The Constitution refers to the budget as the ‘annual financial statement’.
The Budget is an annual financial statement showing expected revenue and expenditure of public money in a financial year, which begins on 1 April and ends on 31 March of the following year.
It is not a bill.
Every year the budget is presented by the Finance Minister in the Lok Sabha.
The budget – making is a big exercise.
The Finance Ministry prepares the budget but it involves the entire government.
The budget in India is presented in two parts-
Railway Budget and the General Budget
Expenditure charged on the Consolidated Fund of India—
[a] the emoluments and allowances of the President and other expenditure relating to his office.
[b] the salaries and allowances of the Chairman and the Deputy Chairman of the Council of States and the Speaker and the Deputy Speaker of the House of the People.
[c] debt charges for which the Government of India is liable including interest, sinking fund charges and redemption charges, and other expenditure relating to the raising of loans and the service and redemption of debt.
[d]  the salaries, allowances and pensions payable to or in respect of Judges of the Supreme Court;
 the pensions payable to or in respect of Judges of the Federal Court;
 the pensions payable to or in respect of Judges of any High Court which exercises jurisdiction in relation to any area included in the territory of India or which at any time before the commencement of this Constitution exercised jurisdiction in relation to any area included in a Governor’s Province of the Dominion of India;
[e] the salary, allowances and pension payable to or in respect of the Comptroller and Auditor-General of India.
[f] any sums required to satisfy any judgment, decree or award of any court or arbitral tribunal.
[g] any other expenditure declared by this Constitution or by Parliament by law to be so charged.
Presentation of Budget
The budget is presented in two parts—Railway Budget and General Budget.
Both are governed by the same procedure.
The introduction of Railway Budget precedes that of the General Budget.
Railway Budget is presented to the Lok Sabha by the railway minister in the third week of February.
General Budget is presented to the Lok Sabha by the finance minister on the last working day of February.
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.
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.
During this stage no cut motion can be moved nor can the budget be submitted to the vote of the House.
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 gap 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.
The standing committee system established is 1993 makes parliamentary financial control over ministries much more detailed, close, in-depth and comprehensive.
Voting on Demands for Grants
In the light of the reports of the departmental standing committees, 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.
The voting of demands for grants is the exclusive privilege of the Lok Sabha, that is, the Rajya Sabha has no power of voting the demands.
General Budget has a total of 109 demands -103 for civil expenditure and 6 for defence 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’, which are of three kinds:
[a] Policy Cut Motion–
It represents the disapproval of the policy underlying the demand.
It states that the amount of the demand be reduced to Re 1.
The members can also advocate an alternative policy.
[b] Economy Cut Motion—
It represents the economy that can be affected in the proposed expenditure.
It states that the amount of the demand be reduced by a specified amount.
[c] Token Cut Motion—
It states that the amount of the demand be reduced by Rs 100.
A cut motion, to be admissible, must satisfy the following conditions:
–It should relate to one demand only.
–It should not refer to a matter that is not primarily the concern of Union government.
–It should not relate to the expenditure charged on the Consolidated Fund of India.
–It should not relate to a matter that is under adjudication by a court.
In total, 26 days are allotted for the voting 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 ‘guillotine’.
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, all money required to meet:
 The grants voted by the Lok Sabha.
 The expenditure charged on the Consolidated Fund of India.
The Appropriation Bill becomes the Appropriation Act after it is assented to by the President.
This act authorises the payments from the Consolidated Fund of India.
This means that 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).
To overcome this functional difficulty, the Constitution has authorised 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.
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.
Unlike the Appropriation Bill, the amendments (seeking to reject or reduce a tax) can be moved in the case of finance bill.
It is granted when the amount authorised by the Parliament through the appropriation act for a particular service for the current financial year is found to be insufficient for that year.
It is granted when a need has arisen during the current financial year for additional expenditure upon some new service not contempleted in the budget for that year.
It is granted when money has been spent on any service during a financial year in excess of the amount granted for that service in the budget for that year.
It is voted by the Lok Sabha after the financial year.
Before the demands for excess grants are submitted to the Lok Sabha for voting, they must be approved by the Public Accounts Committee of Parliament.
Vote of Credit
It is granted for meeting an unexpected demand upon the resources of India, when on account of the magnitude or the indefinite character of the service, the demand cannot be stated with the details ordinarily given in a budget.
Hence, it is like a blank cheque given to the Executive by the Lok Sabha.
It is granted for a special purpose and forms no part of the current service of any financial year.
It is granted when funds to meet the proposed expenditure on a new service can be made available by reappropriation.
A demand for the grant of a token sum (of Re 1) is submitted to the vote of the Lok Sabha and if assented, funds are made available.
Reappropriation involves transfer of funds from one head to another.
It does not involve any additional expenditure.
Supplementary, additional, excess and exceptional grants and vote of credit are regulated by the same procedure which is applicable in the case of a regular budget.