How is Budget enacted in the Parliament?

Q.  Which of the following are true regarding enactment of budget in the Parliament?

1) Rajya Sabha can only discuss the Budget and not vote on it.
2) Amendments can be proposed to Appropriation Bill but not to the Finance Bill.
3) Railway Budget used to be presented before the General Budget.
4) Finance Bill must be enacted within 75 days.
5) Vote on account is for 1/6th the amount of the Budget estimates.

- Published on 03 Mar 17

a. 1, 2
b. 1, 2, 3, 5
c. 2, 4, 5
d. 1, 3, 4, 5

ANSWER: 1, 3, 4, 5
    The budget goes through 6 stages in the Parliament.

    1. Presentation of Budget -

  • Railway Budget and General Budget are presented separately and are governed by same procedure.

  • The introduction of Railway Budget precedes that of the General Budget.

  • Rail Budget used to be presented to the Lok Sabha by the railway minister in the third week of February.

  • General Budget used to be presented to the Lok Sabha by the finance minister on the last working day of February.

  • After the end of budget speech in the Lok Sabha, the budget is laid before the Rajya Sabha, which can only discuss it and not vote.

  • 2. General Discussion -

  • The general discussion on budget begins a few days after its presentation.

  • It takes place in both the Houses of Parliament and lasts usually for three to four days.

  • At this stage, the Lok Sabha can discuss the budget as a whole or on any question of principle involved therein but no cut motion can be moved nor can the budget be submitted to the vote of the House.

  • The finance minister has a general right of reply at the end of the discussion.

  • 3. Scrutiny by Departmental Committees -

  • After the general discussion on the budget is over, the Houses are adjourned for about three to four weeks.

  • During this period, the 24 departmental standing committees of Parliament examine and discuss in detail the demands for grants of the concerned ministers and prepare reports on them.

  • These reports are submitted to both the Houses of Parliament for consideration.

  • 4. Voting on Demands for Grants -

  • In the light of departmental standing committees’ reports,the Lok Sabha takes up voting of demands for grants.

  • The demands are presented ministry wise.

  • A demand becomes a grant after it has been duly voted.

  • Rajya Sabha has no power of voting the demands.

  • Voting is confined to the votable part of the budget - the expenditure charged on the Consolidated Fund of India is not submitted to the vote (it can only be discussed).

  • While the General Budget has a total of 109 demands (103 for civil expenditure and 6 for defense expenditure), the Railway Budget has 32 demands.

  • Each demand is voted separately by the Lok Sabha.

  • During this stage, the members of Parliament can discuss the details of the budget.

  • They can also move motions to reduce any demand for grant. Such motions are called as ‘cut motion’.

  • 5. Passing of Appropriation Bill -

  • The Constitution states that ‘no money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law’.

  • Accordingly, an appropriation bill is introduced to provide for the appropriation, out of the Consolidated Fund of India.

  • This is for 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 appropriation bill in either house of the Parliament that will have the effect of varying the amount or altering the destination of any grant voted, or of varying the amount of any expenditure charged on the Consolidated Fund of India.

  • The Appropriation Bill becomes the Appropriation Act after it is assented to by the President.

  • The government cannot withdraw money from the Consolidated Fund of India till the enactment of the appropriation bill.

  • This takes time and usually goes on till the end of April.

  • But the government needs money to carry on its normal activities after 31 March (the end of the financial year).

  • For this, the Constitution has authorized the Lok Sabha to make any grant in advance in respect to the estimated expenditure for a part of the financial year, pending the completion of the voting of the demands for grants and the enactment of the appropriation bill.

  • This provision is known as the ‘vote on account’.

  • It is passed (or granted) after the general discussion on budget is over.

  • It is generally granted for two months for an amount equivalent to one-sixth of the total estimation.

  • 6. Passing of Finance Bill -

  • The Finance Bill is introduced to give effect to the financial proposals of the Government of India for the following year.

  • It is subjected to all the conditions applicable to a Money Bill.

  • Amendments (seeking to reject or reduce a tax) can be moved in the case of finance bill.

  • According to the Provisional Collection of Taxes Act of 1931, the Finance Bill must be enacted (i.e., passed by the Parliament and assented to by the president) within 75 days.

  • The Finance Act legalises the income side of the budget and completes the process of the enactment of the budget.

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