Budgeting Process in India

Budgeting Process: Presenting the Budget in the Lok Sabha and securing its approval requires adherence to the guidelines outlined in articles 112—117 of the Constitution of India. Additionally, the process involves following Rules 204—221 and 331-E of the Rules of Procedure and Conduct of Business in Lok Sabha. Moreover, Direction 19-B in the Directions by the Speaker is instrumental in this crucial process.

Presentation of Budget

Every year, the Lok Sabha receives two parts of the Budget: the Railway Budget, focusing on Railway Finance, and the General Budget, offering an overall perspective on the financial status of the Government of India, excluding the Railways. The day for presenting the Budget to the Lok Sabha is determined by the President. Immediately after the Budget presentation, three statements are laid on the Lok Sabha table under the Fiscal Responsibility and Budget Management Act, 2003.

(i) The Medium-Term Fiscal Policy Statement,

(ii) The Fiscal Policy Strategy Statement, and

(iii) The Macro Economic Framework Statement.

Concurrently, a copy of the respective Budgets is also placed on the Rajya Sabha table. During an election year, the Budgets may be presented twice. Initially, a partial budget is presented to obtain a Vote on Account, covering a few months. Subsequently, the complete budget is presented later in the year.

Distribution of Budget Papers

After the Railway Minister wraps up their speech during the Railway Budget, members can grab their sets from the Publications Counter. As for the General Budget, members get their sets from different booths in the Inner and Outer Lobbies. These booths are organized based on Division Numbers or, if not assigned, by State. Members can snag their budget papers once the Finance Minister finishes their speech, introduces the Finance Bill, and the House takes a break for the day.

Discussion on the Budget

No discussion on Budget takes place on the day it is presented to the House. Budgets are discussed in two stages—the General Discussion followed by detailed discussion and voting on the demands for grants.

Allotment of Time for Discussion

The entire process of discussing and voting on demands for grants, as well as passing the Appropriation and Finance Bills, must be completed within a specified time.
Due to time limitations, discussions on demands for grants from all Ministries/Departments may not be feasible, leading to some Ministries’ demands being voted on without thorough discussion.
Following the Budget presentation, the Minister of Parliamentary Affairs convenes a meeting with leaders of Parties/Groups in the Lok Sabha. The purpose is to decide which Ministries/Departments demands for grants will be discussed in the House.
The decisions made in the leaders meeting are forwarded to the Business Advisory Committee. This committee, after careful consideration, allocates time for discussions and recommends the order in which the demands will be discussed.
While the Business Advisory Committee suggests an order of discussion, the government retains the flexibility to make any necessary changes.
After the Business Advisory Committee’s decisions, a timetable is published in Bulletin-Part II. This document outlines the dates and the sequence in which the demands for grants from various Ministries will be taken up in the House.

General Discussion on the Budget

During the General Discussion, members of the House have the freedom to talk about the Budget as a whole or any underlying principles. However, it’s important to note that no formal motions can be proposed at this stage.
The focus of the conversation is on examining the overall framework and structure of the Budget. Members can share their perspectives on whether specific expenditures should be increased or decreased, and discuss the taxation policy outlined in both the Budget and the Finance Minister’s speech.
A general survey of the administration is encouraged. Members can delve into a broad assessment of how things are being managed.
It’s important to understand that during this phase, members can express their opinions and engage in dialogue, but they cannot formally propose any motions.
Towards the end of the discussion, the Finance Minister (or the Railway Minister, depending on the context) holds the general right to respond. This allows them to address the points raised during the discussion and provide clarification or additional information as needed.

In 1993, the creation of Departmentally Related Standing Committees of Parliament marked a significant development. These committees play a crucial role in the evaluation of Demands for Grants of all Ministries and Departments. Following the completion of the General Discussion on the Budget, the House takes a break for a set period. During this adjournment, the Committees thoroughly examine the Demands for Grants of various Ministries and Departments.

The Committees are obligated to submit their reports to the House within a specified timeframe, without requesting extensions. Importantly, each Committee must provide a distinct report on the Demands for Grants associated with each Ministry. This process ensures a thorough and timely review of budgetary allocations, promoting transparency and accountability in parliamentary proceedings.

Discussion on Demands for Grants

When it’s time to discuss government spending in the Lok Sabha, the demands for grants are presented alongside the Annual Financial Statement. Usually, the Minister concerned doesn’t have to personally move these demands in the House. The demands are assumed to have been moved and are proposed from the Chair to save time. After the Standing Committees present their reports to the House, discussions and voting on Demands for Grants take place, Ministry-wise.

During this stage, discussions focus on matters under the administrative control of each Ministry and on specific heads of the demand being voted on. Members can express their disapproval of a particular Ministry’s policy, suggest ways to save money in its administration, or highlight specific local grievances. It’s a crucial stage where cut motions can be proposed to reduce any demand for a grant. However, no amendments are allowed to motions seeking to reduce these demands.

