Economics is one of the most important topics in General Knowledge. Many students find it difficult on how to go about solving questions from this topic. For this one needs to have a thorough knowledge of the subject. To simplify the subject we are have divided the subject into smaller topics and are providing you with the notes for the same. These notes will help you revise effectively.
Economics Notes: Union Budget of India
The Constitution of India has a provision (Article 112) for such a document called Annual financial statement which usually refers to the term Budget.
Budget
- The budget is a statement of receipt and expenditure of a government in a financial year which begins on 1 April and ends on 31 March.
- These receipts and expenditure of the government are in three parts:
1. Consolidated Fund of India
2. Contingency Fund of India
3. Public account of India. - The budget has three sets of data for every concerned sector or sub-sector of the economy.
- They are:
1. Actual data of the preceding year
2. Provisional data of the current year
3. Budgetary estimates for the following year - The budget contains Estimates of revenue and capital receipts, ways and means to raise the revenue, Estimates of expenditure, the Economic and Financial policy of the coming year, that is, Taxation proposals, spending programme and introduction of new schemes/projects.
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Types of Fund of Government of India
1. Consolidated fund
- The Consolidated fund comprises all revenues received by the government, including the loans raised by it, receipts from recoveries of loans granted by it, tax and other revenues.
- This fund was established under Article 266 (1) of the Constitution of India.
- Parliament authorization is required for any withdrawn from this fund.
2. Contingency fund
- The Contingency fund is the fund set aside for government to meet emergency expenditures that cannot wait for authorization.
- This fund was established under Article 267 of the Constitution of India.
- This fund is kept at the disposal of the President.
3. Public accounts of India
- Public accounts comprise money the government gets from various schemes like the small savings schemes or dedicated funds like provident funds, deposits and advances.
- This fund was established under Article 266 (2) of the Constitution of India.
Budget in Parliament
- First, the budget is presented in the Lok Sabha by the Finance Minister and he gives a ‘Budget Speech’.
- Then the general discussion takes place in the house.
- Afterwards, it sends it to the Rajya Sabha for the discussion.
- After the discussion is over, the Houses are adjourned for 3 to 4 weeks.
- During this gap, the 24 departmental standing committees examine and discuss in detail the demands for grants of the concerned ministers and prepare reports on them.
- With consideration of these reports voting of the demand for grants will take place.
- The demands are presented ministry-wise.
- A demand will be granted after it has been voted.
Article 113 of the constitutions contain the provisions of demand for grants. - Voting of demands for grants is the exclusive privilege of the Lok Sabha, that is, Rajya Sabha, which can only discuss it and has no power to vote.
- Totally 26 days are allotted for the voting of demands. On the last day, the speaker puts all the remaining demands to vote and disposes of them whether they have been discussed or not. This is called ‘Guillotine’.
- So, the amount which is demanded by the Minister cannot get it without the grants voted by the Lok Sabha.
Motions in Parliament
- During the time of voting on the demand for grants, Members of Parliament can also move motions to reduce any demand for grant.
- Such motions are
1. Policy Cut Motion: - It represents the disapproval of the policy underlying the demand and the amount of the demand be reduced to Re 1.
2. Economy Cut Motion: - In this amount of the demand is reduced by a specified amount.
3. Token Cut Motion: - In this motion the amount of the demand reduced to Rs.100 to ventilate a specific grievance, which is within the sphere of responsibility of the Government of India.
Vote on Account
- Before the starting of the new financial year, the government need to keep enough finance in order to allow it to run the administration of the country remains.
- Article 116 of the constitutions contain the Vote on account provisions.
- This allowed the government to fund its expenses for a short period of time or until a full-budget is passed.
- Generally, the Vote on Account is taken for two months only.
Appropriation Bill
- It is introduced in Lok Sabha After passing of demand for grants to give authority to Government to incur expenditure from and out of the Consolidated Fund of India.
- No money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law (Article- 266).
Finance Bill
- It is introduced in Lok Sabha after passing of Appropriation Bill to give effect to the Government’s taxation proposals which are introduced in Lok Sabha immediately after the presentation of the General Budget
Type of Finance Bill
1. Money Bills
- These are financial bills which contain provisions related to matters listed in Article-110 (1) (a).
- It required the prior recommendation of President of before presented in Lok Sabha.
- Only the Minister can introduce it in Lok Sabha.
- Lok Sabha only having the power to Vote in case of Money Bill. Rajya Sabha only can advise Lok Sabha.
- There is no provision of Joint sitting in case of Money Bills.
2. Finance Bills category-I
- It required the prior recommendation of President of before presented in Lok Sabha.
- But in this case, Rajya Sabha has the power to reject this bill.
- There is a provision of Joint sitting in these types of Bills.
3. Finance Bills category-II
- These are financial bills which do not contain provisions related to matters listed in Article-110.
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