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Current General Studies Magazine: "The Budgetary Process" January 2015

Current General Studies Magazine (January 2015)

General Studies - III: Economy Based Article (The Budgetary Process)

What is Budget?

The Annual Financ ial Statement or the Statement of the Estimated Rec eipts and Expenditure of the Government of India in respec t of eac h financ ial year is popularly known as the Budget.

Presentation of Budget

The Budget is presented to Lok Sabha in two parts, namely, the Railway Budget pertaining to Railway Financ e and the General Budget whic h gives an overall pic ture of the financ ial position of the Government of India, exc luding the Railways.

The Budget is presented to Lok Sabha on suc h day* as the President may direc t. Immediately after the presentation of the Budget, the following three statements under the Fisc al Responsibility and Budget Management Ac t, 2003 are also laid on the Table of

* By convention the Railway Budget is presented sometime in the third week of February at 1200 hours after the Question Hour. The General Budget was presented by convention, till 1998, on the last working day of February at 5 P.M. This convention was however, changed in 1999 when the General Budget was presented at 11 A.M. Since then the General Budget is presented at 11 A.M. on the last working day of February (except in 2000 when it was presented at 2 P.M.).

Lok Sabha:- (i) The Medium Term Fisc al Polic y Statement; (ii) The Fisc al Polic y Strategy Statement; and (iii) The Mac ro Ec onomic Framework Statement. Simultaneously, a c opy of the respec tive Budgets is laid on the Table of Rajya Sabha. In an elec tion year, the Budgets may be presented twic e—first to sec ure a Vote on Ac c ount for a few months and later in full.

Distribution of Budget Papers

In the c ase of the Railway Budget, the sets are distributed to members from the Public ations Counter after the Railway Minister has c onc luded his speec h. The sets of General Budget are distributed to members from several booths in the Inner and Outer Lobbies arranged ac c ording to the Division Numbers of members. In c ase Division Numbers have not been allotted, these booths are arranged State- wise. The budget papers are made available to members after the Financ e Minister’s speec h is over, the Financ e Bill has been introduc ed and the House has adjourned for the day.

Discussion on the Budget

No disc ussion on Budget takes plac e on the day it is presented to the House. Budgets are disc ussed in two stages—the General Disc ussion followed by detailed disc ussion and voting on the demands for grants.

Allotment of Time for Discussion

The whole proc ess of disc ussion and voting on the demands for grants and the passage of the Appropriation and Financ e Bills is to be c ompleted within a spec ified time. As a result, often the demands for grants relating to all the Ministries/Departments c annot be disc ussed and demands of some Ministries get guillotined i.e. voted without disc ussion. The Minister of Parliamentary Affairs, after the presentation of the Budget, holds a meeting of leaders of Parties/ Groups in Lok Sabha for the selec tion of Ministries/ Departments whose demands for grants might be disc ussed in the House. On the basis of dec isions arrived at this meeting, the Government forwards the proposals for the c onsideration of the Business Advisory Committee. The Business Advisory Committee after c onsidering the proposals allots time and also rec ommends the order in whic h the demands might be disc ussed. It is generally left to the Government to make any c hange in the order of disc ussion.

After the allotment of time by the Business Advisory Committee, a time table showing the dates on and order in whic h the demands for grants of various Ministries would be taken up in the House is published in Bulletin- Part II for the information of members.

General Discussion on the Budget

During the General Disc ussion, the House is at liberty to disc uss the Budget as a whole or any question of princ iples involved therein but no motion c an be moved. A general survey of administration is in order. The sc ope of disc ussion is c onfined to an examination of the general sc heme and struc ture of the Budget, whether the items of expenditure ought to be inc reased or dec reased, the polic y of taxation as expressed in the Budget and in the speec h of the Financ e Minister. The Financ e Minister or the Railway Minister, as the c ase may be, has the general right of reply at the end of the disc ussion.

Consideration of the Demands for Grants by Departmentally Related Standing Committees of Parliament

With the c reation of Departmentally Related Standing Committees of Parliament in 1993, the Demands for Grants of all the Ministries/Departments are required to be c onsidered by these Committees. After the General Disc ussion on the Budget is over, the House is adjourned for a fixed period. During this period, the Demands for Grants of the Ministries/ Departments are c onsidered by the Committees. These Committees are required to make their reports to the House within spec ified period without asking for more time and make separate report on the Demands for Grants of eac h Ministry.

