Unit 5: The Union Budget: Role of the Parliament

1. What is the Union Budget?

The term "Budget" is not mentioned in the Constitution. The document is referred to as the 'Annual Financial Statement' (AFS) under Article 112 of the Constitution.

Definition: The Union Budget is a statement of the estimated receipts (income) and expenditure (spending) of the Government of India for a particular financial year (which runs from April 1st to March 31st).

It is the primary instrument of Parliament's control over the executive in financial matters. The core principle is "no taxation without representation" and "no expenditure without parliamentary approval."

Components of the Budget:

• Revenue Budget: Deals with receipts that do not create a liability or reduce assets (e.g., tax revenue) and expenditure that does not create assets (e.g., salaries, subsidies, interest payments).
• Capital Budget: Deals with receipts that create a liability (e.g., government borrowing) and expenditure that creates assets (e.g., building roads, schools, hospitals).

2. Role of the Parliament in the Budget Process

The budget goes through six stages in the Parliament. This entire process is called 'enactment of the budget'.

1. Presentation of Budget:
   • The Finance Minister presents the Budget in the Lok Sabha with a speech.
   • It is also tabled in the Rajya Sabha, but the main financial powers rest with the Lok Sabha.
2. General Discussion:
   • Takes place in both Houses for a few days.
   • Parliament discusses the budget as a whole, focusing on the principles and policies. No voting takes place.
3. Scrutiny by Departmental Standing Committees (DRSCs):
   • The Houses are adjourned for a few weeks.
   • The 24 DRSCs examine the 'Demands for Grants' of their respective ministries in detail.
   • They prepare reports which are tabled in Parliament. These reports are advisory, not binding.
4. Voting on Demands for Grants:
   • This stage is exclusive to the Lok Sabha.
   • The Demands (requests for funds) are discussed and voted on ministry by ministry.
   • This is when members can move 'Cut Motions' to signal disapproval.
5. Passing of Appropriation Bill:
   • After the Demands are passed, an Appropriation Bill is introduced.
   • This bill gives the government the legal authority to withdraw money from the Consolidated Fund of India to meet its expenditure.
   • It is a Money Bill, so the Rajya Sabha's role is limited.
6. Passing of Finance Bill:
   • The Finance Bill contains the government's tax proposals.
   • Its passage legalizes the government's income (receipts).
   • With the passing of the Finance Bill, the budget process is complete.

3. Parliamentary Tools for Financial Control

Parliament (especially the Lok Sabha) has specific tools to control government spending during the budget:

• Cut Motions: A power exclusive to the Lok Sabha, moved to reduce the amount of a demand. They are symbolic and used to express disapproval.
  • Policy Cut: Disapproves of the policy. States the demand be reduced to Re. 1.
  • Economy Cut: Suggests a specific amount to be reduced to promote economy.
  • Token Cut: Used to raise a specific grievance. States the demand be reduced by Rs. 100.
• Guillotine: On the last day of voting on demands, the Speaker puts all remaining demands to vote, whether they have been discussed or not. This is done to ensure the budget is passed within the time limit.
• Vote on Account: A temporary grant given by Parliament to the government to cover its expenses for a short period (usually 2 months) until the full budget is passed.