Chapter 23 (Budget part)
Stages in Enactment of Budget
The Budget passes through the following six stages in Parliament:
1. Presentation of Budget
2. General Discussion
3. Scrutiny by Departmental Committees
4. Voting on Demands for Grants
5. Passing of Appropriation Bill
6. Passing of Finance Bill
1. Presentation of Budget
Traditionally, the Finance Minister presented the Budget in Lok Sabha on the last working day of February.
Since 2017, the Budget is presented on 1 February.
The Budget may also be presented in two or more parts. In such cases, each part is treated as if it were the Budget itself.
No discussion on the Budget takes place on the day it is presented.
The Finance Minister presents the Budget through a speech called the “Budget Speech”.
After the speech in Lok Sabha, the Budget is laid before Rajya Sabha. Rajya Sabha can discuss the Budget but cannot vote on
Demands for Grants.
Budget Documents Presented in Parliament
The following documents are presented along with the Budget:
1. Budget Speech
2. Annual Financial Statement
3. Demands for Grants
4. Finance Bill
5. Statements required under the FRBM Act:
○ Macro-Economic Framework Statement
○ Fiscal Policy Strategy Statement
○ Medium Term Fiscal Policy Statement
6. Expenditure Budget
7. Receipts Budget
8. Expenditure Profile
9. Memorandum Explaining the Provisions in the Finance Bill
10. Budget at a Glance
11. Outcome Budget (Output–Outcome Monitoring Framework)
12. Key Features of the Budget
13. Implementation of Previous Budget Announcements
14. Key to Budget Documents
Earlier, the Economic Survey was also presented along with the Budget.
Now it is presented one day or a few days before the Budget.
It is prepared by the Finance Ministry and shows the condition of the national economy.
2. General Discussion
General discussion on the Budget starts a few days after its presentation.
It takes place in both Houses of Parliament and usually continues for three to four days.
During this stage:
● Lok Sabha discusses the Budget as a whole or any principle related to it.
● No cut motion can be moved.
● The Budget is not put to vote.
At the end of the discussion, the Finance Minister gives a reply.
3. Scrutiny by Departmental Committees
After the general discussion, both Houses are adjourned for about three to four weeks.
During this period, the 24 Departmental Standing Committees examine the Demands for Grants of different ministries in detail and
prepare reports.
These reports are then submitted to both Houses for consideration.
The Standing Committee system was started in 1993 and expanded in 2004.
It made parliamentary financial control more detailed and comprehensive.
4. Voting on Demands for Grants
After considering committee reports, Lok Sabha takes up voting on Demands for Grants.
The demands are presented ministry-wise.
A demand becomes a grant after it is voted upon.
Important Points
1. Only Lok Sabha can vote on Demands for Grants. Rajya Sabha has no such power.
2. Voting is done only on votable expenditure. Charged expenditure on the Consolidated Fund of India is not voted upon,
though it can be discussed.
Cut Motions
During this stage, members can discuss Budget details and move motions to reduce demands for grants. These are called “Cut
Motions”.
There are three kinds of Cut Motions:
(a) Policy Cut Motion
It shows disapproval of the policy behind the demand.
The demand amount is reduced to ₹1.
Members may also suggest an alternative policy.
(b) Economy Cut Motion
It suggests reduction in expenditure.
The demand amount is reduced by a specified amount.
This may involve:
● lump sum reduction, or
● omission/reduction of a specific item.
(c) Token Cut Motion
It highlights a specific grievance within the responsibility of the Government of India.
The demand amount is reduced by ₹100.
Conditions for Admissibility of Cut Motion
A cut motion must satisfy these conditions:
1. It should relate to only one demand.
2. It should be clearly expressed and should not contain arguments or defamatory statements.
3. It should deal with one specific matter only.
4. It should not suggest amendment or repeal of existing laws.
5. It should not deal with matters outside the concern of Union Government.
6. It should not relate to charged expenditure on the Consolidated Fund of India.
7. It should not relate to matters under court consideration.
8. It should not raise a question of privilege.
Importance of Cut Motions
Cut motions are important because they:
1. Allow detailed discussion on a specific demand for grant.
2. Help Parliament examine government activities and maintain responsible government.
In practice, cut motions are rarely passed because the government usually has majority support.
If a cut motion is passed, it shows loss of confidence in the government and may lead to resignation of the government.
Guillotine
On the last day fixed for discussion and voting on Demands for Grants, the Speaker puts all remaining demands to vote, whether
discussed or not.
This process is called “Guillotine”.
