Actual Article
Article 112: Annual financial statement
- Presentation of Annual Financial Statement:
- The President shall in respect of every financial year cause to be laid before both 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.”
- Components of the Annual Financial Statement:
- 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.
- Expenditure Charged on the Consolidated Fund of India:
- The following expenditure shall be expenditure charged on the Consolidated Fund of India:
- The emoluments and allowances of the President and other expenditures relating to his office;
- 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;
- Debt charges for which the Government of India is liable;
- Expenditure relating to the salaries, allowances, and pensions of the Judges of the Supreme Court;
- Pensions payable to or in respect of Judges of the High Courts;
- The salary, allowances, and pension payable to or in respect of the Comptroller and Auditor General of India;
- Any sums required to satisfy any judgment, decree, or award of any court or arbitral tribunal;
- Any other expenditure declared by this Constitution or by Parliament by law to be so charged.
- Discussion and Voting:
- So much of the said estimates as relates to expenditure charged upon the Consolidated Fund of India shall not be submitted to the vote of Parliament, but nothing in this clause shall be construed as preventing the discussion in either House of Parliament of any of those estimates.
UPSC Notes for Article 112
Explanation:
- Annual Financial Statement:
- The President is required to present an annual financial statement, also known as the budget, before both Houses of Parliament every financial year.
- This statement includes estimates of receipts and expenditures for the upcoming financial year.
- Components:
- The budget must clearly distinguish between:
- Expenditure charged on the Consolidated Fund of India (not subject to vote).
- Other expenditure from the Consolidated Fund (subject to vote).
- Expenditure Charged on Consolidated Fund:
- Certain expenditures are charged on the Consolidated Fund of India, meaning they are not subject to parliamentary vote but can be discussed.
- These include salaries and allowances of high constitutional functionaries, debt charges, judicial salaries, pensions, and any other expenditure declared by the Constitution or Parliament.
- Voting and Discussion:
- While expenditures charged on the Consolidated Fund of India are not voted on, they can still be discussed in Parliament.
- Other expenditures proposed in the budget are subject to parliamentary approval and vote.
Key Points:
- Budget Presentation: The annual financial statement is a critical document that outlines the government’s financial plan and priorities for the upcoming year.
- Distinction in Expenditure: Differentiates between expenditures that require parliamentary approval and those that are automatically charged to the Consolidated Fund of India.
- Parliamentary Oversight: Ensures that Parliament can discuss all expenditures, even those not subject to vote, maintaining transparency and accountability.
Important Cases and Commissions Related to Article 112
Cases:
- Subramanian Swamy vs. Union of India (2016): Discussed the scope of financial bills and the necessity of transparency in budgetary processes, reinforcing the principles outlined in Article 112.
- Raja Ram Pal vs. Hon’ble Speaker, Lok Sabha (2007): Touched upon parliamentary privileges and procedures, indirectly highlighting the importance of budget discussions in maintaining legislative oversight.
Commissions:
- Sarkaria Commission: Emphasized the importance of financial accountability and transparency in Centre-State financial relations.
- National Commission to Review the Working of the Constitution (NCRWC) (2002): Recommended reforms to enhance the budgetary process and ensure effective legislative scrutiny of government finances.
Previous Year Prelims Questions Related to Article 112
- (UPSC Prelims 2017) The annual financial statement is presented before both Houses of Parliament by:
- A. The Prime Minister
- B. The Finance Minister
- C. The President
- D. The Speaker of the Lok Sabha Correct Answer: C. The President
- (UPSC Prelims 2018) Which of the following expenditures is charged on the Consolidated Fund of India?
- A. Salaries of the Prime Minister and Ministers
- B. Pensions of retired Judges of the High Courts
- C. Salaries and allowances of the Members of Parliament
- D. Administrative expenses of the Lok Sabha Secretariat Correct Answer: B. Pensions of retired Judges of the High Courts
Previous Year Mains Questions Related to Article 112
- Mains 2016: “Discuss the significance of the annual financial statement in the financial administration of India. How does Article 112 ensure parliamentary control over public expenditure?”
- Mains 2019: “Analyze the distinction between expenditure charged on the Consolidated Fund of India and other expenditure. How does this distinction impact parliamentary scrutiny and control over government finances?”
Additional Insights:
- Financial Accountability: The annual financial statement is a crucial instrument for ensuring financial accountability and transparency in government operations.
- Constitutional Safeguards: The differentiation between charged expenditures and those subject to vote ensures that essential constitutional offices and obligations are financially secure while allowing Parliament to scrutinize and control other government expenditures.
- Transparency and Discussion: Allowing discussion on all expenditures, even those not subject to vote, ensures that Parliament can debate and question the government’s financial decisions, enhancing democratic accountability.
Understanding Article 112 is crucial for UPSC aspirants as it outlines the process for presenting and discussing the annual financial statement, ensuring effective legislative oversight of government finances. This knowledge is essential for both preliminary and main examinations, offering a comprehensive understanding of the constitutional provisions that govern financial administration within India’s parliamentary system.