Part V - Parliament • Article

Article 112 Simplified: Annual financial statement

While we call it the 'Budget', Article 112 calls it the 'Annual Financial Statement.' Every year, the government must show the people's representatives exactly how much money they plan to earn (receipts) and how they plan to spend it (expenditure). This ensures that not a single rupee of public money is spent without your representatives knowing about it.

Official Text

(1) The President shall in respect of every financial year cause to be laid before both the 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''. (2) The estimates of expenditure embodied in 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, and shall distinguish expenditure on revenue account from other expenditure. (3) The following expenditure shall be expenditure charged on the Consolidated Fund of India— (a) the emoluments and allowances of the President and other expenditure relating to his office; (b) 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; (c) debt charges for which the Government of India is liable including interest, sinking fund charges and redemption charges, and other expenditure relating to the raising of loans and the service and redemption of debt; (d) (i) the salaries, allowances and pensions payable to or in respect of Judges of the Supreme Court; (ii) the pensions payable to or in respect of Judges of the Federal Court; (iii) the pensions payable to or in respect of Judges of any High Court which exercises jurisdiction in relation to any area included in the territory of India or which at any time before the commencement of this Constitution exercised jurisdiction in relation to any area included in [a Governor's Province of the Dominion of India]; (e) the salary, allowances and pension payable to or in respect of the Comptroller and Auditor-General of India; (f) any sums required to satisfy any judgment, decree or award of any court or arbitral tribunal; (g) any other expenditure declared by this Constitution or by Parliament by law to be so charged.

Simple Meaning

Explain Like Ten

Every year, the government must show its wallet to Parliament. They present a big report showing how much pocket money they expect to get and how they plan to spend it. This report is called the Budget!

Student Mode

Article 112 mandates the presentation of the 'Annual Financial Statement' (commonly called the Budget) before both Houses. The statement must separately show: (1) Revenue expenditure vs other expenditure; (2) Charged expenditure vs Votable expenditure. Charged expenditure (e.g., salaries of President, Judges, Speaker, debt service charges) is paid directly from the Consolidated Fund and is not voted on by Parliament (though it can be discussed). Votable expenditure is submitted to the Lok Sabha as Demands for Grants.

Example

Every February, the Finance Minister reads out the Budget in Parliament. This is their duty under Article 112 to be transparent about the nation's wallet.

Key Takeaway

Article 112 is the law that guarantees the government is transparent about every rupee it takes from you.

FAQs

Does the word 'Budget' appear in the Constitution?

No, the term 'Budget' is not used in the Constitution. Article 112 refers to it as the 'Annual Financial Statement'.

What is the difference between 'Charged' and 'Made from' the Consolidated Fund of India?

Charged expenditures (Article 112(3)) are guaranteed by the Constitution, meaning they are not put to a vote in Parliament to ensure stability of key offices (like judges or the President). Other expenditures must be voted on and approved annually.

Whose salaries are charged on the Consolidated Fund of India under Article 112?

The President, Chairman/Deputy Chairman of Rajya Sabha, Speaker/Deputy Speaker of Lok Sabha, Judges of the Supreme Court, and the Comptroller and Auditor-General (CAG).