Legislative
Business
BUDGET
IN PARLIAMENTWith the emergence of Welfare State, Governments have come to
look after virtually everywhere of human life. They have to perform manifold functions
from maintaining law and order, protecting their territories to implementation
of plans for economic and social betterment. Besides, they provide a variety of
social services like education, health, employment and housing to the people.
Needless to say, Government require adequate resources to discharge these functions
effectively. Where is this money to come from and who is to sanction the funds?
The necessary funds are mobilized from the country's resources by way of taxes
both direct and indirect, loans both long-term and short-term, to meet the Governmental
expenditure. In India, the principal resources of revenue are customs and excise
duties and Income-tax on individual and companies.
Need for Budget
It is not as if the Government can tax; borrow and spend money the way it likes.
Since there is a limit to the resources, the need for proper budgeting arises
to allocate scarce resources to various Governmental activities. Every item of
expenditure has to be well thought out and total outlay worked out for a specific
period. Prudent spending is essential for the stability of a Government and proper
earnings are a pre-requisite to wise spending. Hence, planed expenditure and accurate
foresight of earnings are sine-qua-non of sound Governmental finance.
Parliamentary Control over Finance
Ours is a Parliamentary
system of Government based on Westminster model. The Constitution has, therefore,
vested the power over the purse in the hands of chosen representatives of the
people thus sanctifying the principle 'no taxation without representation'. Preparation
of Budget for the approval of the Legislature is a Constitutional obligation of
the Government both at the Centre and the State levels. Legislative prerogative
over taxation, legislative control over expenditure and executive initiative in
financial matters are some of the fundamental principles of the system of Parliamentary
financial control.
There are specific provisions in the Constitution
of India incorporating these tenets. For example, article 265 provides that 'no
tax shall be levied or collected except by authority of law'; no expenditure can
be incurred except with the authorization of the Legislature (article 266), and
President shall, in respect of every financial year, cause to be laid before Parliament,
Annual Financial Statement (article 112). These provisions of our Constitution
make the Government accountable to Parliament.
The Budget
The 'Annual Financial Statement', laid before both the Houses of Parliament constitutes
the Budget of the Union Government. This statement takes into account a period
of one financial year. The financial year commences in India on 1st April each
year. The statement embodies the estimated receipts and expenditure of the Government
of India for the financial year.
Demands for Grants
The estimates of expenditure included in the Budget and required to be voted by
Lok Sabha are in the form of Demands for Grants. These Demands are arranged Ministry-wise
and a separate Demand for each of the major services is presented. Each Demand
contains first a statement of the total grant and then a statement of the detailed
estimate divided into items.
Railway Budget
The
Budget of the Indian Railways is presented separately to Parliament and dealt
with separately, although the receipts and expenditure of the Railways form part
of the Consolidated Fund of India and the figures relating to them are included
in the 'Annual Financial Statement'.
Presentation
In India, the Budget is presented to Parliament on such date as is fixed by the
President. The Budget speech of the Finance Minister is usually in two parts.
Part A deals with general economic survey of the country while Part B relates
to taxation proposals. General Budget was earlier being presented at 5 PM on the
last working day of February, but wince 1999 the General Budget is being presented
at 11 A.M. on the last working day of February, i.e. about a month before the
commencement of the Financial year except in the year when General Elections to
Lok Sabha are held. In an election year, Budget may be presented twice-first to
secure Vote on Account for a few months and later in full.
The General
Budget is presented in Lok Sabha by the Minister of Finance. He makes a speech
introducing the Budge and it is only in the concluding part of his speech that
the proposals for fresh taxation or for variations in the existing taxes are disclosed
by him. The 'Annual Financial Statement' is laid on the Table of Rajya Sabha at
the conclusion of the speech of the Finance Minister in Lok Shabha.
Budget
Documents
Alongwith the 'Annual Financial Statement' Government presents
the following documents: an Explanatory Memorandum briefly explaining the nature
of receipts and expenditure during the current year and the next year and the
reasons for variations in the estimates for the two years, the Books of Demands
showing the provisions Ministry-wise and a separate Demand for each Department
and service of the Ministry. The Finance Bill which deals with the taxation measures
proposed by Government is introduced immediately after the presentation of Budget.
It is accompanied by a memorandum explaining the provisions of the Bill and their
effect on the finances of the country.
Vote on Account
The discussion on the Budget begins a few days after its presentation. In a democratic
set-up, Government is anxious to give Parliament full opportunity to discuss the
budgetary provisions and the various proposals for taxation. Since Parliament
is not able to vote the entire budget before the commencement of the new financial
year, the necessity to keep enough finance at the disposal of Government in order
to allow it to run the administration of the country remains. A special provision
is, therefore, made for "Vote on Account" by which Government obtains the Vote
of Parliament for a sum sufficient to incur expenditure on various items for a
part of the year.
