Budget was first introduced in India in 1860 during the colonial rule. Later on, after independence, provisions relating to budget were included in the constitution.
Some of the constitutional provisions are as follows:-
- On President’s recommendation (Art. 117(1) and 117(3)) The finance minister lays down the budget before the parliament for its approval as parliament is the sole authority on finances of the country. It legislates the taxes to be levied (Art. 265) and authorizes expenditure from the consolidated fund of India (Art. 266).
- The Budget, which is known by ‘Annual Financial Statement’ in the constitution (Art. 112), provides a statement of estimated receipts and expenditure for the financial year under three accounts – consolidated fund of India, Contingency fund of India and Public Accounts.
- The Budget consists of two parts – Revenue Budget and Capital budget. Revenue Budget talks about Proceeds of taxes, interests and dividends on investments made by government, fees and other receipts for services rendered by the government. The Capital budget gives details for capital receipts and payments, including loans from public or borrowing from Reserve Bank etc.
- Procedure in Parliament
- Demand for Grants
- The expenditure estimates from Consolidated fund are voted by the Lok Sabha in the form of Demand for Grants which are arranged ministry wise. (Art. 113)
- Appropriation Bill
- It is introduced to give authority to government to appropriate monies out of Consolidated fund to incur expenditure.
- Finance Bill
- It is a money bill and is introduced along-with the budget. It provides for imposition, abolition, remission, alteration or regulation or taxes proposed in the budget.
- Vote-on-account, vote of credit and exceptional grant
- Vote on account deals with expenditure pending the passing of Demand for grants and appropriation bill. Lok Sabha makes grants in advance to authorise the withdrawal of money for such period (Art. 116). Vote of credit refers to the grants that Lok Sabha makes for meeting unexpected demands.
- Fiscal Responsibility and Budget Management Act, 2003
- This act was enacted to make governments to follow fiscal discipline. It mandates the laying down of certain additional documents relating to fiscal policy during budget presentation.