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KYB - Know Your Budget-II

FEBRUARY 15, 2023

By Vijay Kumar

LET'S continue with knowing our budget and its process. It is recommended that you read Part-I before you proceed.


Parliamentary control over public finances is through approval of the Budget. While the Government makes the Union Budget, Parliament approves it and ensures accountability from the Executive.

Articles 265, 266, 112 of the Constitution provide the mechanism for parliamentary control over public purse.

- no tax shall be levied or collected except by authority of law,

- no expenditure can be incurred except with the authorization of the Legislature;

- President shall, in respect of every financial year, cause to be laid before Parliament, "Annual Financial Statement".


The Budget is presented to Parliament on such date as decided by the President.

In the year when General Elections to Lok Sabha are held, the Budget may be presented twice, first to secure a Vote on Account for a few months and later, for the full financial year.


Before presentation of the Budget, President's recommendation is obtained under Article 117 for introduction and consideration in Lok Sabha of the

(a) Finance Bill (along with recommendation under Article 274)

(b) Appropriation Bill (General)

President's approval for the Budget is obtained through "Summary for the President" along with the documents on-

(i) Annual Financial Statement,

(ii) Finance Bill

(iii) Demands for Grants and

(iv) Statements required to be laid under the FRBM Act, 2003.

The 'Summary for the President' also includes the direct and indirect tax proposals and miscellaneous financial provisions as proposed through the Finance Bill. The summary note is approved by the Finance Minister and Prime Minister before being taken for the President's approval, normally in the morning of the date on which Budget is presented to Parliament.


Immediately prior to the presentation of the Budget in Parliament, the Finance Minister briefs the Cabinet on the Budget proposals and the Finance Bill.

The Budget Division of the Finance Ministry prepares a 'Summary for the Cabinet' outlining in brief the Revised Estimates proposals, the Budget proposals for the ensuing year, the estimated receipts, including the direct and indirect tax proposals and miscellaneous financial provisions, as proposed through the Finance Bill and the brief on the compliance with the relevant provisions of the FRBM Act and Rules.

The summary note is approved by the Finance Minister. Immediately after briefing of the Cabinet by the Finance Minister, the Budget is presented in Parliament.


While presenting the Budget in Lok Sabha, the Finance Minister makes a speech providing details of the proposals for the new financial year regarding taxation, borrowings and expenditure plans of the Government.

The Budget Speech is largely a policy document which highlights the policies and programmes of the Government.

The Budget is laid on the Table of the Rajya Sabha soon after the Finance Minister has completed her/his budget speech in the Lok Sabha. No discussion takes place on the day the Budget is presented. Sets of Budget papers are supplied to Members after the Budget has been presented through electronic/digital mode.


The House is at liberty to discuss the budget as a whole or any question of principle involved therein, but no motion is moved at the time of General Discussion nor the Budget is submitted to the vote of the House after the General Discussion.

The Finance Minister has a right to reply at the end of the discussions. The scope of discussion at this stage is confined to general examination of the Budget, policy on taxation as expressed in the Budget Speech of the Finance Minister and general schemes and structures etc. Specific points or issues can be discussed on the floor of the House when relevant Demands for Grants or the Finance Bill is taken up.

Officers not below the rank of Under Secretaries are assigned to cover general discussions on Budget and Finance Bill in both the Houses of Parliament. They report important points to their Heads of Divisions/ Heads of Departments for preparing 'Notes'. Such Notes are prepared promptly and submitted to the Finance Minister. "Gist of Points" raised during the day are submitted to the Finance Minister.


After the General Discussion, the Demands for Grants of individual Ministries/ Departments are taken up in Lok Sabha for discussion according to a time table decided at the meeting of Business Advisory Committee of the House and voted upon.

When a Demand is taken up for discussion, any Member may seek reduction in the amount of the Demand by moving any of the following types of Cut Motions:

(a) Disapproval of Policy Cut : by moving "that the amount of the demand be reduced to "Re. 1", thus representing disapproval of the policy underlying the demand. The Member giving notice of 'Disapproval of Policy Cut' indicates the particulars of the policy which he/she proposes to discuss. The discussion is confined to specific points mentioned in the notice and is open to the member to advocate an alternative policy.

(b) Economy Cut : by moving "that the amount of the demand be reduced by a specified amount" representing the economy that can be effected. The Member giving notice of 'Economy Cut' may indicate either a lump-sum reduction in the Demand or omission or reduction of an item. She/he indicates the particular matter on which discussion is sought to be raised and her/ his speech has to be confined to that matter as to how economy can be effected; and

(c) Token Cut: by moving "that the amount of the demand be reduced by "Rs. 100" to ventilate a specific grievance, which is in the sphere of responsibility of the Government of India. The discussion is limited to a particular grievance specified in the motion.

Speaker to decide admissibility . The Speaker shall decide whether a cut motion is or is not admissible under these rules and may disallow any cut motion when the Speaker is of the opinion that it is an abuse of the right of moving cut motions or is calculated to obstruct or prejudicially affect the procedure of the House or is in contravention of these rules.


On the last day of discussion on Demands for Grants, the Speaker puts all the outstanding Demands for Grants to the vote of the House. This process is known as 'Guillotine' and is a device for bringing the debate on financial proposals to an end within a specified time with the result that several Demands have to be voted by the House without discussions.

When time for applying the guillotine is reached, the Member or the Minister who is in attendance of the House is asked by the Speaker to resume his/her seat. Cut Motions which have been moved are immediately put to vote and disposed (negated).


The Constitution under Article 114 states "no money shall be withdrawn from the Consolidated Fund of India except under Appropriation made by law". Therefore, after the Demands for Grants are voted and passed by Lok Sabha, an Appropriation Bill is introduced in the Lok Sabha seeking to "authorize payment and appropriation of the sums so voted, as well as those required for meeting the charged expenditure from and out of the Consolidated Fund of India for the services during the financial year".

After the Bill has been considered and passed by the Lok Sabha, it is transmitted to the Rajya Sabha for consideration and return. Appropriation Bill for withdrawal from the Consolidated Fund of India is introduced in the Lok Sabha with the prior approval of the President.


A provision has been made in the Constitution which empowers Lok Sabha to make any grant in advance in respect of the estimated expenditure for a part of the financial year pending completion of procedure for the voting of the Demands. The purpose of 'Vote on Account' is to keep Government functioning, pending voting of final budget.

As a convention, Vote on Account is treated as a formal affair and passed by Lok Sabha.


Finance Bill is introduced by the Finance Minister immediately after the Annual Financial Statement is presented in the Lok Sabha. Being a Money Bill, it is introduced in the Lok Sabha with the President's recommendation under clause (1) of Article 117. After passing of the Appropriation Bill, Finance Bill is considered and passed by the Parliament. In the case of Finance Bill, the procedure in Rajya Sabha is the same as in the case of other Money Bills.

As explained last week, the Speaker had held that the Finance Bill should not contain amendments to both direct and indirect tax laws if they are of a permanent nature and are not consequential upon or incidental to the taxation proposals, and for that, a separate Bill i.e. Taxation Laws Amendment Bill should be brought forward.

This is not usually followed

Until Next week