In India, the Supplementary Budget (also called a Supplementary Demand for Grants) is a provision that allows the government to meet unforeseen expenses or to revise the budget during the financial year. It is primarily used to address any additional financial requirements not anticipated during the presentation of the Annual Budget.
The provisions related to the Supplementary Budget are outlined in the Constitution of India, particularly under the following sections:
1. Article 115 – Supplementary, Additional or Excess Grants
- Article 115 of the Constitution provides the legal framework for the Supplementary Budget.
- It allows the government to present a Supplementary Demand for Grants if it needs more funds than were originally allocated in the Annual Budget. The Union Budget includes provisions for expenditure, and if a shortfall occurs, a Supplementary Budget is presented to make adjustments.
- The President of India can, under this article, authorize the government to spend funds beyond the approved budget.
- The Parliament must approve these additional allocations through a vote before the funds can be released.
Key Provisions of Article 115:
- Supplementary Grants: This provision allows for additional funds to be sought during the year if the initial budget estimate for a particular expenditure is insufficient. These funds are presented as the Supplementary Demand for Grants.
- Additional Grants: If the grants for a particular scheme or department are inadequate due to unforeseen circumstances, additional grants can be requested.
- Excess Grants: In cases where the funds spent by the government exceed the budgeted amount, it can request approval for excess grants.
2. Article 116 – Vote on Account and Vote on Credit
- Article 116 allows the government to seek Vote on Account or Vote on Credit from Parliament. The Vote on Account is a provision that allows the government to draw money for essential functions when there is insufficient time to pass the full budget.
- The Vote on Credit is a specific type of grant approval given when the government cannot predict the exact expenses and seeks approval to spend money for certain unforeseen purposes.
3. Role of the Parliament
- The Supplementary Budget requires the approval of the Lok Sabha (lower house) and the Rajya Sabha (upper house). However, the Lok Sabha has the final say on the issue of financial matters, including grants and supplementary demands.
- The Finance Minister presents the Supplementary Budget, and the Parliament discusses and votes on it.
- The Public Accounts Committee (PAC) may also scrutinize the Supplementary Budget to ensure that it is being used efficiently.
4. Procedure for Presenting the Supplementary Budget
- The government prepares the Supplementary Budget during the financial year, typically when there is a need to allocate additional funds due to unforeseen circumstances, such as natural disasters, economic stimulus, or other emergencies.
- The Finance Minister presents the Supplementary Demand for Grants in Parliament, detailing the need for additional funds.
- The Demands for Grants are examined by the Standing Committee or the Public Accounts Committee.
- After parliamentary approval, the government can draw the required funds.
5. Types of Demands
- Supplementary Demand for Grants: To meet additional requirements.
- Excess Demand: When the government has exceeded the allocated budget in some areas.
- Additional Demand for Grants: If there are new needs arising during the year that were not accounted for initially.
Conclusion:
The Supplementary Budget in India is an essential mechanism for ensuring that the government has enough financial flexibility to meet unforeseen or emergency expenditure needs during the fiscal year. The constitutional provisions (mainly Articles 115 and 116) ensure that such demands are adequately scrutinized and approved by Parliament before additional funds are released. This system maintains a check on the government’s financial spending while ensuring that essential functions are not disrupted.