5. Passing of Appropriation Bill
The Constitution says that no money can be withdrawn from the Consolidated Fund of India without appropriation made by law.
After Demands for Grants are voted and passed, an Appropriation Bill is introduced to authorise withdrawal of money from the
Consolidated Fund of India for:
1. Grants voted by Lok Sabha
2. Charged expenditure on the Consolidated Fund of India
Restrictions on Amendments
No amendment can be proposed in the Appropriation Bill that:
● changes the amount or purpose of a voted grant, or
● changes the amount of charged expenditure.
Appropriation Act
After the President gives assent, the Appropriation Bill becomes the Appropriation Act.
This Act authorises withdrawal of money from the Consolidated Fund of India.
The government cannot withdraw money until the Appropriation Bill is enacted.
Vote on Account
Passing the Appropriation Bill takes time and may continue till the end of April.
But the government needs money after 31 March to continue normal work.
To solve this problem, the Constitution allows Lok Sabha to grant advance money for part of the financial year. This is called “Vote
on Account”.
It is passed after general discussion on the Budget.
Usually:
● it is granted for two months, and
● for an amount equal to one-sixth of the total estimated expenditure.
In election years, it may be granted for a longer period of about 3 to 5 months.
Changes After 2017
From 2017, the Budget session starts on 31 January and the Union Budget is presented on 1 February.
This change was made to:
● avoid Vote on Account, and
● pass a single Appropriation Bill before the financial year ends.
After this change, Vote on Account is presented only in election years along with Interim Budget.
Interim Budget
In years when Lok Sabha elections are held, an Interim Budget is presented.
After elections and formation of the new government, the Regular Budget is presented on a date decided by the new government.
6. Passing of Finance Bill
The Finance Bill is introduced every year to give effect to the financial proposals of the Government of India for the next financial
year.
It also includes supplementary financial proposals if needed.
The Finance Bill follows all conditions applicable to a Money Bill.
Unlike the Appropriation Bill, amendments to reject or reduce a tax can be moved in the Finance Bill.
During this stage, members can discuss:
● general administration,
● local grievances related to Union Government, and
● government’s monetary or financial policy.
According to the Provisional Collection of Taxes Act, 1931, the Finance Bill must be enacted within 75 days.
The Finance Act legalises the income side of the Budget and completes the Budget enactment process.
Other Grants
Apart from the regular Budget, Parliament can grant other types of grants under special circumstances.
Supplementary Grant
It is granted when the amount already authorised for a service during the current financial year becomes insufficient.
Additional Grant
It is granted when additional expenditure is needed for a new service not included in the Budget for that year.
Excess Grant
It is granted when expenditure on a service exceeds the amount granted in the Budget for that year.
It is voted by Lok Sabha after the financial year ends.
Before voting, it must be approved by the Public Accounts Committee.
Vote of Credit
It is granted to meet unexpected demands when the amount or details cannot be clearly stated in the Budget.
It is like a blank cheque given by Lok Sabha to the Executive.
Exceptional Grant
It is granted for a special purpose and does not form part of the current service of any financial year.
Token Grant
It is granted when money for a new service can be arranged through reappropriation.
A token amount is put to vote in Lok Sabha.
Reappropriation means transfer of funds from one head to another and does not involve extra expenditure.
Procedure for Other Grants
The following follow same procedure as regular Budget:
● Supplementary Grant
● Additional Grant
● Excess Grant
● Exceptional Grant
● Vote of Credit
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Parliamentary Privileges
Meaning
Parliamentary privileges are:
● special rights,
● immunities,
● exemptions
given to:
● both Houses of Parliament,
● parliamentary committees,
● Members of Parliament (MPs).
Purpose
To ensure Parliament works:
● independently,
● effectively,
● without outside pressure or obstruction.
Without these privileges:
● Parliament cannot maintain dignity and authority.
● MPs cannot perform duties freely.
Also Available To
● Attorney General of India
● Union Ministers (while participating in proceedings)
Not Available To
● President of India
Classification of Parliamentary Privileges
1. Collective Privileges
2. Individual Privileges
1. Collective Privileges of Parliament
1. Right to Publish Proceedings
Parliament can:
● publish debates/reports/proceedings,
● prohibit others from publishing them.
After 44th Amendment (1978)
Press can publish true reports of proceedings except during:
● secret sittings.
2. Right to Exclude Strangers
Parliament can:
● exclude outsiders,
● hold secret sittings.
3. Right to Regulate Own Procedure
Each House can:
● make its own rules,
● regulate business conduct.
4. Right to Punish for Breach of Privilege/Contempt
Parliament can punish:
● MPs,
● outsiders.
