Passing the budget: grants, cut motions and the Finance Bill

Detail

Why Parliament controls the budget

• Financial control means the government cannot raise or spend money without the legislature's approval.
• The Lok Sabha discusses why money is needed before it grants it. The legislature may also refuse resources to the government.
• The Constitution sets out the rules:
• Art. 112 — annual financial statement (the "budget").
• Art. 113 — how estimates are voted.
• Art. 114 — Appropriation Bill.
• Arts. 115–116 — other kinds of grants.

• Art. 117 — special rules for financial bills.

• Charged expenditure is money that Parliament does not vote on, such as the salaries of the President and judges, and debt payments. Parliament may discuss it but cannot vote on it (Art. 113(1)). Voted expenditure is everything else, and the Lok Sabha must vote on it.

The six stages of the budget

Stage	What happens	Who	Vote?
1. Presentation	Finance Minister presents the budget (Art. 112)	Both Houses	No
2. General discussion	The budget as a whole is debated	Both Houses	No vote
3. Committee scrutiny	DRSCs examine the demands during a recess of about 3–4 weeks (since 1993)	DRSCs (members from both Houses)	No (reports only)
4. Voting on demands	Each demand for grants is voted	Lok Sabha alone (Art. 113(2))	Yes
5. Appropriation Bill	Allows money to be drawn from the Consolidated Fund (Art. 114)	Both Houses; passed as a money bill	Yes
6. Finance Bill	Gives effect to the tax proposals	Both Houses; passed as a money bill	Yes

• DRSCs (departmentally related standing committees) are permanent committees, each covering a few ministries. Since 1993 they have examined demands for grants in detail. Ministers do not sit on them.
• In the 17th Lok Sabha, 31% of DRSC reports were on demands for grants. Between 2020 and 2023, only 32% of these reports were tabled before the budget was passed [2].

Stage 4: Demands for grants

• A demand for grants is a request for money for one item of voted spending. There is usually one demand for each ministry or department.
• A demand can be made only on the President's recommendation (Art. 113(3)).
• On each demand, the Lok Sabha may:
• approve it,
• reduce it, or

• refuse it.

• It cannot increase a demand. Only the government can propose new spending.

• The Rajya Sabha can discuss demands but cannot vote on them.

The guillotine

• Guillotine: on the last day allotted for demands, the Speaker puts all remaining demands to vote together, without discussion.
• What this means in practice:
• Only a few ministries' demands are debated.

• Most of the budget passes without any debate.

• Data:

• 2019 budget session: about 20% of voted demands were discussed (road transport, agriculture, rural development, youth affairs and sports, and railways). The rest were guillotined [3].
• 2004-05 onwards: on average only 13% of voted demands were discussed (excluding railways) [3].
• 2019–2023 (17th Lok Sabha): on average about 80% of the budget was voted without discussion [2].
• 2023: the entire budget was passed without discussion [2].
• The 17th Lok Sabha spent an average of 35 hours a year on the budget, and this time has been falling [2].

Stage 5: Appropriation Bill (Art. 114)

• An Appropriation Bill is the law that allows the government to take money out of the Consolidated Fund of India. It covers:
• the grants voted by the Lok Sabha, plus

• the charged expenditure.

• No amendment may change the amount or purpose of any grant, or change charged expenditure (Art. 114(2)).

• No money can be drawn from the Consolidated Fund until this bill becomes law (Art. 114(3)).

Stage 6: Finance Bill

• The Finance Bill gives effect to the government's tax proposals, such as new taxes and changed tax rates.
• It is passed as a money bill. A money bill is only about taxes, government borrowing or spending. The Rajya Sabha can only make recommendations and must return it within 14 days.
• Provisional collection — how it works:
• The government adds a declaration to the bill for certain provisions, which are then called "declared provisions".
• These take effect immediately, from the day after the bill is introduced [5].

• The bill must be enacted within 75 days of its introduction. If it is not, the declared provisions stop having effect [4][5].

• The law today: Provisional Collection of Taxes Act, 2023

• It repealed and replaced the 1931 Act. It was introduced on 13 December 2023, passed by the Lok Sabha on 19 December 2023 and by the Rajya Sabha on 20 December 2023 [5]. (NCERT: Provisional Collection of Taxes Act 1931.)
• It covers customs and excise duties [5].
• Provisional collection ends when (a) the bill is enacted, (b) Parliament passes a motion telling the government to stop, or (c) 75 days pass [5].
• Refunds must be paid if the bill is passed with lower rates or the provision lapses [5].

