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After which process is the budget approved? How was the budget work?

Ritul Pandey

By Ritul Pandey

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Maharashtra Finance Minister Ajit Pawar presented the state’s interim budget resolution for the financial year 2023-24 in the Assembly. The budget is presented in the legislature where the Finance Minister reads the budget speech. Many people have a common belief that after the Finance Minister presents the budget in the House, other members give speeches on it. However, the budget mentions various schemes of the state, the amount required for it, revenue, deficit, debt outstanding on the state, interest to be paid on it, expenditure on salaries of officers, employees, MLAs, contingency fund. However, this budget is yet to be approved in the House. Then it is converted into law and only then the government is allowed to make this expenditure from the consolidated fund of the state. The most complicated aspect of this is to get the budget approved in the House. Here we will understand how this process takes place.

The Maharashtra State Legislature usually holds three sessions namely Winter (Nagpur), Monsoon and Budget (Mumbai). On rare occasions a special session is called for some extremely important matter. The date of the session of the Legislature is fixed with the approval of the Governor. Similarly, the Governor also fixes a day for presenting the budget in the Legislature. The Finance Minister in the Legislative Assembly and the Minister of State for Finance in the Legislative Council deliver the budget speech at the same time. Also, the annual financial statements and other budget publications (Annual Financial Statements – Green Book, Budget Estimates – White Book and Budget Statements – Blue Book) are presented in the House. Although this process mainly takes place in the budget session, budget work is also done in the other sessions through supplementary demands, demands for more expenditure.

After the Finance Minister presents the budget in the Vidhan Sabha, it needs approval. For this, discussions are going on in the hall. This discussion takes place in two phases. One is general discussion and the other is discussion on grant demands. This discussion is clause-wise. After that, voting takes place if needed. However, even if it is discussed in the Vidhan Parishad, voting does not take place on it.

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How is the budget approved?

After the budget is presented in the Legislative Assembly, discussion is expected to take place for a maximum of seven days. However, this time limit can be relaxed by mutual consent. In such a situation, discussion is expected to take place for a maximum of five days in the Legislative Council. After this discussion, the Finance Minister answers the points and questions raised by the members and this general discussion ends.

Guillotine

The House discussed the demands for grants. This is usually a separate demand for grants proposed for each department. These demands are informed to the members through departmental booklets called budget estimates. At that time also, selected sections were discussed. Before this discussion, the Speaker of the Assembly first exchanges views with the opposition leaders in the Assembly. After this, the priority of the departments is decided as to which departments are to be taken up for discussion.

According to the rules of the Vidhan Sabha, department-wise discussion and voting can take place on the grant demands for a maximum of eighteen days after ten days of the presentation of the budget. During this discussion, the members talk in detail about the goals, policies, operations, budget of the concerned departments. They raise questions. The minister of the concerned department responds to this discussion and then voting is done on the demands. On the last day of the days fixed for departmental discussion, the discussion is stopped half an hour before the end of work. Except for the departments whose grant demands have already been discussed and voted upon, the grant demands of all other departments are approved by voting. This process is called hanging or guillotine.

What is a discount notice? How does the government fall for Rs 1?

Voting on demands for grants is done as per the reduction instructions given by the members. The reduction notice is used by the Armed Opposition. However, reduction cannot be suggested by members in respect of burdensome expenditure on which the Assembly has no power to vote. A reduction notice can be given only in respect of expenditure in the form of approval or for omission of an item of grant. This reduction notice has to be filed four days in advance. When voting takes place on a demand on which members have suggested reduction, the Chairman allows the suggestion to be put and voting takes place. There are three types of exemption notices.

One rupee cut: This is a very important weapon of the opposition parties. It is also known as policy cut or rejection of policy cut. This mitigation motion has the status of a no-confidence motion. Such a notice is given when no confidence has to be expressed in the government. If the cut motion is voted upon and approved, the government will have to resign.

