Supplementary Demands For Grants

In News

• The Union government sought approval from Parliament for the second batch of Supplementary Demands for Grants worth ? 2.7 lakh crore for the financial year 2022- 23. 

Demand for Grants

• Article 113 of the Constitution requires that any proposal or estimate seeking withdrawal of money from the Consolidated Fund of India should be presented to the Lok Sabha in the form of a demand for grants.
• Any withdrawal or disbursement from the Consolidated Fund of India can only be done by passing a bill in the Lok Sabha, the house of people.
• Every ministry prepares a demand for grants for the expenditure to be incurred in the next financial year. These demands are collectively presented in the Lok Sabha as part of the Union Budget.
• The demand for grants include both charged and voted expenditure. Charged expenditures are considered liabilities of the government of India such as payment of interest and are not put to vote in the Lok Sabha.
• The other category of expenditure is voted expenditure that includes revenue and capital expenditure to be incurred on a government scheme in the next financial year. Usually, there is a demand for grant for each ministry, but large ministries like Finance and Defence have more than one demand for grants.

Demand for Grants: How is it prepared?

• Each demand for grant is prepared in two ways:
  • First, it clearly distinguishes the charged expenditure and the voted expenditure
  • It also classifies expenditure as capital expenditure and revenue expenditure
  • While capital expenditure results in the creation of some kind of assets for the government, revenue expenditures are operational in nature.

How Demand for Grants are Presented?

• Under Article 113, the Lok Sabha has the power to give or refuse its assent to a demand for grants or it can reduce the amount specified in the demand.
• Article 113 prescribes that no demand for grants can be presented in the Lok Sabha without the President of India’s prior approval.
• Under Articles 117 and 274 of the Indian Constitution, a Presidential recommendation is also required for tabling a Money Bill in the Lok Sabha. The Finance Bill, accompanying the annual financial statement which is called the Union Budget, also carries a certificate issued by the President.
• Article 115 contains provisions related to supplementary, additional or excess grants.
• Article 116 of the Constitution pertains to Votes on account, Votes of credit and exceptional grants.

Types of Grants 

• Additional Grant: It is granted when a need has arisen during the current financial year for additional expenditure upon some new service not contemplated in the budget for that year.
• Excess Grant: It is granted when money spent on the service during a financial year is in excess of the amount granted for that service in the budget for that year.
  • It is voted by the Lok Sabha after the financial year.
  • Before the demands for excess grants are submitted to the Lok Sabha for voting, they must be approved by the Public Accounts Committee of Parliament.
• Supplementary Grant: It is granted when the amount authorised by the Parliament for a particular service for the current financial year is found to be insufficient for that year.
  • The Comptroller and Auditor General of India bring such excesses to the notice of the Parliament.
  • The Public Accounts Committee examines these excesses and gives recommendations to the Parliament.
• Vote of Credit: It is granted for meeting an unexpected  exceptional demand upon the resources of India. the demand cannot be stated with the details ordinarily given in a budget. Hence, it is like a blank cheque given to the Executive by the Lok Sabha.
• Exceptional Grant: It is granted for a special purpose and forms no part of the current service of any financial year.
• Token Grant: It is granted when funds to meet the proposed expenditure on a new service can be made available by reappropriation.
  • A demand for the grant of a token sum (of Re 1) is submitted to the vote of the Lok Sabha and if assented, funds are made available.
  • Reappropriation involves transfer of funds from one head to another.
  • It does not involve any additional expenditure.

Source: TH