Discussion on Demands for Grants

The demands for grants are presented to Lok Sabha along with the Annual Financ ial Statement. These are not generally moved in the House by the Minister c onc erned. The demands are assumed to have been moved and are proposed from the Chair to save the time of the House. After the reports of the Standing Committees are presented to the House, the House proc eeds to the disc ussion and voting on Demands for Grants, Ministry- wise. The sc ope of disc ussion at this stage is c onfined to a matter whic h is under the administrative c ontrol of the Ministry and to eac h head of the demand as is put to the vote of the House. It is open to members to disapprove a polic y pursued by a partic ular Ministry or to suggest measure for ec onomy in the administration of that Ministry or to foc us attention of the Ministry to spec ific loc al grievanc es. At this stage, c ut motions c an be moved to reduc e any demand for grant but no amendments to a motion seeking to reduc e any demand is permissible.

Cut Motions

The motions to reduc e the amounts of demands for grants are c alled ‘Cut Motions’. The objec t of a c ut motion is to draw the attention of the House to the matter spec ified therein.

Cut Motions c an be c lassified into three c ategories:— (i) Disapproval of Polic y Cut;

(ii) Ec o no my Cut ; a nd
(iii) T o ke n Cut .

Disapproval of Policy Cut: A c ut mo t io n w hic h s a y s “That the amount of the demand be reduc ed to Re. 1” implies that the mover disapproves of the polic y underlying the demand. The member giving notic e of suc h a Cut Motion has to indicate in precise terms the particulars of the policy which he proposes to disc uss. Disc ussion is c onfined to the spec ific point or points mentioned in the notic e and it is open to the member to advoc ate an alternative policy.

Economy Cut: Where the objec t of the motion is to effec t ec onomy in the expenditure, the form of the motion is “That the amount of the demand be reduc ed by Rs...(a spec ified amount)”. The amount suggested for reduc tion may be either a lump- sum reduc tion in the demand or omission or reduc tion of an item in the demand.

Token Cut: Where the objec t of the motion is to ventilate a spec ific grievanc e within the sphere of responsibility of the Government of India, its form is: “That the amount of the demand be reduc ed by Rs. 100” . Disc ussion on suc h a c ut motion is c onfined to the partic ular grievanc e spec ified in the motion whic h is within the sphere of responsibility of the Government of India.

For the fac ility of members, printed forms for giving notic es of c ut motions are kept in the Parliamentary Notice Office.

Notice period for tabling Cut Motions

The notic es of c ut motions c an be tabled after the presentation of Railway/General Budget.

The notic es of c ut motions tabled up to 15.15 hours on a day are printed and c irc ulated before the day the relevant demands for grants to whic h they relate are to be taken up in the House. The notic es tabled after 15.15 hours are deemed to have been tabled on the next working day. These notic es are printed and c irc ulated on the next working day if the demands for grants to whic h they relate have not already been disposed of in the House.

As c ut motions are c irc ulated to members both in English and Hindi simultaneously, the Rules Committee (Fourth Lok Sabha) at its sitting held on 9 Marc h, 1970 dec ided that members might be requested to table suc h notic es at least two days before the day they are to be taken up in the House.

Ac c ordingly, members should table the notic e of c ut motions at least two days before the day the demands for grants to whic h they relate, are to be taken up in the House, but in any c ase not later than 15.15 hours on the previous day.

Admissibility of Cut Motions—Conditions of

A c ut motion to be admissible should satisfy the following c onditions:—

(1) It should relate to one demand only.
(2) It should be c learly expressed and should not c ontain arguments, inferenc es, ironic al expressions, imputations, epithets and defamatory statements.
(3) It should be c onfined to one spec ific matter whic h should be stated in prec ise terms.
(4) It should not reflec t on the c harac ter or c onduc t of any person whose c onduc t c an only be c hallenged on a substantive motion.
(5) It should not make suggestions for the amendment or repeal of existing laws.
(6) It should not relate to a State subjec t or to matters whic h are not primarily the c onc ern of the Government of India.
(7) It should not relate to expenditure ‘Charged’ on the Consolidated Fund of India.
(8) It should not relate to a matter whic h is under adjudic ation by a c ourt of law having jurisdic tion in any part of India.
(9) It should not raise a question of privilege.
(10) It should not revive disc ussion on a matter whic h has been disc ussed in the same session and on whic h dec ision has been taken.
(11) It should not antic ipate a matter whic h has been previously appointed for c onsideration in the same session.
(12) It should not ordinarily seek to raise disc ussion on a matter pending before any statutory tribunal or statutory authority performing any judic ial or quasi- judic ial func tions or any c ommission or c ourt of enquiry appointed to enquire into, or investigate any matter. However, the Speaker may in his disc retion allow suc h matter being raised in the House as is c onc erned with the proc edure or stage of enquiry, if the Speaker is satisfied that it is not likely to prejudic e the c onsideration of suc h matter by the statutory tribunal, statutory authority, c ommission or c ourt of enquiry.
(13) It should not relate to a trifling matter.