Token deduction: This deduction of Rs 100 is given to discuss the general policy of the concerned department on general matters of the government. If this suggestion of deduction is approved in the House, it means that the House has expressed dissatisfaction over the policy of the government.

Economy cuts: The relevant grant demand suggests a cut of a specific amount related to a specific item. While giving such a notice, the member has to explain how the cut can be made. If such a suggestion is accepted then only the grant demand of a smaller amount is voted upon. There is also a rule that a cut of even one rupee should not be made in the assembly. It is customary for the concerned department to reply in writing to the rest of the cut notices.

Appropriation Bill

After voting and approval on the department-wise grant demands, the Finance Minister presents the Appropriation Bill in the Legislative Assembly. It includes all the demands passed in the bill and those important demands on which voting has not taken place. Apart from this, estimates of expenditure on revenue and capital accounts, estimates of expenditure under the credit section are mentioned separately. The amount of the appropriation bill cannot exceed the amount of the annual financial statement.

After the bill is passed by the Legislative Assembly, it is sent to the Legislative Council for recommendations. Since it is a finance bill, the Legislative Council has no power to vote on it. Therefore, the Legislative Council cannot reject it. However, it can suggest improvements. If the Legislative Council suggests amendments, they are introduced in the Legislative Assembly. The power to accept or reject these lies with the Legislative Assembly. The bill thus passed by the Assembly is finally sent to the Governor for assent. After the assent of the Governor, the bill becomes a law (Act) and allows the government to spend from the Consolidated Fund of the state.

Accounts Payable

The financial year ends on March 31. If the process of the Appropriation Bill is not completed by then, the government will not be allowed to spend money from the Consolidated Fund for spending from April 1. In such a situation, the government is given an advance grant for the expenditure in the period till the approval of the entire budget. This process is called accounting. In this, the Finance Minister presents the details of the necessary expenditure before the House till the budget is approved. It is usually discussed and approved. Only the ongoing works and expenditure on currently approved establishments are recognized by the grant of accounts. The government will have to wait till the approval of the Appropriation Bill to approve expenditure on new items.

Supplementary Demands

Generally, the budget business takes place in the budget session. However, when the provision made for an item after the approval of the budget for the respective financial year is found to be insufficient, it is actually approved by presenting a supplementary demand. Sometimes unexpected and urgent expenses have to be met from the contingency fund. Those expenses have to be reimbursed again in the contingency fund. All these processes are completed through supplementary demands. Supplementary demands are presented three times in the monsoon, winter and budget sessions.

reallocation

The entire procedure applicable for the approval of the budget is also applicable for the approval of supplementary demands. The entire procedure is carried out from presenting supplementary demands, cut notices, prioritisation of departments for discussion, blocking of discussion, voting on the day appointed by the Governor. The Supplementary Appropriation Bill i.e. Reappropriation Bill is introduced. All the above procedures of the Appropriation Bill are followed for the Reappropriation Bill as well. It is then converted into an Act.

Demand for more spending

Supplementary demands or symbolic demands always relate to the current financial year. Sometimes after the end of the financial year it is observed that the expenditure has exceeded the approved budget. Additional expenditure demands are presented to adjust such expenditure.

This is how the budget gets approved

All expenditures during the year are audited by the Accountant General. The audit report prepared by him is submitted to the Legislature. The Legislature’s Public Accounts Committee investigates expenditure in excess of the sanctioned amount. The administration has to explain under what circumstances the excess expenditure was made. If the committee is satisfied, then the committee recommends regularization of such expenditure. On the occasion of inspection, the committee often takes a dig at the administration.

As per the report of the committee, the demand for more expenditure is presented in the Legislative Assembly on the day fixed by the Governor. Since the demand is examined by the Public Accounts Committee, it is usually not discussed in the Assembly. Although the state treasury is with the government, its key is with the legislature. The government is responsible for the question raised in the legislature. That is why the Legislative Assembly is called the sovereign house.

Ritul Pandey

Ritul Pandey

I am Ritul Pandey, a content creator focused on delivering entertaining and engaging news from the worlds of entertainment and sports

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