State Budget Explorer

Granted when the amount authorised for a particular service for the current financial year is found to be insufficient. This usually occurs when new services are initiated or the scope of existing services expands during the year, requiring additional funds.

Granted when a need arises during the current financial year for additional expenditure upon some new service not contemplated in the annual financial statement for that year. This covers completely new initiatives not budgeted for.

Granted when money has been spent on any service during a financial year in excess of the amount granted for that service in the budget for that year. These are presented to the Assembly for approval after the financial year has ended and after the accounts have been audited by the CAG. The Public Accounts Committee (PAC) usually examines such excess expenditures.

Granted for meeting an unexpected demand for funds concerning a service for which the magnitude or the indefinite character of the service makes it impossible to state with the details ordinarily given in a budget. It is an ad hoc grant made when funds are required urgently, without detailed estimates. Examples include natural calamities or war.

Granted for a special purpose and forms no part of the current service of any financial year. These are usually for very unique and non-recurring expenses.

Granted when funds are required for a new service, but money can be reappropriated from other existing services for that new service. A demand for a token sum (e.g., Re. 1) is voted to allow the introduction of the new service and reappropriation of funds. No actual expenditure is approved through this, just a formality to enable reappropriation.

• Financial Autonomy of States: Often constrained by central transfers, CSS, and national policies (e.g., GST).
• Effectiveness of Legislative Scrutiny: Limitations in time, expertise, and political will hinder oversight; "guillotine" process.
• Role of Legislative Council: Negligible role in financial matters raises questions about its utility.
• Fiscal Responsibility & Budget Management (FRBM) Acts: States' own FRBM Acts (mirroring central act) ensure fiscal discipline.

• Increased Dependence on Centre: States increasingly rely on central transfers despite constitutional provisions for own revenue.
• GST Impact: Subsumed state indirect taxes, affecting independent revenue generation but with compensation.
• Rise of Charged Expenditure: Reduces scope for legislative vote, though typically a minor proportion.
• Shift to Outcome-Based Budgeting: Some states experimenting to link expenditure with tangible results.

• State Fiscal Health: Crucial for managing debt, deficits, and capital expenditure; post-COVID stress.
• Implementation of Central Schemes: Dictates state priorities and reduces spending flexibility.
• Resource Mobilization: Reflects efforts to attract investment and manage public sector enterprises.
• Accountability and Transparency: Budget process, coupled with CAG audits, ensures governmental accountability.

• State Budgets FY 2023-24 & 2024-25: Focus on capital expenditure, infrastructure, welfare, while managing debt and GST compensation cessation.
• Odisha's Fiscal Prudence: Often cited for lower debt-to-GSDP ratio, reflecting effective budgetary processes.
• Fiscal Stimulus during COVID-19: States incorporated significant stimulus packages and increased health expenditure, highlighting fiscal stress.
• CAG Reports on State Finances: Annually highlight financial mismanagement, excess expenditures, crucial for oversight.

• Recommendations of Finance Commissions: Influence state budgetary allocations and fiscal planning.
• State-level FRBM Acts: Aim to bring transparency and accountability, setting deficit targets.
• Green Budgeting/Gender Budgeting: Some states adopting these for environmental sustainability or women's empowerment.

Critically examine the role of the Comptroller and Auditor General (CAG) of India in ensuring accountability of the government.

Direction:

This question directly links to the state budgetary process. The CAG audits state government accounts and expenditures, including excess grants (Art 205). CAG reports are crucial for legislative scrutiny of state budgets and financial discipline. An answer should discuss CAG's constitutional role (Art 148-151), audit functions, and how its reports influence legislative oversight and parliamentary (or assembly) committees like PAC.

With reference to the financial procedure in a State Legislature, which of the following statements is/are correct?

1. No demand for a grant can be made except on the recommendation of the Governor.
2. The Legislative Council has the power to vote on demands for grants.
3. Money charged upon the Consolidated Fund of the State is not submitted to the vote of the Legislative Assembly.

Select the correct answer using the code given below:

• (a) 1 only
• (b) 1 and 2 only
• (c) 1 and 3 only
• (d) 1, 2 and 3

Answer: (c)

Explanation: Statement 1 is correct (Art 203(3)). Statement 2 is incorrect; the Legislative Council cannot vote on demands for grants (Art 203(2)). Statement 3 is correct (Art 202(3)).

Which of the following funds of a State does NOT require a law passed by the State Legislature for withdrawals?

• (a) Consolidated Fund of the State
• (b) Public Account of the State
• (c) Contingency Fund of the State
• (d) Both (a) and (c)

Answer: (b)

Explanation: Withdrawal from the Consolidated Fund requires an Appropriation Act (a law) (Art 204). The Contingency Fund is established by a law and initial corpus withdrawal from Consolidated Fund requires law, but operation by executive action, with subsequent recoupment requiring law. The Public Account can be operated by executive action without legislative appropriation (Art 266(2)).

"While the State Legislature plays a crucial role in approving the budget, the real control over state finances is often diluted by structural limitations and political realities." Discuss this statement in the context of the budgetary procedure in Indian states.

Key Points/Structure:

• Introduction: Briefly explain the constitutional scheme of state budget approval (Art 202-206) and the legislative control mechanisms.
• Crucial Role of Legislature: Elaborate on how the Legislative Assembly ensures accountability: general discussion, voting on demands, cut motions, passing Appropriation and Finance Bills. Mention the role of committees.
• Structural Limitations: Limited scope of scrutiny (time, guillotine), Charged Expenditure, Legislative Council's Weakness, Fiscal Federalism (dependence on central transfers, GST impact).
• Political Realities: Executive dominance, Party Discipline, Ad hocism, Governor's Role.
• Conclusion: Summarize challenges. Emphasize strengthening legislative committees, improving financial literacy, and enhancing fiscal autonomy for effective legislative control.

Examine the significance of the various types of grants (Supplementary, Additional, Excess, Vote of Credit, Exceptional) in ensuring flexibility and accountability in state financial management, highlighting the role of the Comptroller and Auditor General (CAG) in this process.

Key Points/Structure:

• Introduction: Briefly explain annual budget cycle and need for supplementary grants.
• Significance of Each Grant Type (Flexibility): Supplementary/Additional (unforeseen needs), Vote of Credit/Exceptional (emergency funds), Excess (addresses overspending).
• Accountability Mechanisms: All grants require legislative approval; Excess Grants crucial for retrospective approval.
• Role of CAG: Pre-audit (indirect, informs scrutiny), Post-audit (direct & critical, audits all expenditures), Public Accounts Committee (PAC) examines CAG reports on excess expenditures.
• Conclusion: Grants offer flexibility; their effective scrutiny by legislature, supported by CAG's auditing, is paramount for accountability.