

This committee is present in both Lok Sabha and the Rajya Sabha.

The strength of the committee in Lok Sabha is 15 members.

The strength of the committee in Rajya Sabha is 10 members.

 COMMITTEE ON SUBORDINATE LEGISLATION:

This committee is present both the houses of the Parliament.

The strength of the committee in Lok sabha is 15 members.

The strength of the committee in Rajya sabha is 15 members.

COMMITTEE ON WELFARE OF SCHEDULED CASTES AND SCHEDULED TRIBES

This is a joint parliamentary committee.

The strength of the committee is 30 members.

20 members are drawn from the Lok sabha and the remaining 10 are drawn from the Rajya Sabha.
 COMMITTEE ON ABSENCE OF MEMBERS:

This committee is present only in Lok Sabha.

It consists of 15 members.

In Rajya Sabha, these functions are performed by the house itself. (No committee)

RULES COMMITTEE:

This committee is present in both the houses of the Parliament.

The strength of the committee in Lok Sabha is 15.

The strength of the committee in Rajya Sabha is 16.

The Speaker is the Chairman of the committee in Lok Sabha.

The Chairman of Rajya Sabha is the ex-officio chairman of the Rules Committee in Parliament.
 COMMITTEE ON PRIVILEGES:

This committee is present in both the houses of the Parliament.

The strength of the committee in Lok Sabha is 15 members.

The strength of the committee in Rajya Sabha is 10.

JOINT COMMITTEE ON SALARIES AND ALLOWANCES OF MEMBERS:

The strength of the committee is 15.

10 members are drawn from the Lok sabha and the 5 members are drawn from the Rajya Sabha.
JOINT COMMITTEE ON OFFICE OF PROFIT:

The strength of the committee is 15.

10 members are drawn from the Lok Sabha and 5 are drawn from the Rajya Sabha.

COMMITTEE ON PETITIONS:

The committee on petitions is present in both the houses of the Parliament.

The strength of the committee in Lok sabha is 15.

The strength of the committee in Rajya Sabha is 10.

This committee examines the petitions on bills and on matters of general public importance.
LIBRARY COMMITTEE:

This is a common committee for both the houses of the Parliament.

The strength of the committee is 9.

Out of these 6 members are drawn from the Lok Sabha and the remaining 3 are drawn from the Rajya Sabha.

COMMITTEE ON THE PAPERS LAID ON THE TABLE:

This committee is present both in Lok Sabha and the Rajya Sabha.

The strength of the Lok Sabha committee is 15.

The strength of the Rajya Sabha committee is 10.

This committee examines the papers that are laid on the table of the house by the ministers to see whether
they comply with the provisions of the Constitution.
 COMMITTEE ON EMPOWERMENT OF WOMEN:

The strength of the committee is 30.

20 are drawn from the Lok Sabha and 10 from Rajya Sabha.
 Ad hoc Committees

Committee on Food Management in Parliament House Complex

Committee on Installation of Portraits/Statues of National leaders and

Parliamentarians

Committee on MP Local Area Development Scheme

Committee on Provision of Computers to Members of Lok Sabha

Joint Committee on Maintenance of Heritage Character and

Development of Parliament House Complex

Joint Committee on Security in Parliament House Complex

Parliamentary Privileges

• Parliamentary privileges are certain rights and immunities enjoyed by

members of Parliament, individually and collectively, so that they can
“effectively discharge their functions”.

Parliamentary privileges are defined in Article 105 of the Indian

Constitution and those of State legislatures in Article 194.

When any of these rights and immunities are disregarded, the offence is called a breach of
privilege and is punishable under law of Parliament.
 Privileges of Parliamentarians: (Individual)

1.Freedom of Speech: According to the Indian Constitution, the members of

Parliament enjoy freedom of speech and expression.

2.Freedom from Arrest:It is understood that no member shall be arrested in a civil

case 40 days before and after the adjournment of the House (Lok Sabha or Rajya
Sabha) and also when the House is in session.

3.Exemption from attendance as witnesses:The members of Parliament also enjoy

freedom from attendance as witnesses.
 Privileges of Parliament (Collective)

Right to exclude strangers:

Each house of Parliament enjoys the right to exclude strangers (no-members or visitors) from the galleries at
any time and to resolve to debate with closed doors.

Right to punish members and outsiders for breach of its privileges:

Parliament can punish members as well as outsiders for breach of its privileges or its contempt by
reprimand, admonition or imprisonment (also suspension or expulsion in case of members).

No person (either a member or outsider) can be arrested and no legal process (criminal or civil) can be
initiated within the premises of the house without the permission of the presiding officer of the house