Punishments
● reprimand,
● admonition,
● imprisonment,
● suspension (MPs),
● expulsion (MPs).
5. Right to Receive Information About Arrest of MPs
House must immediately be informed if an MP is:
● arrested,
● detained,
● convicted,
● imprisoned,
● released.
6. Right to Conduct Inquiries
Parliament can:
● summon witnesses,
● demand papers/documents/records.
7. Courts Cannot Inquire into Proceedings
Courts cannot investigate:
● parliamentary proceedings,
● committee proceedings.
8. No Arrest Inside Parliament Without Permission
Inside Parliament premises:
● no arrest,
● no legal notice/process
without permission of:
● Speaker (Lok Sabha),
● Chairman (Rajya Sabha).
2. Individual Privileges of MPs
1. Freedom from Arrest in Civil Cases
MPs cannot be arrested:
● during session,
● 40 days before session,
● 40 days after session.
Applies Only To
● civil cases.
Not Available In
● criminal cases,
● preventive detention.
2. Freedom of Speech in Parliament
MPs can speak freely in Parliament.
No court case for:
● anything said in Parliament,
● any vote given in Parliament.
Subject To
● Constitution,
● parliamentary rules.
3. Exemption from Jury Service
MPs can refuse:
● to appear as witness,
● to give evidence
while Parliament is in session.
Breach of Privilege
Meaning
Violation of privileges/rights/immunities of:
● Parliament,
● MPs.
Result
● Punishable by Parliament.
Contempt of the House
Meaning
Any act that:
● obstructs Parliament,
● obstructs MPs/officers,
● lowers dignity/authority of House.
Difference Between Breach of Privilege and Contempt
Breach of Privilege Contempt
Direct violation of specific privilege Broader concept
Violates a privilege Any act lowering dignity/authority
Important Line
● Every breach of privilege is contempt.
● Every contempt is not breach of privilege.
Example
Disobeying parliamentary order:
● may not violate specific privilege,
● but still amounts to contempt.
Sources of Parliamentary Privileges
Privileges come from:
1. Constitution
2. Laws made by Parliament
3. Rules of both Houses
4. Parliamentary conventions
5. Judicial interpretations
Important Constitutional Position
Originally, Article 105 stated:
● privileges same as British House of Commons.
44th Amendment (1978)
● Removed direct reference to British House of Commons.
● Actual position largely remained same.
Important Point
● Parliament has still not codified all privileges into one law.
Sovereignty of Parliament
Meaning
Parliamentary sovereignty means:
● Parliament is supreme law-making authority.
This concept mainly belongs to Britain.
Parliamentary Sovereignty in Britain
According to A. V. Dicey:
1. British Parliament Can Make or Repeal Any Law
Even constitutional laws.
Famous Statement
British Parliament can do everything except:
● “make a woman a man and a man a woman.”
2. No Difference Between Ordinary and Constitutional Law
● Same procedure for both.
3. No Judicial Review
● Courts cannot declare parliamentary laws unconstitutional.
Is Indian Parliament Sovereign Like British Parliament?
No
Indian Parliament is not fully sovereign because of constitutional limitations.
Factors Limiting Sovereignty of Indian Parliament
1. Written Constitution
● Constitution is supreme law.
● Parliament must work within constitutional limits.
2. Federal System
Powers divided between:
● Centre,
● States.
Parliament normally cannot legislate on State List.
3. Judicial Review
● Supreme Court and High Courts can declare parliamentary laws unconstitutional.
4. Fundamental Rights
Article 13:
● Parliament cannot violate Fundamental Rights.
If law violates FRs:
● law becomes void.
Final Comparison
British Parliament Indian Parliament
Legally supreme Limited by Constitution
No judicial review Subject to judicial review
Unwritten Constitution Written Constitution
No constitutional limits Fundamental Rights restrict Parliament
Unitary system Federal division of powers
Conclusion
Indian Parliament is:
● not sovereign like British Parliament,
● closer to the position of the United States Congress.
Parliamentary Privileges
Meaning
Parliamentary privileges are special rights, immunities and exemptions given to:
● both Houses of Parliament
● committees of Parliament
● members of Parliament (MPs)
These privileges help Parliament work:
● independently
● effectively
● without obstruction
Without these privileges:
● Parliament cannot maintain dignity and authority
● MPs cannot perform duties freely
Who gets these privileges?
