The document discusses the budget process in India, which involves 4 stages: preparation, enactment, execution, and parliamentary control. It outlines the key agencies and stages involved in the preparation of the budget, including the formulation of estimates by various ministries and departments. It then explains the constitutional provisions and stages for enactment, including presentation to Parliament, general discussion, scrutiny by committees, and voting on demands for grants. Finally, it discusses how the budget is executed once passed, through allocation of funds to ministries and departments for approved projects and auditing of accounts.

1. POL 202
UNIT: V
TOPIC
BUDGET PROCESS
LEARNING OUTCOME
Students will be able
1. To know about formulation of Budget
2. To know about the execution of Budget
DR. MINARUL

2. BUDGET PROCESS IN INDIA
Four different operations
1. Preparation of the budget
2. Enactment of the budget
3. Execution of the budget
4. Parliamentary control over finance

3. PREPARATION OF THE BUDGET
Agencies involved
1. Finance Ministry
2. Administrative Ministries
3. NITI Aayog
4. CAG

4. PREPARATION OF THE BUDGET
Stages involved
1. Preparation of Estimates by the Drawing and
Disbursing Officers
• …in September-October, Fin Min sends the
circulars and forms to Administrative Ministries
seeking their budget estimates
• ..Administrative Ministries pass on these forms and
circulars to their filed/local offices
• ..the disbursing officers fills the forms with
information on the budget estimates, and send back

5. PREPARATION OF THE BUDGET
Stages involved
2. Scrutiny and Consolidation of the Estimates by the
Departments and Ministries
• ….the Head of the Department scrutinizes and
consolidates, and submits to the Administrative
Ministry
• …the Administrative Ministries scrutinizes and
consolidates
• …the Administrative Ministries send to the Fin Min

6. PREPARATION OF THE BUDGET
Stages involved
3. Scrutiny by the Finance Ministry
• …Fin Min scrutinizes the estimates received from
the Administrative ministries from the point of view
of economy expenditure, and availability of
revenues
4. Settlement of Disputes
• ….in case of difference of opinion between
Administrative Ministry and Finance Ministry
regarding budget estimates, decision of the Union
Cabinet is final

7. PREPARATION OF THE BUDGET
Stages involved
5. Consolidation by the Finance Ministry
• …the Fin Min consolidates the budget estimate on
the expenditure side; based on the estimated
expenditure, the Ministry prepares the estimates of
revenue
6. Approval by the Cabinet
• …after the Fin Min places the estimated budget
before the Union Cabinet, it is approved by the
later, and gets ready for presentation to the
Parliament

8. ENACTMENT OF THE BUDGET
…..means the approval of Annual Financial Statement
by the Parliament
CONSTITUTIONAL PROVISIONS
….Art. 112- placing the budget before Lok Sabha and
Rajya Sabha
….Art. 113- No demand for grant can be made except
on the recommendation of the President
….Art. 114- Appropriation Bills

9. ENACTMENT OF THE BUDGET
CONSTITUTIONAL PROVISIONS
• ….Art. 117- Money Bill imposing tax shall not be
introduced in the Rajya Sabha
• ….Rajya Sabha has no power to vote on demand
for grants; it is the exclusive privilege of the Lok
Sabha
• …Rajya Sabha should return the Money Bill to the
Lok Sabha within 14 days. The Lok Sabha can
either accept or reject the recommendations made
by the Rajya Sabha

10. ENACTMENT OF THE BUDGET
STAGES IN ENACTMENT
1. Presentation of the Budget
2. General Discussion
3. Scrutiny by Departmental Committees
4. Voting on Demands for Grants
5. Passing of Appropriation Bill
6. Passing of Finance Bill

11. ENACTMENT OF THE BUDGET
STAGES IN ENACTMENT
1. Presentation of the Budget
• ….presented by the Finance Minister with a speech
known as ‘Budget Speech’ in the Lok Sabha
• …after that it is laid before the Rajya Sabha which
can only discuss the budget, but can not vote on
demand for grants
• …is presented on 1st February

