Annual Financial Statement / Budget

AFS/Budget

What is Annual Financial Statement (AFS)/Budget? How is it passed in the Parliament?

Annual Financial Statement (AFS) shows the estimated receipts and expenditures of the Government of India for that year. According to Article 112(1), the AFS is caused to be laid before both of the Houses of the Parliament by the President of India at the beginning of the each financial year.

According to Article 112(2), the estimates of expenditure embodied under the AFS shows separately -

a) the sums required to meet such expenditures described by the Indian Constitution as expenditures charged upon the Consolidated Fund of India (CFI); and

b) the sums required to meet such expenditures proposed to be made from the CFI.

According to Article 112(3), the sums required to meet such expenditure as expenditure charged upon the CFI, shall not be submitted to vote in Parliament. These are the non-votable expenditures under our Constitution.

After the grants are voted in the House of People / Lok Sabha / Lower House, the grants so made by the House and the expenditures charged upon the CFI, are incorporated in a bill, called Appropriation Bill. It provides the legal authority to withdraw money from the CFI following the Article 114.

Similarly, the taxing proposals of the Government are incorporated under another bill, known as Annual Finance Bill (AFB).

Both these bills being Money Bills, they can only be introduced in the House of People following the Article 109. After the bill is passed in the House of People, it shall be transmitted to the Council of States / Rajya Sabha / Upper House, who shall have the power only to make any recommendation to the House of People within fourteen (14) days from the receipt of the bill. It shall lie in the hands of the House of People to accept all or any or reject all recommendations made by the Council of States. In both the cases, the bill shall be deemed to have been passed as soon as the House of People decides to accept or reject the recommendations of the Council of States. Thereafter, the bill becomes an Act/ a law on receiving the assent of the President. This is how the AFS is passed in the Parliament.