THE BUDGETARY PROCESS

THE BUDGET
What is Budget?
The Annual Financial Statement or the Statement
of the Estimated Receipts and Expenditure of the
Government of India in respect of each financial year is
popularly known as the Budget.
Presentation of Budget
2. Till 2016, the Budget was presented to Lok Sabha
in two parts, namely, the Railway Budget pertaining to
Railway Finance and the General Budget which gave an
overall picture of the financial position of the Government
of India, excluding the Railways. Since the year
2017-18, with the merger of the Railway Budget with the
General Budget, a single document titled ‘Union Budget’
is presented by the Minister of Finance.
3. The Budget is presented to Lok Sabha on such
day* as the President may direct. Immediately after
*By convention the Railway Budget was presented sometime in
the third week of February at 1200 hours after the Question
Hour. The General Budget was presented by convention, till
1998, on the last working day of February at 5 P.M. This
convention was changed in 1999 when the General Budget was
presented at 11 A.M. Since then the General Budget is presented
at 11 A.M. on the last working day of February (except in 2000
when it was presented at 2 P.M.). However, since 2017-18, the
date of presentation of Union Budget has been advanced to
1st February.

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the presentation of the Budget, the following three
statements under the Fiscal Responsibility and Budget
Management Act, 2003 are also laid on the Table of
Lok Sabha:—(i) The Medium Term Fiscal Policy
Statement; (ii) The Fiscal Policy Strategy Statement; and
(iii) The Macro Economic Framework Statement. In 2019,
however, only two statements, namely: (a) Medium Term
Fiscal Policy cum Fiscal Policy Strategy Statement and
(b) Macro-Economic Framework Statement were laid.
Simultaneously, a copy of the Budget is laid on the Table
of Rajya Sabha. In an election year, the Budget may be
presented twice—first to secure a Vote on Account for a
few months and later in full.
Distribution of Budget Papers
4. The sets of Union Budget are distributed to
members from several booths in the Inner and Outer
Lobbies arranged according to the Division Numbers of
members. In case, Division Numbers have not been
allotted, these booths are arranged State-wise. The
budget papers are made available to members after the
Finance Minister’s speech is over, the Finance Bill has
been introduced and the House has adjourned for the day.
Discussion on the Budget
5. No discussion on Budget takes place on the day
it is presented to the House. Budgets are discussed in
two stages—the General Discussion followed by detailed
discussion and voting on the demands for grants.

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Allotment of Time for Discussion

6. The whole process of discussion and voting on

the demands for grants and the passage of the
Appropriation and Finance Bills is to be completed within
a specified time. As a result, often the demands for grants
relating to all the Ministries/Departments cannot be
discussed and demands of some Ministries get guillotined
i.e. voted without discussion. The Minister of
Parliamentary Affairs, after the presentation of the Budget,
holds a meeting of leaders of Parties/ Groups in
Lok Sabha for the selection of Ministries/ Departments
whose demands for grants might be discussed in the
House. On the basis of decisions arrived at this meeting,
the Government forwards the proposal for the
consideration of the Business Advisory Committee. The
Business Advisory Committee after considering the
proposal allots time and also recommends the order in
which the demands might be discussed. It is generally
left to the Government to make any change in the order
of discussion.

7. After the allotment of time by the Business

Advisory Committee, a time table showing the dates on
and order in which the demands for grants of various
Ministries would be taken up in the House is published in
Bulletin-Part II for the information of members.

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General Discussion on the Budget

8. During the General Discussion, the House is at

liberty to discuss the Budget as a whole or any question
of principles involved therein but no motion can be moved.
A general survey of administration is in order. The scope
of discussion is confined to an examination of the general
scheme and structure of the Budget, whether the items
of expenditure ought to be increased or decreased, the
policy of taxation as expressed in the Budget and in the
speech of the Finance Minister. The Finance Minister or
the Railway Minister, as the case may be, has the general
right of reply at the end of the discussion.

Consideration of the Demands for Grants by

Departmentally Related Standing Committees of
Parliament

9. With the creation of Departmentally Related

Standing Committees of Parliament in 1993, the Demands
for Grants of all the Ministries/Departments are required
to be considered by these Committees. After the General
Discussion on the Budget is over, the House is adjourned
for a fixed period. During this period, the Demands for
Grants of the Ministries/ Departments are considered by
the Committees. These Committees are required to make
their reports to the House within specified period without

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asking for more time and make separate report on the
Demands for Grants of each Ministry.
Discussion on Demands for Grants
10. The demands for grants are presented to
Lok Sabha along with the Annual Financial Statement.
These are not generally moved in the House by the
Minister concerned. The demands are assumed to have
been moved and are proposed from the Chair to save
the time of the House. After the reports of the Standing
Committees are presented to the House, the House
proceeds to the discussion and voting on Demands for
Grants, Ministry-wise. The scope of discussion at this
stage is confined to a matter which is under the
administrative control of the Ministry and to each head of
the demand as is put to the vote of the House. It is open
to members to disapprove a policy pursued by a particular
Ministry or to suggest measures for economy in the
administration of that Ministry or to focus attention of the
Ministry to specific local grievances. At this stage, cut
motions can be moved to reduce any demand for grant
but no amendments to a motion seeking to reduce any
demand is permissible.
Cut Motions
11. The motions to reduce the amounts of demands
for grants are called ‘Cut Motions’. The object of a cut
motion is to draw the attention of the House to the matter
specified therein.