Cut motions

• A cut motion asks the Lok Sabha to reduce a demand for grants. It is moved while demands are being voted.
• There are three kinds:

Type	Cut proposed	Purpose
Policy cut motion	Demand reduced to Re 1	Shows disapproval of the policy behind the demand. The member may suggest a different policy.
Economy cut motion	Demand reduced by a stated amount	Points to a possible saving in spending
Token cut motion	Demand reduced by ₹100	Raises a specific grievance that is within the government's responsibility

• Why cut motions matter:
• If any cut motion is passed, the government has been defeated on money matters.
• So it is treated as a loss of the House's confidence, and the government is expected to resign.

• This is why cut motions work as tests of confidence and as a tool of collective responsibility (the whole Council of Ministers answers to the Lok Sabha together).

• Example: in April 2010, the UPA government survived cut motions that the Opposition moved over fuel price rises.

Other grants (Arts. 115–116)

Grant	When it is used	Article
Supplementary grant	The money voted for a service turns out to be not enough for the year	Art. 115(1)(a)
Additional grant	Money is needed for a new service that was not in that year's budget	Art. 115(1)(a)
Excess grant	Money was overspent beyond the grant. It is voted after the year ends, and only after the Public Accounts Committee (PAC) approves	Art. 115(1)(b)
Vote on account	An advance grant to cover spending until the budget is passed	Art. 116(1)(a)
Vote of credit	A lump sum for an unexpected need whose size or details cannot be stated, like a "blank cheque" (e.g. during war)	Art. 116(1)(b)
Exceptional grant	A purpose that is not part of the current service of any financial year	Art. 116(1)(c)
Token grant	Re 1 is voted when a new service can be paid for by moving savings from another head (re-appropriation)	Rules of Procedure, not a separate Article

• PAC (Public Accounts Committee): a parliamentary committee that checks the CAG's audit reports on government spending.
• Supplementary, additional and excess grants follow the same procedure as the main budget (Art. 115(2)).

Vote on account vs interim budget

• Vote on account (Art. 116(1)(a)):
• It is usually for two months, which is about one-sixth of the year's estimates.
• It runs longer in election years.
• It keeps the government running until the full budget is passed.

• It covers spending only.

• Interim budget: a full statement of accounts (income and spending) presented by an outgoing government, usually before a general election. It leaves the full budget to the next government.

Point	Vote on account	Interim budget
What it is	Permission to spend for a short period	A full financial statement for a short period
Covers	Spending only	Spending and receipts
Constitutional basis	Art. 116(1)(a)	Not a separate category; it follows convention
Who presents it	Any government, when the budget will not pass by 1 April	An outgoing government in an election year

Prelims Hooks

• Art. 113(2): only the Lok Sabha votes on demands for grants. The Rajya Sabha can only discuss them.
• The Lok Sabha can approve, reduce or refuse a demand, but never increase it.
• Policy cut = Re 1; token cut = ₹100; economy cut = a stated amount. Trap: a token grant is also Re 1, but it is a grant, not a cut motion.
• Art. 114(3): no money can be drawn from the Consolidated Fund until the Appropriation Bill is enacted. No amendment may change the amounts or purposes of grants.
• Excess grant: voted after the year ends, only after PAC approval (Art. 115(1)(b)).
• Art. 116 covers the vote on account, vote of credit and exceptional grant. Art. 115 covers supplementary, additional and excess grants.
• Provisional Collection of Taxes Act, 2023 replaced the 1931 Act. Declared provisions apply from the day after the bill is introduced and lapse after 75 days if the bill is not enacted [5].
• 2019–2023: about 80% of the Union budget was voted without discussion. In 2023, none of it was discussed [2].
• Guillotine: all remaining demands are put to vote together on the last allotted day, without discussion.
• DRSCs have examined demands for grants since 1993, during a recess of about 3–4 weeks.

Mains Points

• The guillotine weakens financial control.
• About 80% of the budget passed without debate in 2019–2023, and none of it was debated in 2023 [2].
• So most ministries' spending escapes scrutiny on the floor of the House.

• Possible reforms: more days for demands, taking up a different set of ministries each year, and a separate budget session calendar.

• DRSC scrutiny is often too late. Only 32% of DRSC reports on demands came before the budget was passed in 2020–2023 [2]. Making reports due before voting would make committee scrutiny count.

• Cut motions keep the executive accountable but rarely succeed. With a majority government, they mostly serve to raise issues (as in the April 2010 fuel price cut motions against the UPA). Critics argue that every cut motion should not be treated as a confidence vote, so that members could vote more freely on spending.
• Lump-sum votes raise accountability concerns. Votes on account, votes of credit and long interim periods in election years let large sums be spent with little scrutiny. One possible safeguard is stricter use of excess grants and PAC follow-up.