Normally, the Vote on Account is taken for two months
only. But during election year or when it is anticipated that the main Demands
and Appropriation Bill will take longer time than two months, the Vote on Account
may be for a period exceeding two months.
Discussion
The Budget is discussed in two stages in Lok Sabha. First, there is the General
Discussion on the Budget as a whole. This lasts for about 4 to 5 days. Only the
broad outlines of the Budget and the principles and policies underlying it are
discussed at this stage.
Consideration of the demands by Standing Committees
of Parliament
After the first stage of General Discussion on both Railway
as well as General Budget is over, the House is adjourned for a fixed period.
During this period, the Demands for Grants of various Ministries/Departments including
Railways are considered by concerned Standing Committees (Rule 331G). These Committees
are requested to make their reports to the House within specified period without
asking for more time. The system of consideration of Demands for Grants by the
Standing Committees was introduced from the Budget for the year 1993-94. The Standing
Committee consists of 45 Member, 30 from Lok Sabha and 15 from Rajya Sabha. The
reports of the Standing Committees are of persuasive nature (Rule 331N). The report
shall not suggest anything of the nature of cut motions.
After the reports
of the Standing Committees are presented to the House, the House proceeds to the
discussion and Voting on Demands for Grants, Ministry-wise. The time for discussion
and Voting of Demands for Grants is allocated by the Speaker in consultation with
the Leader of the House. On the last day of the allotted days, the Speaker puts
all the outstanding Demands to the Vote of the House. This device is popularly
known as 'guillotine'. Lok Sabha has the power to assent to or refuse to give
assent to any Demand or even to reduce the amount of Grant sought by Government.
In Rajya Sabha there is only a General Discussion on the Budget. It does not vote
on the Demands for Grants. Only so much of the amount is subject to the vote of
Lok Sabha as is not a "charged" expenditure on the Consolidated Fund of India.
The "charged" expenditure includes the emoluments of the President and the salaries
and allowances of the Chairman and Deputy Chairman of Rajya Sabha and the Speaker
and Deputy Speaker of Lok Sabha, Judges of Supreme court, Comptroller and Auditor
General of India and certain other items specified in the Constitution of India.
Discussion in Lok Sabha on 'charged' expenditure is permissible but such expenditure
is not voted by the House. Members have full opportunity to criticize the budgetary
provisions during the course of discussion as also to make suggestions for improving
the financial position of the country.
Cut Motions
Motions for reduction to various Demands for Grants are made in the form of Cut
Motions seeking to reduce the sums sought by Government on grounds of economy
or difference of opinion on matters of policy or just in order to voice a grievance.
Appropriation Bill
After the General Discussion on the Budget proposals
and Voting on Demands for Grants have been completed, Government introduces the
Appropriation Bill. The Appropriation Bill in intended to give authority to Government
to incur expenditue from and out of the Consolidated Fund of India. The procedure
for passing this Bill is the same as in the case of other money Bills.
Finance Bill
The Finance Bill seeking to give effect to the
Government's taxation proposals which is introduced in Lok Sabha immediately after
the presentation of the General Budget, is taken up for consideration and passing
after the Appropriation Bill is passed. However, certain provisions in the Bill
relating to levy and collection of fresh duties or variations in the existing
duties come into effect immediately on the expiry of the day on which the Bill
is introduced by virtue of a declaration under the Provisional Collection of Taxes
Act. Parliament has to pass the Finance Bill within 75 days of its introduction.
Supplementary/Excess Grants
No expenditure in excess
of the sums authorized by Parliament can be incurred without the sanction of Parliament.
Whenever a need arises to incur extra expenditure, a Supplementary estimate is
laid before Parliament. If any money has been spend on any service during a financial
year in excess of the amounts granted for that service and for that year, the
Minister of Finance/ Railways presents a Demand for Excess Grant. The procedure
followed in Parliament in regard to Supplementary/Excess Grants is more or less
the same as is adopted in the case of estimates included in the General Budget.
Budget of a State/Union Territory under President's Rule
Budget of a State under President's rule is presented to Lok Sabha. The procedure
followed in regard to the Budget of the Union Government is followed in the case
of State Budget also with such variations or modifications, as the Speaker may
make. HOW A BILL BECOMES
AN ACTA Bill is the draft of a legislative proposal. It has to pass through
various stages before it becomes an Act of Parliament.
First
Reading
The legislative process starts with the introduction of a
Bill in either House of Parliament-Lok Sabha or Rajya Sabha. A Bill can be introduced
either by a Minister or by a private member. In the former case it is known as
a Government Bill and in the latter case it is known as a Private Member's Bill.
It is necessary for a member-in-charge of the Bill to ask for leave to
introduce the Bill. If leave is granted by the House, the Bill is introduced.