The Speaker dec ides whether a c ut motion is or is not admissible and may disallow any c ut motion when in his opinion it is an abuse of the right of moving c ut motions or is c alc ulated to obstruc t or prejudic ially affec t the proc edure of the House or is in c ontravention of the Rules of Proc edure of the House.

It is a well- established Parliamentary c onvention that c ut motion seeking to disc uss the ac tion of the Speaker or relating to Speaker’s Department or matters under the c ontrol of Speaker are not allowed. Likewise, c ut motions relating to the offic e of the Vic e- President (who is also ex-officio Chairman of Rajya Sabha) are not admissible. Cut motion relating to matters under c onsideration of a Parliamentary Committee are not admissible. Cut motions are not admissible if they ventilate personal grievanc es, or if they c ast aspersions on individual Government offic ials. Cut motions seeking to disc uss a matter affec ting relations with a friendly foreign c ountry or details of internal administration of an autonomous body are out of order as also those whic h seek omission of a whole grant.

Token c uts seeking to disc uss inadequac y of provision in respec t of a partic ular demand are, however, in order.

Normally members of ruling party do not table c ut motions.

Circulation of Lists of Cut Motions

Lists of c ut motions to the various demands for grants as admitted by the Speaker are c irc ulated to members generally two days in advanc e of the date on whic h the demands for grants in respec t of the Ministry are to be taken up in the House for disc ussion.

Moving of Cut Motions

At the c ommenc ement of the disc ussion on the demands for grants in respec t of a partic ular Ministry, members are asked by the Speaker to hand over at the Table, within fifteen minutes, slips indic ating the serial numbers of their c ut motions that they would like to move. The c ut motions thus indic ated are only treated as moved. Cut motions c annot be moved at a later stage.

Cut motions c annot be moved by proxy. A member should be present in the House to move his c ut motions when the relevant demands for grants are taken up.

Guillotine

On the last of the allotted days for the disc ussion and voting on demands for grants, at the appointed time the Speaker puts every question nec essary to dispose of all the outstanding matters in c onnec tion with the demands for grants. This is known as guillotine. The guillotine c onc ludes the disc ussion on demands for grants.

Annual Reports, Outcome Budgets and Detailed Demands for Grants of the Ministries

In c onnec tion with disc ussion on demands for grants, c opies of the Annual Reports and Outc ome Budget of the various Ministries and Departments are made available to members through the Public ations Counter. Detailed demands for grants in respec t of various Ministries/Departments are laid on the Table of Lok Sabha some time before the demands for grants are c onsidered by the Departmentally Related Standing Committees.

Vote on Account

As the whole proc ess of Budget beginning with its presentation and ending with disc ussion and voting of demands for grants and passing of Appropriation Bill and Financ e Bill generally goes beyond the c urrent financ ial year, a provision has been made in the Constitution empowering the Lok Sabha to make any grant in advanc e through a vote on ac c ount to enable the Government to c arry on until the voting of demands for grants and the passing of the Appropriation Bill and Financ e Bill.

Normally, the vote on ac c ount is taken for two months for a sum equivalent to one sixth of the estimated expenditure for the entire year under various demands for grants. During an elec tion year, the vote on ac c ount may be taken for a longer period say, 3 to 4 months if it is antic ipated that the main demands and the Appropriation Bill will take longer than two months to be passed by the House.

As a c onvention vote on ac c ount is treated as a formal matter and passed by Lok Sabha without disc ussion.

Vote on ac c ount is passed by Lok Sabha after the general disc ussion on the Budget (General and Railway) is over and before the disc ussion on demands for grants is taken up.

Supplementary and Excess Demands for Grants

If the amount authorised to be expended for a partic ular servic e for the c urrent financ ial year is found to be insuffic ient for the purpose of that year or when a need has arisen during the c urrent financ ial year for supplementary or additional expenditure upon some ‘new servic e’ not c ontemplated in the Budget for that year the President c auses to be laid before both the Houses of Parliament another statement showing the estimated amount of that expenditure.

If any money has been spent on any servic e during a financ ial year in exc ess of the amount granted or the servic e for that year, the President c auses to be presented to Lok Sabha a demand for suc h exc ess. All c ases involving suc h exc esses are brought to the notic e of Parliament by the Comptroller and Auditor General through his report on the Appropriation Ac c ounts. The exc esses are then examined by the Public Ac c ounts Committee whic h makes rec ommendations regarding their regularisation in its report to the House.

