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'Budget'—What it means.—The word, 'budget' is derived from the French word 'bougette',
which a small leather bag or wallet, and is reminiscent of the case in which Finance Ministers of the
United Kingdom used to carry their financial proposals for presentation to Parliament. The word, in
the sense in which it is used today, has, however, come to mean not the bag, but the document
which is contains—the Annual Financial Statement—which the Finance Minister presents to the
Legislature every year. 2
Annual Financial Statement.—Under Article 202 of the Constitution of India, a statement of
the estimated receipts and expenditure of the State for each financial year has to be laid before the
Legislature. This statement is known as the Annual Financial Statement and is commonly referred
to as the 'Budget'. THE BUDGETARY CYCLE
3[1]
Preparation of the budget.—(1) Every year, during the month of July, the Budget Wing of the
Finance Department issues a circular to all Heads of Departments and other Estimating Officers,
requesting them to take steps for the preparation and submission of the Departmental Estimates of
Revenue and Expenditure for the ensuing financial year. This heralds the start of preparation of the
budget, the first of the four budgetary stages. 3[2]
The Departmental Estimates start coming in September; the Non-plan Estimates are received
by the 15th of September, and the plan and Revenue Estimates by the 30th of November. The
Estimates are received direct by the Finance Department;copies of the Estimates are simultaneously made available to the Administrative Departments. The
Administrative Departments scrutinise the Estimates, and forward their comments to the Finance
Department within ten days of receipt of the Estimates. 3[3]
The Departmental Estimates are scrutinised by the Finance Department minutely, in the light
of the comments of the Administrative Departments, the figures of actual expenditure made
available by the Accountant General, and the information available with the Finance Department,
and modified, wherever necessary. The availability of funds is then reviewed, and new schemes
provided for to the extent practicable. The budget is ready for presentation to the Legislature by
about the end of February. 4
Passing of the budget.—The budget is presented to the Legislature by the Finance Minister
towards the end of February or the beginning of March. First, there is a general discussion on the
budget, at the end of which the Finance Minister may choose to reply. This is followed by detailed
consideration and voting of the Demands for Grants. A Demand for Grant is, in effect, a request
from the Executive to the Legislature for a specified sum of money to finance a particular service
during the year. The appropriation Bill is then introduced, discussed, and passed. The
Appropriation Act is the legal authority for the withdrawal of money from the Consolidated Fund of
the State, and it specifies the maximum amount that may be spent on each service during the
financial year. The passing of the budget marks the conclusion of the second stage of the budgetary
cycle. 5[1]
Execution of the budget.—(1) As soon as the budget is passed and the Appropriation Act is
published in the Government Gazette the Budget Wing of the Finance Department issues a circular
to all Heads of Departments and others, informing them that the publication of the Act in the
Gazette is sufficient authority for the payment and appropriation of the sums included therein. The
stage is now set for the execution of the budget. The work of distribution of the appropriation is
first taken up. The chief Controlling Officers distribute the appropriation among the officers next
below them (Sub-controlling Officers/Disbursing Officers). The Sub-controlling Officers divide the
appropriation among the Disbursing Officers. In certain cases, the Chief Controlling Officers/Sub-
controlling Officers may themselves retain the appropriation. 5[2]
In the course of the year, it has to be endured that the expenditure on a particular service,
say Medical, does not , at any time exceed the budget grant as a whole. For this purpose, the
Disbursing Officers are grouped under Sub-controlling Officers, who are at the intermediate level
directly below the Chief Controlling Officer as shown below: The Disbursing Officers are required to submit their accounts monthly to their superior controlling authority (Sub-controlling Officer I or Sub-controlling Officer II, as the case may be, vide diagram). Each Sub-controlling Officers consolidates his own accounts and the accounts rendered by the Disbursing Officers below .................. and submits the consolidated return to the Chief controlling Officer. The Chief controlling Officers, likewise, consolidates the ..................received from the Sub-controlling Officers and his own accounts, and thus gets a complete picture of the flow of expenditure against the budget grant as a whole.
5[3]
If, in the course of the year, expenditure in excess of the budget grant becomes unavoidable,
or expenditure has to be incurred on a 'new service', not contemplated in the budget, a
supplementary demand for grant is placed before the Legislature. On the contrary, if it is found that
the budget grant cannot be utilised in full, funds in excess of requirements are surrendered by the
Disbursing Officers, in the reverse order in which they received the funds, to the Chief Controlling
Officer, from whom the Finance Department will resume the final savings. 6
Review of the budget.—The appropriation Bill passed by the Legislature, after considering of
the budget, specifies the maximum amount that may be spent during the year on each service. The
actual spending is, however, done by the Executive. As such, after the close of the financial year,
the Legislature has to be satisfied that the budget grant has been spent by the Executive for the purposes for which it was intended and
in amounts intended. This is done by getting the accounts audited by an independent authority—the
Comptroller and Auditor General—and examining his report through a Legislature Committee—the
Public Accounts Committee/Committee on Public Undertakings. Review of the budget also
involves detailed examination of the Estimates presented to the Legislature, to see how best the
plans and programmes embodied therein could be executed efficiently and economically. This
work is entrusted to another Legislature Committee, specially constituted for the purpose—the
Estimates Committee. 
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