Budget, Funds, Expenditure & Grants in India

Budget (Annual Financial Statement)

It is represented before Lok Sabha upon recommendation of the President & it is the duty of President to lay it before both the houses of Parliament

• Presented by Finance minister on last working day of Feb month in parliament
• Presents an estimate of receipt & expenditure of GOI for the following financial year
• Gives proposal of taxation & other means to raise the receipts to meet the expenditure
• Contains actual receipts & expenditure of previous year with detailed review of financial position of said period

• After its introduction, Lok Sabha discusses the demands for grant (i.e. proposed expenditure) of various ministries & departments, one by one. All such expenditures are charged from consolidated fund of India & presented in form of single bill called appropriation bill.
• Proposal for taxation to raise revenue is presented in form of financial bill

Types of funds in India

Consolidated fund of India

• A fund to which all revenues received, loans raised & income received by GOI are deposited
• All legally authorized payments on the behalf of GOI are made out of this fund
• No money can be spent out of this fund except through grants made by parliament

Public accounts of India

• All other public money except the one credited to consolidated fund shall be credited to Public accounts of India
• Bank savings account of the departments/ministries (for day-to-day transactions)
• National Investment fund – NIF (Money earned from disinvestment)
• National Calamity & contingency fund (NCCF) (Under Home ministry) → Merged with NDRF
• National small savings fund, defense fund, provident fund, Postal insurance etc.
• All Cess & Specific purpose surcharges
• Government schemes Fund (e.g., MNREGA)
• No need of Parliament’s approval

Contingency fund of India

• Created in 1950, with a limit of merely 50 cr, raised to 500 cr in 2005, at the disposal of the President to meet unforeseen expenditures – Operated by Finance secretary
• Contingency fund is used by the President where parliament’s approval cannot be obtained owing to time factor
• However, sanction of parliament is necessary to replenish this fund from consolidated fund of India
• States have their own consolidated & contingency funds

Expenditures & Grants

Charged Expenditures

Expenditures that do not require approval of parliament to be spent out of consolidated fund of India. These expenditures are sanctioned by constitution itself:

• Emoluments, allowances & expenditure of President & his office
• Salary & allowances of chairman / Deputy chairman of RS + Speaker / Deputy speaker of Lok Sabha
• Debt charged for which GOI is liable
• Salaries, allowances & pensions of SC judges & CAG

Vote on account

• Power of Lok Sabha (not of Rajya Sabha) to authorize various ministries to incur expenditures for a part of financial year, pending the passage of appropriation bill by the parliament

Vote of Credit

• Granted for meeting an unexpected demand upon the resources of India, when on account of magnitude, the demand could not be stated with details ordinarily given in the budget

Supplementary Grant

• Granted when the amount authorized by parliament through the appropriation act for a particular service for current financial year is found to be insufficient

Additional Grant

• Granted when a need has arisen during current financial year for additional expenditure for some new service, not contemplated in budget for that year

Excess Grant

• Granted when money has been spent on any service during a financial year in excess of amount granted for that service in the budget for that year.
• It is voted by Lok Sabha after the financial year.