Union Budget and Parliamentary Financial Control
UPSC DRDO Senior Administrative Officer: lesson notes, 10 MCQs with explanations and score analysis.
The Constitution never uses the word “budget”. It speaks of the Annual Financial Statement, and the whole cycle of authorising, spending and auditing public money is built around a small cluster of Articles. For an administrative officer who will handle grants, re-appropriation and audit paras, these provisions are working knowledge rather than theory.
1. Constitutional Provisions and Budget Stages
| Article | Subject |
|---|---|
| 112 | Annual Financial Statement laid before both Houses; 112(3) lists charged expenditure |
| 113 | Charged expenditure not put to vote; other estimates presented as demands for grants to the Lok Sabha |
| 114 | Appropriation Bill; no amendment that varies the amount or destination of a grant or alters charged expenditure |
| 115 | Supplementary, additional and excess grants |
| 116 | Vote on account, vote of credit and exceptional grants |
| 110 and 117 | Money Bills and Financial Bills |
| 265 | No tax shall be levied or collected except by authority of law |
The Budget passes through six stages: presentation, general discussion, scrutiny by the departmentally related standing committees, voting on demands for grants, passing of the Appropriation Bill, and passing of the Finance Bill. Since 2017 it is presented on 1 February, and the Railway Budget has been merged with the General Budget.
Cut motions
| Motion | Effect | Purpose |
|---|---|---|
| Policy cut | Reduce the demand to Re 1 | Disapproval of the underlying policy |
| Economy cut | Reduce by a specified amount | Economy in expenditure |
| Token cut | Reduce by Rs 100 | Ventilate a specific grievance |
On the last of the allotted days, the Speaker puts all outstanding demands to vote together. This is the guillotine. The Finance Bill must be enacted within 75 days under the Provisional Collection of Taxes Act, 1931.
Grants under Article 115
A supplementary grant is sought when the sanctioned amount proves insufficient for the year. An additional grant is required for a new service not contemplated in the Budget. An excess grant regularises money already spent beyond the grant; it is placed before the Lok Sabha only after the Public Accounts Committee has examined it.
2. Funds and Charged Expenditure
| Fund | Article | Withdrawal |
|---|---|---|
| Consolidated Fund of India | 266(1) | Only through an appropriation made by Parliament |
| Public Account of India | 266(2) | By executive action; the government acts as banker (provident funds, deposits, small savings) |
| Contingency Fund of India | 267 | Advances by the President for unforeseen expenditure, recouped later from the Consolidated Fund after parliamentary authorisation |
The Contingency Fund is held by the Finance Secretary on behalf of the President. Its corpus was raised from Rs 500 crore to Rs 30,000 crore through the Finance Act, 2021.
Charged expenditure under Article 112(3)
Charged items are not subject to the vote of Parliament, although they may be discussed. They include the emoluments and allowances of the President; salaries and allowances of the Chairman and Deputy Chairman of the Rajya Sabha and the Speaker and Deputy Speaker of the Lok Sabha; salaries, allowances and pensions of Supreme Court judges; pensions of High Court judges; the salary, allowances and pension of the CAG; debt charges of the Government of India; and sums required to satisfy court judgments or awards. Salaries of the Prime Minister and Union Ministers are voted, not charged.
3. Financial Committees and the CAG
| Committee | Strength | Core function |
|---|---|---|
| Public Accounts Committee | 22 (15 Lok Sabha, 7 Rajya Sabha) | Examines the appropriation and finance accounts and CAG audit reports after expenditure has occurred |
| Estimates Committee | 30, all from the Lok Sabha | Suggests economies and alternative policies in administration; often described as a continuous economy committee |
| Committee on Public Undertakings | 22 (15 Lok Sabha, 7 Rajya Sabha) | Examines reports and accounts of public undertakings and related CAG reports |
Members serve one-year terms and Ministers cannot be members. By a convention followed since 1967, the PAC chairman is appointed by the Speaker from the opposition.
Comptroller and Auditor General
The CAG is appointed by the President under Article 148, holds office for six years or until the age of 65, whichever is earlier, and can be removed only in the manner of a Supreme Court judge. Duties and powers are set out in the CAG (Duties, Powers and Conditions of Service) Act, 1971. Under Article 151, reports on the accounts of the Union are submitted to the President, who causes them to be laid before Parliament; reports on a State go to the Governor. The CAG is not eligible for further office under the Union or any State after ceasing to hold office.
Practice: 10 MCQs
Attempt all questions, then submit to see explanations and your score analysis.