Article 112 of the Indian Constitution is the cornerstone provision that mandates the presentation of the Union Budget before the Parliament. It lays down the constitutional obligation for the executive to provide a detailed account of the government’s financial position, including estimated receipts and expenditures for the forthcoming financial year.
This article ensures parliamentary control over the government’s finances by making the executive accountable to the legislature for its income and expenditure proposals. It is the foundation upon which the entire budgetary process in the Union Parliament is built, enabling debate, scrutiny, and approval of financial proposals.
Original Text
112. Annual financial statement.
(1) The President shall in respect of every financial year cause to be laid before both the Houses of Parliament a statement of the estimated receipts and expenditure of the Government of India for that year, in this Part referred to as the “annual financial statement”.
(2) The estimates of expenditure embodied in the annual financial statement shall show separately— (a) the sums required to meet expenditure described by this Constitution as expenditure charged upon the Consolidated Fund of India; and (b) the sums required to meet other expenditure proposed to be made from the Consolidated Fund of India, and shall distinguish expenditure on revenue account from other expenditure.
(3) The following expenditure shall be expenditure charged on the Consolidated Fund of India— (a) the emoluments and allowances of the President and other expenditure relating to his office; (b) the salaries and allowances of the Chairman and the Deputy Chairman of the Council of States and the Speaker and the Deputy Speaker of the House of the People; (c) debt charges for which the Government of India is liable including interest, sinking fund charges and redemption charges, and other expenditure relating to the raising of loans and the service and redemption of debt; (d) (i) the salaries, allowances and pensions payable to or in respect of Judges of the Supreme Court; (ii) the pensions payable to or in respect of Judges of any High Court; (e) the salary, allowances and pension payable to or in respect of the Comptroller and Auditor-General of India; (f) any sums required to satisfy any judgment, decree or award of any court or arbitral tribunal; (g) any other expenditure declared by this Constitution or by Parliament by law to be so charged.
Detailed Explanation
Article 112 mandates that the President shall cause the “Annual Financial Statement” (commonly known as the Union Budget) to be presented before both Houses of Parliament for every financial year. A financial year in India runs from April 1st to March 31st.
Clause (1) establishes the fundamental requirement for the annual budget presentation. It specifies that this statement must detail the estimated receipts (income) and expenditure (spending) of the Government of India for the upcoming financial year. The term “annual financial statement” is formally introduced here as the constitutional name for this document.
Clause (2) outlines the required breakdown within the expenditure estimates presented in the statement. It mandates a clear separation of expenditure into two categories: (a) Expenditure Charged upon the Consolidated Fund of India: These are expenses that are non-votable, meaning the Parliament can discuss them but cannot vote on the demands for these sums. These expenses are charged directly to the Consolidated Fund as a constitutional requirement to ensure the independence and continuity of certain offices and obligations. (b) Other Expenditure proposed to be made from the Consolidated Fund of India: These are the expenses that are votable. Parliament discusses and votes on the demands for grants related to these expenditures. This category represents the bulk of government spending proposals requiring parliamentary approval. Furthermore, Clause (2) requires that the expenditure estimates distinguish between expenditure on revenue account (recurring expenses, like salaries, interest payments, grants) and other expenditure (primarily capital expenditure, like investments in assets, loans given). This separation is crucial for understanding the nature of government spending and its impact on the economy.
Clause (3) explicitly lists the types of expenditure that are charged upon the Consolidated Fund of India. This list includes:
- The emoluments, allowances, and other expenses related to the office of the President.
- Salaries and allowances of the Presiding Officers of the Council of States (Rajya Sabha) and the House of the People (Lok Sabha).
- Debt charges of the Government of India, including interest payments and costs associated with raising and servicing loans.
- Salaries, allowances, and pensions of Supreme Court Judges.
- Pensions payable to High Court Judges (though their salaries and allowances are charged on the state’s Consolidated Fund, as per Article 202).
- The salary, allowances, and pension of the Comptroller and Auditor-General of India.
- Sums required to satisfy court judgments, decrees, or arbitral awards.
- Any other expenditure that is explicitly declared by the Constitution or by a law made by Parliament to be charged on the Consolidated Fund.
The expenditures charged upon the Consolidated Fund are essentially fixed constitutional or statutory liabilities that must be paid regardless of parliamentary voting on the budget. They represent a protected category of expenses necessary for the functioning of key institutions and fulfillment of sovereign obligations.
Detailed Notes
- Constitutional basis for the Union Budget (Annual Financial Statement).
- Mandates the President to present the statement before Parliament for every financial year.
- Financial year runs from April 1st to March 31st.
- Statement shows estimated receipts and expenditures of the Government of India.
- Estimates of expenditure must be shown separately for:
- Expenditure charged upon the Consolidated Fund of India (non-votable).
- Other expenditure from the Consolidated Fund of India (votable).
- Expenditure estimates must distinguish between revenue account expenditure and other expenditure (capital).
- Expenditures charged upon the Consolidated Fund of India include:
- President’s emoluments and office expenses.
- Salaries/allowances of Chairman/Deputy Chairman of Rajya Sabha and Speaker/Deputy Speaker of Lok Sabha.
- Debt charges of the Government of India.
- Salaries/allowances/pensions of Supreme Court Judges.
- Pensions of High Court Judges.
- Salary/allowances/pension of the Comptroller and Auditor-General of India.
- Sums for court judgments/decrees/awards.
- Any other expenditure declared by the Constitution or Parliament by law.
- Charged expenditures are not subject to the vote of Parliament but can be discussed.
- Other expenditures require Parliament’s approval through the voting of demands for grants.
- The term “Budget” is not used in the text of Article 112 or the Constitution.
Additional Comments
- The Annual Financial Statement is traditionally presented in Parliament by the Union Finance Minister on behalf of the President.
- The budgetary process involves a general discussion on the Budget, scrutiny by departmental standing committees, voting on demands for grants (only in Lok Sabha), and passing of Appropriation and Finance Bills.
- The Lok Sabha has the primary role in voting on the demands for grants (money bills), reflecting its control over the executive’s purse strings. The Rajya Sabha can discuss the Budget but cannot vote on demands for grants and has limited powers regarding money bills.
- Article 202 of the Constitution contains a similar provision for the presentation of the Annual Financial Statement for each State before the State Legislature.
- The Budget presented under Article 112 typically includes not just estimates but also a review of the government’s financial performance in the preceding year.
Summary
Article 112 of the Indian Constitution mandates the President to present the Annual Financial Statement (Union Budget) before both Houses of Parliament each financial year. This statement details the estimated government receipts and expenditures, categorizing expenditure into non-votable sums charged upon the Consolidated Fund of India and votable ‘other expenditure’. It also requires distinguishing between revenue and capital expenditure. The article lists specific items that are charged upon the Consolidated Fund, ensuring the financial security of key constitutional offices and obligations, while the remaining expenditure is subject to parliamentary approval through voting. This provision is fundamental to parliamentary oversight and control over the executive’s finances.