Cut Motions

Cut Motions are proposed changes to reduce the amounts allocated in demands for grants during parliamentary proceedings. They serve as a way for members to express their concerns and draw attention to specific issues related to government spending.

Cut Motions can be classified into three categories:—

Disapproval of Policy Cut: A member proposes a reduction of the demand to Re. 1 to signify disagreement with the policy behind the demand. The member must specify the details of the policy in question, and discussions are limited to those points. Alternative policies can be suggested during the discussion.
Economy Cut: The motion suggests a specific amount by which the demand should be reduced for the purpose of achieving expenditure savings. The specified amount can either be a lump-sum reduction or the omission/reduction of a particular item in the demand.
Token Cut: The motion aims to highlight a specific grievance within the government’s responsibility. The demand is proposed to be reduced by a symbolic amount (e.g., Rs. 100). Discussions focus on the particular grievance mentioned in the motion that falls within the government’s jurisdiction.

Notice period for tabling Cut Motions

After presenting the Railway/General Budget, members can submit cut motions. Notices of cut motions submitted by 15:15 hours on a day are printed and circulated before the scheduled discussion of the relevant demands for grants in the House.
Cut motions submitted after 15:15 hours are treated as if they were submitted on the next working day. If the demands for grants related to these motions haven’t been discussed, they are printed and circulated on the next working day.
To ensure members receive notices in both English and Hindi at the same time, the Rules Committee (Fourth Lok Sabha) decided on March 9, 1970, to encourage members to submit these notices at least two days before the scheduled discussion in the House.
Members are advised to submit cut motion notices at least two days before the scheduled discussion of the demands for grants, and not later than 15:15 hours on the previous day. This allows enough time for circulating the notices among the members.

Admissibility of Cut Motions

A cut motion to be admissible should satisfy the following conditions:—

Keep your demand clear and straightforward without using arguments, inferences, irony, or defamatory statements.
Focus on one specific matter and express it precisely.
Avoid discussing the character or conduct of any individual unless challenged through a proper motion.
Refrain from suggesting changes to existing laws.
Stick to matters that fall within the purview of the Government of India and not state-specific issues.
Do not address expenditures ‘Charged’ on the Consolidated Fund of India.
Avoid discussing matters currently under court adjudication anywhere in India.
Do not raise questions of privilege.
Do not revive discussions on matters already decided in the current session.
Avoid preempting topics scheduled for consideration in the same session.
Normally, do not discuss matters pending before statutory tribunals, authorities, or investigative bodies. However, the Speaker may allow it if it pertains to procedural aspects and won’t prejudice the ongoing inquiry.
Keep your focus on significant matters, avoiding trivial issues.

The Speaker plays a crucial role in deciding whether to allow a cut motion. If the Speaker believes that a cut motion is being misused to obstruct the House’s proceedings, abuse the right to propose cut motions, or violate the rules of the House, the Speaker has the authority to disallow it. Parliamentary traditions firmly establish that cut motions discussing the Speaker’s actions, matters related to the Speaker’s Department, or anything under the Speaker’s control are not permitted. Similarly, cut motions concerning the office of the Vice-President (who also serves as the Chairman of Rajya Sabha) are not admissible.

Cut motions related to topics under consideration by a Parliamentary Committee are also not allowed. Additionally, cut motions expressing personal grievances or casting doubts on individual Government officials are not acceptable. Cut motions seeking to discuss matters affecting relations with friendly foreign countries or the internal administration of an autonomous body are considered out of order, as are those seeking the removal of an entire grant. However, token cuts that aim to discuss the inadequacy of provisions for a specific demand are considered acceptable.

Circulation of Lists of Cut Motions

Members typically receive lists of cut motions related to various demands for grants, as approved by the Speaker, about two days before the scheduled discussion on the Ministry’s grant requests in the House.

Moving of Cut Motions

At the start of the discussion about the budget for a specific Ministry, the Speaker kindly requests members to submit slips to the Table within fifteen minutes. These slips should indicate the serial numbers of the cut motions they wish to propose.

Once submitted, these cut motions are considered officially moved and can’t be brought up later. It’s important to note that cut motions cannot be moved on someone else’s behalf; each member must be personally present in the House to present their cut motions when the relevant budget discussions are underway.

Guillotine

On the final day dedicated to discussing and voting on budget allocations, when the clock strikes the scheduled time, the Speaker addresses all the remaining issues related to the proposed funding. This process, known as the guillotine, efficiently wraps up the debates on budgetary demands, ensuring a timely conclusion to the discussions.

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

When we talk about requests for funds, you can find copies of the Annual Reports and Outcome Budget for different Ministries and Departments at the Publications Counter. The detailed funding requests for various Ministries/Departments are placed on the Lok Sabha table a bit before they are discussed by the Departmentally Related Standing Committees.