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 12. Cut Motions can be classified into three
categories:—

(i) Disapproval of Policy Cut;

(ii) Economy Cut; and
(iii) Token Cut.
Disapproval of Policy Cut: A cut motion which says
“That the amount of the demand be reduced to Re. 1”
implies that the mover disapproves of the policy
underlying the demand. The member giving notice of such
a Cut Motion has to indicate in precise terms the
particulars of the policy which he proposes to discuss.
Discussion is confined to the specific point or points
mentioned in the notice and it is open to the member to
advocate an alternative policy.
Economy Cut: Where the object of the motion is to
effect economy in the expenditure, the form of the motion
is “That the amount of the demand be reduced by Rs...(a
specified amount)”. The amount suggested for reduction
may be either a lump-sum reduction in the demand or
omission or reduction of an item in the demand.
Token Cut: Where the object of the motion is to
ventilate a specific grievance within the sphere of
responsibility of the Government of India, its form is: “That
the amount of the demand be reduced by Rs. 100”.

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Discussion on such a cut motion is confined to the
particular grievance specified in the motion which is within
the sphere of responsibility of the Government of India.

13. For the facility of members, printed forms for

giving notices of cut motions are kept in the Parliamentary
Notice Office.

With effect from 18 July, 2016, Members can also

table notices in electronic form through e-portal specially
developed for the purpose.

Notice period for tabling Cut Motions

14. The notices of cut motions can be tabled after

the presentation of Union Budget.

15. The notices of cut motions tabled up to 1515

hours on a day are printed and circulated before the day
the relevant demands for grants to which they relate are
to be taken up in the House. The notices tabled after
1515 hours are deemed to have been tabled on the next
working day. These notices are printed and circulated
on the next working day if the cut motions to the demands
for grants to which they relate have not been moved in
the House.

16. As cut motions are circulated to members both

in English and Hindi simultaneously, the Rules Committee
(Fourth Lok Sabha) at its sitting held on 9 March, 1970

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decided that members might be requested to table such
notices at least two days before the day they are to be
taken up in the House.

17. Accordingly, members should table the notice

of cut motions at least two days before the day the
demands for grants to which they relate, are to be taken
up in the House, but in any case not later than 1515 hours
on the previous day.

Admissibility of Cut Motions—Conditions of

18. A cut motion to be admissible should satisfy the

following conditions:—

(1) It should relate to one demand only.

(2) It should be clearly expressed and should not
contain arguments, inferences, ironical
expressions, imputations, epithets and
defamatory statements.
(3) It should be confined to one specific matter
which should be stated in precise terms.
(4) It should not reflect on the character or conduct
of any person whose conduct can only be
challenged on a substantive motion.
(5) It should not make suggestions for the
amendment or repeal of existing laws.

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 (6) It should not relate to a State subject or to
matters which are not primarily the concern of
the Government of India.
(7) It should not relate to expenditure ‘Charged’
on the Consolidated Fund of India.
(8) It should not relate to a matter which is under
adjudication by a court of law having jurisdiction
in any part of India.
(9) It should not raise a question of privilege.
(10) It should not revive discussion on a matter
which has been discussed in the same session
and on which decision has been taken.
(11) It should not anticipate a matter which has been
previously appointed for consideration in the
same session.
(12) It should not ordinarily seek to raise discussion
on a matter pending before any statutory
tribunal or statutory authority performing any
judicial or quasi-judicial functions or any
commission or court of enquiry appointed to
enquire into, or investigate any matter.
However, the Speaker may in her/his discretion
allow such matter being raised in the House

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 as is concerned with the procedure or stage of
enquiry, if the Speaker is satisfied that it is not
likely to prejudice the consideration of such
matter by the statutory tribunal, statutory
authority, commission or court of enquiry.
(13) It should not relate to a trifling matter.

19. The Speaker decides whether a cut motion is or

is not admissible and may disallow any cut motion when
in the opinion of the Speaker it is an abuse of the right of
moving cut motions or is calculated to obstruct or
prejudicially affect the procedure of the House or is in
contravention of the Rules of Procedure of the House.