Privileges are also given to people who can speak and participate in Parliament proceedings, such as:
● Attorney General of India
● Union Ministers
But:
● President does NOT enjoy parliamentary privileges
Classification of Parliamentary Privileges
They are of 2 types:
1. Collective Privileges
2. Individual Privileges
1. Collective Privileges
(Privileges enjoyed by each House together)
1. Right to publish proceedings
Parliament can:
● publish reports, debates and proceedings
● stop others from publishing them
44th Amendment Act (1978):
● restored freedom of press to publish true parliamentary reports
● but not for secret sittings
2. Right to exclude strangers
House can:
● stop outsiders from attending proceedings
● hold secret sittings
3. Right to regulate own procedure
Each House can:
● make rules
● regulate business and conduct
4. Right to punish for breach of privilege/contempt
House can punish:
● MPs
● outsiders
Punishments:
● reprimand
● admonition
● imprisonment
● suspension
● expulsion
5. Right to receive information about arrest of member
House must immediately get information if a member is:
● arrested
● detained
● convicted
● imprisoned
● released
6. Right to conduct inquiries
House can:
● call witnesses
● ask for papers and records
7. Courts cannot inquire into parliamentary proceedings
Courts cannot investigate:
● proceedings of Parliament
● committee proceedings
8. No arrest inside House without permission
Inside Parliament premises:
● no arrest
● no legal process
without permission of presiding officer.
2. Individual Privileges
(Privileges enjoyed by MPs individually)
1. Freedom from arrest in civil cases
MPs cannot be arrested:
● during session
● 40 days before session
● 40 days after session
This applies only in:
● civil cases
NOT in:
● criminal cases
● preventive detention
2. Freedom of speech in Parliament
MPs can speak freely in Parliament.
No court case can be filed for:
● speech in Parliament
● vote in Parliament
But this freedom is subject to:
● Constitution
● rules of Parliament
3. Exemption from jury service
MPs can:
● refuse to appear as witness
● refuse to give evidence in court
when Parliament is in session.
Breach of Privilege
If any person:
● violates privileges
● attacks rights/immunities of Parliament or MPs
→ it is called Breach of Privilege.
It is punishable by Parliament.
Contempt of the House
Any act that:
● obstructs Parliament
● lowers dignity/authority of House
● obstructs MPs/officers in duties
→ called Contempt of the House.
Difference Between Breach of Privilege and Contempt
Breach of Privilege
● direct violation of a specific privilege
Contempt
● broader concept
● includes anything lowering dignity or authority of House
Important Point
● Every breach of privilege = contempt
● Every contempt ≠ breach of privilege
Example
Disobeying an order of House:
● may not violate a specific privilege
● but still amounts to contempt
Sources of Parliamentary Privileges
Privileges come from 5 sources:
1. Constitution
2. Laws made by Parliament
3. Rules of both Houses
4. Parliamentary conventions
5. Judicial interpretations
Important Constitutional Position
Originally Article 105 mentioned:
● freedom of speech
● right of publication
Other privileges were same as British House of Commons.
44th Amendment Act (1978):
● removed direct reference to British House of Commons
● but actual position remained same
Even now:
● Parliament has NOT codified all privileges in one law.
Sovereignty of Parliament
Meaning
Sovereignty of Parliament means:
● Parliament is supreme law-making authority
This idea mainly belongs to British Parliament.
Parliamentary Sovereignty in Britain
According to A. V. Dicey:
1. British Parliament can make or repeal any law
It can:
● make
● amend
● repeal any law
2. No difference between ordinary law and constitutional law
Both are made by same procedure.
3. Courts cannot declare laws unconstitutional
Britain has:
● no judicial review
Courts cannot strike down parliamentary laws.
Is Indian Parliament Sovereign Like British Parliament?
NO
Indian Parliament is NOT fully sovereign because legal restrictions exist.
Factors Limiting Sovereignty of Indian Parliament
1. Written Constitution
Constitution is supreme law.
Parliament must work within constitutional limits.
Some amendments also require:
● approval of half of states
2. Federal System
Powers are divided between:
● Centre
● States
Parliament cannot normally legislate on State List subjects.
3. Judicial Review
Supreme Court and High Courts can:
● declare parliamentary laws unconstitutional
4. Fundamental Rights
Article 13 says:
● Parliament cannot violate Fundamental Rights
If law violates FRs:
● law becomes void
Final Comparison
British Parliament
● sovereign
● no judicial review
● unwritten constitution
Indian Parliament
● limited by Constitution
● subject to judicial review
● Fundamental Rights restrict Parliament
● federal division of powers exists
So:
● Indian Parliament is NOT sovereign like British Parliament
● It is closer to American Congress in this respect.