One of the most important annual fiscal events for which India waits eagerly is the Budget Presentation. The Budget not only recites the financial accomplishments of the previous year, but also denotes the new fiscal policy of the government for the forthcoming year. Thus, in short budget is estimate of inflows and outflows of the Government during a year.
The Budget is presented in the Parliament every year on the last working day of February, which comes into effect on April 1. This year an Interim Budget will be presented on 16th February 2009.
The whole process beginning with the presentation of the Budget and ending with discussions and voting on the Demands for Grants requires sufficiently long time. The Lok Sabha is, therefore, empowered by the Constitution to make any grant in advance in respect of the estimated expenditure for a part of the financial year pending completion of procedure for the voting of the Demands. The purpose of the 'Vote on Account' is to keep Government functioning, pending voting of 'final supply'. The Vote on Account is obtained from Parliament through an Appropriation (Vote on Account) Bill.
Why declaration of Budget is mandatory?
According to Article 112 of the Constitution, a proper financial statement, giving a calculated receipts and outlay of the Union Government has to be presented before the Parliament in respect of every financial year running from 1st April to 31st March.
The Receipt and Payments of the Government are categorised in three parts:
Consolidated Fund: All revenues received by Government, loans raised by it, and also its receipts from recoveries of loans granted by it form the Consolidated Fund. All expenditure of Government is incurred from the Consolidated Fund and no amount can be withdrawn from the Fund without authorisation from Parliament.
Contingency Fund: Occasions may arise when Government may have to meet urgent unforeseen expenditure pending authorisation from Parliament. The Contingency Fund is an imprest placed at the disposal of the President to incur such expenditure. Parliamentary approval for such expenditure and for withdrawal of an equivalent amount from the Consolidated Fund is subsequently obtained and the amount spent from Contingency Fund is recouped to the Fund.
Public Account: Besides the normal receipts and expenditure of Government which relate to the Consolidated Fund, certain other transactions enter Government accounts, in respect of which, Government acts more as a banker, for example, transactions relating to provident funds, small savings collections, other deposits, etc. The moneys thus received are kept in the Public Account and the connected disbursements are also made therefrom. Generally speaking, Public Account funds do not belong to Government and have to be paid back some time or the other to the persons and authorities who deposited them. Parliamentary authorisation for payments from the Public Account is, therefore, not required. Thus, budget efficaciously indicates the financial health of India and is a very important tool in drawing the framework or blueprint for India's progress.