20. It is a well-established Parliamentary convention

that cut motions seeking to discuss the action of the
Speaker or relating to Speaker’s Department or matters
under the control of Speaker are not allowed. Likewise,
cut motions relating to the office of the Vice-President
(who is also ex-officio Chairman of Rajya Sabha) are not
admissible. Cut motions relating to matters under
consideration of a Parliamentary Committee are not
admissible. Cut motions are not admissible if they ventilate
personal grievances, or if they cast aspersions on
individual Government officials. Cut motions seeking to
discuss a matter affecting relations with a friendly foreign
country or details of internal administration of an
autonomous body are out of order as also those which
seek omission of a whole grant.

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 Token cuts seeking to discuss inadequacy of
provision in respect of a particular demand are, however,
in order.

Normally members of ruling party do not table cut

motions.

Circulation of Lists of Cut Motions

21. Lists of cut motions to the various demands for

grants as admitted by the Speaker are circulated to
members generally two days in advance of the date on
which the demands for grants in respect of the Ministry
are to be taken up in the House for discussion.

Moving of Cut Motions

22. At the commencement of the discussion on the

demands for grants in respect of a particular Ministry,
members are asked by the Speaker to hand over at the
Table, within fifteen minutes, slips indicating the serial
numbers of their cut motions that they would like to move.
The cut motions thus indicated are only treated as moved.
Cut motions cannot be moved at a later stage.

23. Cut motions cannot be moved by proxy. A

member should be present in the House to move cut
motions when the relevant demands for grants are taken
up.

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Guillotine

24. On the last of the allotted days for the discussion

and voting on demands for grants, at the appointed time
the Speaker puts every question necessary to dispose
of all the outstanding matters in connection with the
demands for grants. This is known as guillotine. The
guillotine concludes the discussion on demands for
grants.

Annual Reports, Outcome Budgets and Detailed

Demands for Grants of the Ministries

25. In connection with discussion on demands for

grants, copies of the Annual Reports and Outcome
Budget of the various Ministries and Departments are
kept in the library for perusal by members. Some copies
are also kept at the Publications Counter. Detailed
demands for grants in respect of various Ministries/
Departments are laid on the Table of Lok Sabha some
time before the demands for grants are considered by
the Departmentally Related Standing Committees.

Vote on Account

26. Prior to 2017, the Budget used to be presented

on last working day of February. Accordingly, the
Parliament was not able to vote the entire budget before
the commencement of the new Financial year. Due to
necessity to keep enough finance at the disposal of

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Government in order to allow it to run the administration
of the country Government obtained vote on account from
Parliament.
Normally, the vote on account was taken for two
months for a sum equivalent to one-sixth of the estimated
expenditure for the entire year under various demands
for grants.
Vote on Account was passed by Lok Sabha after
the general discussion on the Budget (General and
Railway) was over and before the discussion on the
demands for grants was taken up.
However with the advancement of the date of
presentation of Budget since 2017-18 to 1st February,
the necessity to obtain vote on Account is no more
required. The Demands for Grants and the Appropriation
Bill are passed well before the close of the Financial Year.
27. However, during an election year, the vote on
account may be necessary and taken for a longer period
say, 3 to 4 months if it is anticipated that the main
demands and the Appropriation Bill will take longer than
two months to be passed by the House.
Supplementary and Excess Demands for Grants
28. If the amount authorised to be expended for a
particular service for the current financial year is found to
be insufficient for the purpose of that year or when a need

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has arisen during the current financial year for
supplementary or additional expenditure upon some ‘new
service’ not contemplated in the Budget for that year, the
President causes to be laid before both the Houses of
Parliament another statement showing the estimated
amount of that expenditure.
29. If any money has been spent on any service
during a financial year in excess of the amount granted
for the service for that year, the President causes to be
presented to Lok Sabha a demand for such excess. All
cases involving such excesses are brought to the notice
of Parliament by the Comptroller and Auditor General
through a report on the Appropriation Accounts. The
excesses are then examined by the Public Accounts
Committee which makes recommendations regarding
their regularisation in its report to the House.
30. The Supplementary Demands for Grants are
presented to and passed by the House before the end of
the financial year while the demands for excess grants
are made after the expenditure has actually been incurred
and after the financial year to which it relates has expired.
31. Copies of the Books of Demands for
Supplementary or Excess Grants, received from the
Ministry of Finance, are made available to members from
the Publications Counter after the presentation of such
demands.

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Procedure for Discussion

32. Supplementary and Excess Grants are regulated

by the same procedure as is applicable in the case of
demands for grants of the main Budget subject to such
adaptations, whether by way of modification, addition or
omission, as the Speaker deems necessary or expedient.