This stage is known as the First Reading of the Bill. If the motion for leave
to introduce a Bill is opposed, the Speaker may, in his discretion, allow brief
explanatory statement to be made by the member who opposes the motion and the
member-in-charge who moved the motion. Where a motion for leave to introduce a
Bill is opposed on the ground that the Bill initiates legislation outside the
legislative competence of the House, the Speaker may permit a full discussion
thereon. Thereafter, the question is put to the vote of the House. However, the
motion for leave to introduce a Finance Bill or an Appropriation Bill is forthwith
put to the vote of the House.
Publication in Gazette
After a Bill has been introduced, it is published in the Official Gazette. Even
before introduction, a Bill might, with the permission of the Speaker, be published
in the Gazette.
In such cases, leave to introduce the Bill in the House
is not asked for and the Bill is straightaway introduced.
Reference
of Bill to Standing Committee
After a Bill has been introduced, Presiding
Officer of the concerned House can refer the Bill to the concerned Standing Committee
for examination and make report thereon.
If a Bill is referred to Standing
Committee, the Committee shall consider the general principles and clauses of
the Bill referred to them and make report thereon. The Committee can also take
expert opinion or the public opinion who are interested in the measure. After
the Bill has thus been considered, the Committee submits its report to the House.
The report of the Committee, being of persuasive value shall be treated as considered
advice given by the Committees.
Second Reading
The
Second Reading consists of Consideration of the Bill which is in two stages.
First Stage: The first stage consists of general discussion on the Bill as a whole
when the principle underlying the Bill is discussed. At this stage it is open
to the House to refer the Bill to a Select Committee of the House or a Joint Committee
of the two Houses or to circulate it for the purpose of eliciting opinion thereon
or to straightaway take it into consideration.
If a Bill is referred
to a Select/Joint Committee, the Committee considers the Bill clause-by-clause
just as the House does. Amendments can be moved to the various clauses by members
of the Committee. The Committee can also take evidence of associations. Public
bodies or experts who are interested in the measure. After the Bill has thus been
considered, the Committee submits its report to the House which considers the
Bill again as reported by the Committee. If a Bill is circulated for the purpose
of eliciting public opinion thereon, such opinions are obtained through the Governments
of the States and Union Territories. Opinion s so received are laid on the Table
of the House and the next motion in regard to the Bill must be for its reference
to a Select/Joint Committee. It is not ordinarily permissible at this stage to
move the motion for consideration of the Bill.
Second Stage: The
second stage of the Second Reading Consists of Clause-by-clause consideration
of the Bill as introduced or as reported by Select/Joint Committee.
Discussion takes place on each clause of the Bill and amendments to clauses can
be moved at this stage. Amendments to a clause have been moved but not withdrawn
are put to the vote of the House before the relevant clause is disposed of by
the House. The amendments become part of the Bill if they are accepted by a majority
of members present ad voting. After the clauses, the Schedules if any, clause
1, the Enacting Formula and the Long Title of the Bill have been adopted by the
House, the Second Reading is deemed to be over
Third Reading
Thereafter, the member-in-charge can move that the Bill be passed. This stage
is known as the Third Reading of the Bill. At this stage the debate is confined
to arguments either in support or rejection of the Bill without referring to the
details thereof further than that are absolutely necessary. Only formal, verbal
or consequential amendments are allowed to be moved at this stage. In passing
an ordinary Bill, a simple majority of members present and voting is necessary.
But in the case of a Bill to amend the Constitution, a majority of the total membership
of the House and a majority of not less than two-thirds of the members present
ad voting is required in each House of Parliament.
Bill in the
other House
After the Bill is passed by one House, it is sent to
the other House for concurrence with a message to that effect, and there also
it goes through the stages described above except the introduction stage.
Money Bills
Bills which exclusively contain provisions for
imposition and abolition of taxes, for appropriation of moneys out of the Consolidated
Fund, etc., are certified as Money Bills. Money Bills Money Bills can be introduced
only in Lok Sabha, Rajya Sabha cannot make amendments n a Money Bill passed by
Lok Sabha and transmitted to it. It can, however, recommend amendments in a Money
Bill, but must return all Money Bills to Lok Sabha within fourteen days from the
date of their receipt it is open to Lok Sabha to accept or reject any or all of
the recommendations of Rajya Sabha with regard to a Money Bill. If Lok Sabha accepts
any of the recommendations of Rajya Sabha, the Money Bill is deemed to have been
passed by both Houses with amendments recommended by Rajya Sabha ad accepted by
Lok Sabha and if Lok Sabha does not accept any of the recommendations of Rajya
Sabha, Money Bill is deemed to have been passed by both houses in the form in
which it was passed by Lok Sabha without any of the amendments recommended by
Rajya Sabha. If a Money Bill Passed by Lok Sabha ad transmitted to Rajya Sabha
for its recommendations is not returned to Lok Sabha within the said period of
fourteen days, it is deemed to have been passed by both Houses at the expiration
of the said period in the form in which it was passed by Lok Sabha.
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