The Union Finance Minister has recently moved the Appropriation (No.5) Bill, 2022, and Appropriation (No.4) Bill, 2022, in the Rajya Sabha. The bill authorizes payment and appropriation of a certain amount from and out of the Consolidated Fund of India for the services of the financial year 2022-2023.
The Appropriation Bill allows the government to withdraw funds from the Consolidated Fund of India to meet expenditure during the fiscal year. According to Article 114 of the Constitution, government can only draw money from this fund after Parliamentary approval. The withdrawn amount is utilized to meet the current expenses over the financial year.
Procedure of the Appropriation Bill
The Appropriation Bill is introduced in the Lok Sabha after discussions on the Budget proposals and Voting on Demand for Grants. If the Appropriation Bill gets defeated in a parliamentary vote, it could lead to the government’s resignation or a general election. After passing by the Lok Sabha, it is sent to the Rajya Sabha for any recommended amendments. However, it’s the Lok Sabha’s prerogative to accept or reject the amendments suggested by the Rajya Sabha. Upon receiving presidential assent, the bill becomes an Appropriation act.
An interesting feature of the Appropriation Bill is its automatic repeal clause, which repeals the Act post meeting its statutory purpose. Until the bill is enacted, the government cannot withdraw money from the Consolidated Fund of India.
‘Vote on Account’ Provision
Since the enactment of the Appropriation bill takes time, the government needs funds to carry on its regular activities. Thus, the Constitution authorises the Lok Sabha to advance a grant for part of the fiscal year. This known as the ‘Vote on Account.’ During an election year, the Government opts for either an ‘interim Budget’ or a ‘Vote on Account’ since the reign might change after elections and so could the policies. Article 116 of the Indian Constitution defines a vote on account.
Difference between Appropriation Bill and Finance Bill
While the Finance Bill provides provisions to finance the expenditure of the government, an Appropriation Bill specifies the amount and reason for withdrawing money. Both these bills are classified as money bills and do not require explicit consent from the Rajya Sabha, only discussions and returns.
Introduction to Consolidated Fund of India
The Consolidated Fund of India was founded under Article 266 (1) of the Indian Constitution. It comprises all revenues received by the Centre through taxes like Income Tax, Central Excise, Customs as well as non-tax revenues. It also includes loans raised by the Centre from public notifications, treasury bills or foreign governments, and international institutions.
All government expenses are met from this fund, excluding exceptional items which are met from the Contingency Fund or Public Account. No funds can be withdrawn from this Fund without Parliament authorization.
Budget stages in Parliament
The budget stages in Parliament include the presentation of the budget, general discussion, scrutiny by departmental committees, voting on demands for grants, passing an Appropriation Bill, and passing of the Finance Bill.
Parliamentary Control over Public Finance
The parliament is the custodian of public money in India. It holds control over public finances through various means. Constitutional provisions facilitate parliament to oversee public finances, such as Article 266, which states that all revenues and receipts of the government go to a ‘Consolidated Fund.’ Furthermore, the withdrawal of funds from it can only happen according to laws passed by Parliament.
Another provision, Article 112, necessitates the President to place an annual financial statement before Parliament every fiscal year. Charged and voted estimates of expenditure need to be displayed separately, and revenue account expenditure should be distinct from other expenditures.
In the context of previous year questions (PYQs) on the UPSC Civil Services Examination, it’s crucial to note terms such as ‘vote-on-account,’ ‘interim budget,’ and the difference between them. A ‘vote on account’ pertains only to government budget expenditure, while an ‘interim budget’ includes both expenditure and receipts.