Scope of discussion on Supplementary/Excess

Grants

33. The discussion on the Supplementary Demands

for Grants is confined to the items constituting the same
and no discussion can be raised on the original grants
nor on the policy underlying them. In respect of schemes
already sanctioned in the main Budget, no discussion on
any question of principle or policy is allowed. As regards
demands for which no sanction has been obtained, the
question of policy has to be confined to the items of
expenditure on which the vote of the House is sought.
General grievances cannot be ventilated during
discussion on a Supplementary Grant. Member can only
point out whether the Supplementary Demand is
necessary or not.

34. During discussion on Excess Demands for

Grants members can point out how money has been
spent unnecessarily or that it ought not to have been
spent; beyond this there is no scope for general
discussion or for ventilation of grievances.

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Cut Motions to Supplementary/Excess Demands for
Grants

35. The cut motions to Supplementary or Excess

Demands for Grants must relate to the subject matter of
the Supplementary or Excess Demands. Cut motions
which are extraneous to the subject matter of such
demands are out of order.

Appropriation Bill

36. After the demands for grants have been passed

by the House, a Bill to provide for the appropriation out of
the Consolidated Fund of India of all moneys required to
meet the grants and the expenditure charged on the
Consolidated Fund of India is introduced, considered and
passed. The introduction of such Bill cannot be opposed.
The scope of discussion is limited to matters of public
importance or administrative policy implied in the grants
covered by the Bill and which have not already been
raised during the discussion on demands for grants. The
Speaker may require members desiring to take part in
the discussion to give advance intimation of the specific
points they intend to raise and may withhold permission
for raising such of the points as in the opinion of the
Speaker appear to be repetition of the matters discussed
on a demand for grant. Such advance intimation must be

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given before 1000 hours on the day the Appropriation
Bill is to be taken into consideration. No action is taken
on intimations received after 1000 hours.

37. No amendment can be proposed to an

Appropriation Bill which will have the effect of varying the
amount or altering the destination of any grant so made
or of varying the amount of any expenditure charged on
the Consolidated Fund of India and the decision of the
Speaker as to whether such an amendment is admissible
is final. An amendment to an Appropriation Bill for
omission of a demand voted by the House is out of order.

38. In other respects, the procedure in respect of

an Appropriation Bill is the same as in respect of other
Money Bills.

Finance Bill

39. “Finance Bill” means a Bill ordinarily introduced

every year to give effect to the financial proposals of the
Government of India for the next following financial year
and includes a Bill to give effect to supplementary financial
proposals for any period.

40. The Finance Bill is introduced immediately after

the presentation of the Budget. The introduction of the
Bill cannot be opposed. The Appropriation Bills and
Finance Bills may be introduced without prior circulation
of copies to members.

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 The Finance Bill usually contains a declaration under
the Provisional Collection of Taxes Act, 1931, by which
the declared provisions of the Bill relating to imposition
or increase in duties of customs or excise come into force
immediately on the expiry of the day on which the Bill is
introduced. In view of such provisions and the provision
of Act of 1931, the Finance Bill has to be passed by
Parliament and assented to by the President before the
expiry of the seventy-fifth day after the day on which it
was introduced.

41. As the Finance Bill contains taxation proposals,

it is considered and passed by the Lok Sabha only after
the Demands for Grants have been voted and the total
expenditure is known. The scope of discussion on the
Finance Bill is vast and members can discuss any action
of the Government of India. The whole administration
comes under review.

42. The procedure in respect of Finance Bill is the

same as in the case of other Money Bills.

Budgets of Union territories and States under

President’s Rule

43. Budgets of Union territories and States under

President’s Rule are also presented to Lok Sabha. The
procedure with regard to the Budget of the Union

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Government is followed in such cases with such variations
or modifications, as the Speaker may make.

[The procedure for presentation of the Budget in and

its passing by Lok Sabha is as laid down in
articles 112—117 of the Constitution of India,
Rules 204—221 and 331-E of the Rules of
Procedure and Conduct of Business in Lok Sabha
and Direction 19-B of Directions by the Speaker.]

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THE BUDGETARY PROCESS

LOK SABHA SECRETARIAT

NEW DELHI
T.O. No. 91

© 2019 BY LOK SABHA SECRETARIAT

Published under Rule 382 of the Rules of Procedure and

Conduct of Business in Lok Sabha (Sixteenth Edition)
and printed by Jainco Art India, New Delhi-110 005.
 PREFACE
This Abstract is part of the Parliamentary Procedure
Abstracts Series and describes the procedure regarding
presentation of the Budget and its passing by Lok Sabha.
It is based on the Rules of Procedure and Conduct of
Business in Lok Sabha, the Directions issued by the
Speaker under the Rules of Procedure and the decisions/
rulings given by the Chair from time-to-time. It is intended
to serve as a handy guide for ready reference.

The information contained in this Abstract is,

however, not exhaustive. It will, therefore, be prudent
to refer to and rely on the original sources for full
information.

NEW DELHI Secretary General