12. ENACTMENT OF THE BUDGET
STAGES IN ENACTMENT
2. General Discussion
• ….begins few days after its presentation
• …takes place in both the houses
• …..discuss the budget as a whole or any question of
principles involved but no motion can be moved at
this stage
• ….scope of discussion is confined to an
examination of the general scheme and structure of
the budget

13. ENACTMENT OF THE BUDGET
STAGES IN ENACTMENT
3. Scrutiny by Departmental Committees
• ….after the general discussion on budget is over,
the houses are adjourned, and during this gap
period, the DSCs discuss in details the demands for
grants of the concerned ministries
• …..prepare their reports and submit to both the
Houses of the parliament
• …. prepare separate report on the demands for
grants of each ministry

14. ENACTMENT OF THE BUDGET
STAGES IN ENACTMENT
4. Voting on Demands for Grants (Article 113)
• ….Lok Sabha takes up voting of demands for grants
Ministry-wise
• ….is open to members to disapprove a policy
pursued by a particular Ministry or to suggest
measure for economy in the administration of that
Ministry
• …..at this stage, cut motions can be moved to
reduce any demand for grant

15. ENACTMENT OF THE BUDGET
STAGES IN ENACTMENT
4. Voting on Demands for Grants
• …. Disapproval of Policy Cut: A cut motion which
says “That the amount of the demand be reduced to
Re. 1” implies that the mover disapproves of the
policy underlying the demand
• …Token Cut: Where the object of the motion is to
ventilate a specific grievance within the sphere of
responsibility of the Government of India, its form
is: “That the amount of the demand be reduced by
Rs. 100”

16. ENACTMENT OF THE BUDGET
STAGES IN ENACTMENT
4. Voting on Demands for Grants
• …. Economy Cut: Where the object of the motion
is to effect economy in the expenditure, the form of
the motion is “That the amount of the demand be
reduced by Rs…(a specified amount)”. The amount
suggested for reduction may be either a lump-sum
reduction in the demand or omission or reduction of
an item in the demand.

17. ENACTMENT OF THE BUDGET
STAGES IN ENACTMENT
5. Passing of Appropriation Bill (Art. 114)
• …. 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
charged on the Consolidated Fund of India is
introduced, considered and passed

18. ENACTMENT OF THE BUDGET
STAGES IN ENACTMENT
6. Passing of Finance Bill (Art 110)
• ….“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
• …includes a Bill to give effect to supplementary
financial proposals for any period
• …Finance Act completes the process of the
enactment of the budget

19. EXECUTION OF THE BUDGET
• ……the execution of the budget is the
responsibility of the executive government
• …procedures for execution of the budget depend on
the distribution and delegation of powers to the
various operating levels.
• ….as soon as the Appropriation Act is passed, the
Ministry of Finance advises spending Ministries/
Departments about their respective allocation of
funds

20. EXECUTION OF THE BUDGET
• ……the controlling officers in each ministry
department then allocate and advise the various
disbursing officers
• …he expenditure is monitored to ensure that the
amounts placed at the disposal of the spending
authorities are not exceeded without additional
funds being obtained in time
• ..normally the head of the ministry/department acts
as the controlling office

21. EXECUTION OF THE BUDGET
• …… a system of competent authorities who issue
financial sanction;
• ….a system of drawing and disbursing officers
• … a system of payments, receipts and account
• …Department of Revenue in the Ministry of
Finance is in overall control and supervision over
the machinery charged with the collection of direct
and indirect taxes

22. EXECUTION OF THE BUDGET
• …… Central Board of Direct Taxes and the Central
Board of Indirect Taxes exercise supervision and
control over the various operational levels which
implement different taxation laws

23. EXECUTION OF THE BUDGET
• ……begins when the finance and appropriation bill
is passed
• …..executive department is given permission to
begin collecting funds and spending it on approved
projects
• …various ministries are given authority to draw and
spend the necessary funds
• …Secretary of the Ministry serves as the principal
accounting authority in this regard

24. EXECUTION OF THE BUDGET
• …the accounts of the various ministries are
compiled in accordance with the established
procedures
• …the Comptroller and Auditor General of India
audits these accounts
Article 148 - Comptroller and Auditor-
General of India
Article 149 - Duties and Powers of the
Comptroller and Auditor-General