The Supplementary Demands for Grants are presented to and passed by the House before the end of the financ ial year while the demands for exc ess grants are made after the expenditure has ac tually been inc urred and after the financ ial year to whic h it relates, has expired.

Copies of the Books of Demands for Supplementary or Exc ess Grants, rec eived from the Ministry of Financ e, are made available to members from the Public ations Counter after the presentation of suc h demands.

Procedure for Discussion

Supplementary and Exc ess Grants are regulated by the same proc edure as is applic able in the c ase of demands for grants of the main Budget subjec t to suc h adaptations, whether by way of modific ation, addition or omission, as the Speaker deems nec essary or expedient.

Scope of discussion on Supplementary/Excess Grants

The disc ussion on the Supplementary Demands for Grants is c onfined to the items c onstituting the same and no disc ussion c an be raised on the original grants nor on the polic y underlying them. In respec t of sc hemes already sanc tioned in the main Budget, no disc ussion on any question of princ iple or polic y is allowed. As regards demands for whic h no sanc tion has been obtained, the question of polic y has to be c onfined to the items of expenditure on whic h the vote of the House is sought. General grievanc es c annot be ventilated during disc ussion on a Supplementary Grant. Member c an only point out whether the Supplementary Demand is nec essary or not.

During disc ussion on Exc ess Demands for Grants members c an point out how money has been spent unnec essarily or that it ought not to have been spent; beyond this there is no sc ope for general disc ussion or for ventilation of grievanc es.

Cut Motions to Supplementary/Excess Demands for Grants

The c ut motions to Supplementary or Exc ess Demands for Grants must relate to the subjec t matter of the Supplementary or Exc ess Demands. Cut motions whic h are extraneous to the subjec t matter of suc h demands are out of order.

Appropriation Bill

After the demands for grants have been passed by the House, a Bill to provide for the appropriation out of the Consolidated Fund of India of all moneys required to meet the grants and the expenditure c harged on the Consolidated Fund of India is introduc ed, c onsidered and passed. The introduc tion of suc h Bill c annot be opposed. The sc ope of disc ussion is limited to matters of public importanc e or administrative polic y implied in the grants c overed by the Bill and whic h have not already been raised during the disc ussion on demands for grants. The Speaker may require members desiring to take part in the disc ussion to give advanc e intimation of the spec ific points they intend to raise and may withhold permission for raising suc h of the points as in his opinion appear to be repetition of the matters disc ussed on a demand for grant. Suc h advanc e intimation must be given before 10.00 hours on the day the Appropriation Bill is to be taken into c onsideration. No ac tion is taken on intimations rec eived after 10.00 hours.

No amendment c an be proposed to an Appropriation Bill whic h will have the effec t of varying the amount or altering the destination of any grant so made or of varying the amount of any expenditure c harged on the Consolidated Fund of India, and the dec ision of the Speaker as to whether suc h an amendment is admissible is final. An amendment to an Appropriation Bill for omission of a demand voted by the House is out of order.

In other respec ts, the proc edure in respec t of an Appropriation Bill is the same as in respec t of other Money Bills.

Finance Bill

“Financ e Bill” means a Bill ordinarily introduc ed every year to give effec t to the financ ial proposals of the Government of India for the next following financ ial year and inc ludes a Bill to give effec t to supplementary financ ial proposals for any period.

The Financ e Bill is introduc ed immediately after the presentation of the Budget. The introduc tion of the Bill c annot be opposed. The Appropriation Bills and Financ e Bills may be introduc ed without prior c irc ulation of c opies to members.

The Financ e Bill usually c ontains a dec laration under the Provisional Collec tion of Taxes Ac t, 1931, by whic h the dec lared provisions of the Bill relating to imposition or inc rease in duties of c ustoms or exc ise c ome into forc e immediately on the expiry of the day on whic h the Bill is introduc ed. In view of suc h provisions and the provision of Ac t of 1931, the Financ e Bill has to be passed by Parliament and assented to by the President before the expiry of the seventy- fifth day after the day on whic h it was introduc ed.

As the Financ e Bill c ontains taxation proposals, it is c onsidered and passed by the Lok Sabha only after the Demands for Grants have been voted and the total expenditure is known. The sc ope of disc ussion on the Financ e Bill is vast and members c an disc uss any ac tion of the Government of India. The whole administration c omes under review.

The proc edure in respec t of Financ e Bill is the same as in the c ase of other Money Bills.

Budgets of Union Territories and States under President’s Rule

Budgets of Union territories and States under President’s Rule are also presented to Lok Sabha. The proc edure in regard to the Budget of the Union Government is followed in suc h c ases with suc h variations or modific ations, as the Speaker may make.

(Source- http://164.100.47.132/LssNew/abstract/process.htm)