UPSC Prelims 2024 Q85: Union Budget, Articles 112 & 113 — Explained

With reference to Union Budget, consider the following statements:

1. The Union Finance Minister on behalf of the Prime Minister lays the Annual Financial Statement before both the Houses of Parliament.

2. At the Union level, no demand for a grant can be made except on the recommendation of the President of India.

Which of the statements given above is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer: (c) Both 1 and 2

Statement-wise explanation

  • 1: correct — Article 112 requires the President to 'cause to be laid' the Annual Financial Statement (the Budget) before both Houses every financial year. In practice, the Finance Minister gives the Budget Speech in the Lok Sabha and lays the authenticated statement on the Table, and a copy is laid in the Rajya Sabha at the same time. The final UPSC key treats this statement as correct. Note that Article 112 names the President, not the Prime Minister, as the authority on whose behalf the Budget is laid (see the answer note).
  • 2: correct — Article 113(3) says: 'No demand for a grant shall be made except on the recommendation of the President.' Demands for grants for voted expenditure go only to the Lok Sabha. It can assent to a demand, refuse it, or reduce it, but it cannot raise it. The President's recommendation means the executive alone decides what spending is asked for.

How to eliminate

Statement 2 copies Article 113(3) almost word for word. Anyone who has read the financial articles can mark it correct, which removes options 'a' and 'd'. Statement 1 decides the answer, and you cannot reason your way to it. You have to know that Article 112 makes the President responsible for laying the Annual Financial Statement, and that the Finance Minister presents it in both Houses. Read it as 'the Finance Minister lays the Budget before both Houses' and it is accurate. Read it strictly against Article 112 and the phrase 'on behalf of the Prime Minister' is the weak spot. The official key took the first reading. Fact to remember: in Union finance, every constitutional power to lay, recommend or initiate rests with the President (Articles 112, 113(3), 117(1)). The Finance Minister exercises these powers in practice.

Know more

The Union Budget in the Constitution

The Constitution never uses the word 'Budget'. It calls it the Annual Financial Statement (Article 112): the estimated receipts and expenditure of the Government of India for one financial year (1 April to 31 March). The statement must show charged expenditure separately from other (voted) expenditure, and revenue spending separately from other spending.

Article What it does
112 President causes the Annual Financial Statement to be laid before both Houses
113 Charged expenditure is not put to vote but may be discussed; other expenditure goes to the Lok Sabha as demands for grants; no demand without the President's recommendation
114 Appropriation Bill: no money is withdrawn from the Consolidated Fund without a law
115 Supplementary, additional and excess grants
116 Vote on account, votes of credit, exceptional grants
117 Financial Bills need the President's recommendation to be introduced

Stages in Parliament

  1. Presentation by the Finance Minister (on 1 February since 2017; the Railway Budget was merged into the Union Budget the same year).
  2. General discussion in both Houses, with no vote on details.
  3. Departmental Standing Committees examine the demands for grants.
  4. Voting on demands in the Lok Sabha only. Cut motions can be moved. Demands still pending on the last allotted day are put to vote together by the guillotine.
  5. Appropriation Bill, then the Finance Bill (tax proposals). Both are Money Bills, so the Rajya Sabha can only recommend changes, within 14 days.

Why the President appears everywhere: The President acts on ministerial advice (Article 74). Tying every money demand to the President's recommendation means only the government can propose spending. Parliament can approve, cut or refuse a demand, but never increase it.

Vote on account: In an election year, as in February 2024, Parliament passes an Interim Budget with a vote on account. This lets the government spend for part of the year until the full Budget is passed.

In the news

The question is static (Articles 112 and 113). The 2024 paper came soon after the Interim Budget of 1 February 2024 and its vote on account, presented ahead of the general election. This may have put the Budget procedure in focus.

NCERT Concepts to Revise

  • Demands for grants: Statement 2 is about who must recommend a demand for grants before the Lok Sabha can vote on it.
  • Union Budget: Statement 1 is about the formal name and laying of the Union Budget before Parliament.
  • Consolidated Fund of India: Demands for grants are requests to spend from the Consolidated Fund, which needs Parliament's approval.
  • Appropriation Bill: The Appropriation Bill is the law that follows the voting on demands for grants.
  • Guillotine: The guillotine shows how the Lok Sabha disposes of remaining demands for grants at the end of voting.

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