Monday, February 28, 2011

The government is accountable to the Parliament in its financial management. With the constitutional supremacy of the bicameral Parliament, especially of the, every single financial act is processed and passed by the representatives of the people. However, proposals for the formulation of budget levying taxes, determining government accounts and expenditures, are prepared by the Government's Ministries and consolidated in the Ministry of Finance.

The Union Budget presented to the Parliament consists of the General Budget and the Railway Budget, the Demands for Grant, the Vote on Account, the Supplementary Demands for Grant, the Appropriation Bill and the Finance Bill. Annual Financial Statement is the main Budget document. It details the receipts and payments under which Government accounts are kept, namely - Consolidated Fund, Contingency Fund, and Public Account.

All revenues received by the Government, loans raised, and receipts from recoveries, form the Consolidated Fund. All Government expenditures are acquired from the Consolidated Fund, and no amount can be withdrawn from the Fund without authorisation from the Parliament.

The Contingency Fund on the other hand is placed at the disposal of the President of India , for occasions that may arise when the Government may have to incur imperative and unexpected expenditure. Parliamentary approval for such expenditure and its reimbursement from the Consolidated Fund is subsequently obtained, and the amount spent is recouped to the Contingency Fund.

Besides the normal Government expenditures that relate to the Consolidated Fund, certain other transactions enter the Government accounts in respect of which, the Government acts more like a banker, overlooking transactions relating to provident funds, small savings collections, other deposits, etc. The money thus received is deposited in the Public Account, and the related distribution is also made there from. Thus, funds in the Public Account do not belong to the Government, and have to be paid back to the persons and authorities depositing them.

Immediately after the Annual Statement, the Finance Bill is introduced in the Lok Sabha by the Finance Minister. The Finance Bill is presented in fulfillment of the requirement under Article 110 (1) (a) of the Constitution, detailing the imposition, abolition, remission, alteration or regulation of taxes proposed in the Budget.

After passing of the Appropriation Bill, the Finance Bill is considered and passed by the Parliament as a Money Bill.

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