Vote on Account

In simple terms, the budget process in India is quite a lengthy one, stretching beyond the current financial year. To ensure the government can function smoothly during this period, the Constitution allows the Lok Sabha to approve a “vote on account.” This essentially means granting funds in advance to keep things running until the full budget is discussed, demands for grants are voted on, and the Appropriation Bill and Finance Bill are passed.

Typically, a vote on account is approved for two months, covering about one-sixth of the estimated yearly expenditure across various demands for grants. However, in an election year, this period might be extended to 3 or 4 months if there’s an expectation that passing the main demands and bills will take longer than two months.

Interestingly, the vote on account is usually a straightforward and formality-driven process. It’s treated as such and gets approved by the Lok Sabha without much discussion. This approval happens after the general discussion on the budget (both General and Railway) is completed but before delving into the specifics of demands for grants.

Supplementary and Excess Demands for Grants

In simple terms, India’s budget process extends beyond the current financial year and involves a “vote on account” approved by the Lok Sabha. This allows the government to function smoothly until the full budget, demands for grants, and bills are discussed and passed.

Typically, a vote on account is granted for two months, covering around one-sixth of the estimated yearly expenditure across different demands for grants. However, in an election year, this period might extend to 3 or 4 months if it’s anticipated that passing the main demands and bills will take longer than two months.

Interestingly, the vote on account is usually a straightforward and formality-driven process. The Lok Sabha approves it without much discussion, happening after the general discussion on the budget is completed but before getting into the specifics of demands for grants.

Scope of discussion on Supplementary/Excess Grants

When we talk about Supplementary Demands for Grants, our focus should be on the specific items they cover. We can’t bring up discussions on the original grants or the policies behind them. For schemes already approved in the main Budget, we can’t delve into questions of principle or policy. If there’s no approval yet, discussions on policy should stick to the items seeking the House’s vote. Unfortunately, we can’t bring up general grievances during talks on a Supplementary Grant. Members can only express whether they think the demand is necessary or not.

Moving on to Excess Demands for Grants, members can highlight instances where money has been spent unnecessarily or shouldn’t have been spent at all. But beyond that, there’s no room for broad discussions or airing grievances. Let’s keep it focused on how the funds have been utilized.

Cut Motions to Supplementary/Excess Demands for Grants

The cut motions to Supplementary or Excess Demands for Grants must relate to the subject matter of the Supplementary or Excess Demands. Cut motions which are extraneous to the subject matter of such demands are out of order.

Appropriation Bill

After the House approves the demands for grants, a Bill is introduced to allocate funds from the Consolidated Fund of India, covering the approved grants and expenditures charged on the fund. Unlike other bills, the opposition cannot prevent the introduction of this Bill. The discussions focus on matters of public importance or administrative policy related to the grants covered by the Bill, provided they haven’t already been addressed during the demands for grants discussions.

Members who wish to participate in the discussion may need to inform the Speaker in advance about specific points they plan to raise. The Speaker has the authority to deny permission for points that seem repetitive. Members must notify the Speaker before 10:00 AM on the day the Appropriation Bill is considered, and no submissions are accepted after this time.

When it comes to amending an Appropriation Bill, members cannot propose changes that alter the amount or destination of any grant or the designated expenditure from the Consolidated Fund of India. The Speaker’s decision on the admissibility of such amendments is final. Amendments seeking to omit a demand already voted on by the House are considered out of order. In all other aspects, the procedure for an Appropriation Bill follows the same rules as other Money Bills.

Finance Bill

“Finance Bill” means a Bill ordinarily introduced every year to give effect to the financial proposals of the Government of India for the next following financial year and includes a Bill to give effect to supplementary financial proposals for any period. The Finance Bill is introduced right after presenting the Budget. Members cannot oppose its introduction. Appropriation Bills and Finance Bills can be introduced without circulating copies to members beforehand. Typically, the Finance Bill includes a declaration under the Provisional Collection of Taxes Act, 1931. This declaration ensures that the provisions related to customs or excise duties in the Bill come into force immediately after its introduction.

Due to these provisions and the Act of 1931, Parliament must pass the Finance Bill and the President must give assent before the seventy-fifth day after its introduction. Since the Finance Bill includes taxation proposals, the Lok Sabha deliberates and passes it only after voting on Demands for Grants and determining the total expenditure. The scope of discussion on the Finance Bill is vast and members can discuss any action of the Government of India. The whole administration comes under review.

Budgets of Union Territories and States under President’s Rule

When a Union Territory or State is under President’s Rule, their budgets are also shared with the Lok Sabha. The process for handling the budget is similar to that of the Union Government, but there might be some changes or adjustments made by the Speaker.

Read Also: Definition of Budget