India National Budget: India's public finance system follows the British pattern.
The Indian constitution establishes the supremacy of the
bicameral Parliament, specifically the
Lok Sabha (House of the People), in financial matters. No
central government taxes are levied and no
government expenditure from
public funds disbursed without an
act of Parliament, which also scrutinizes and audits all government accounts to ensure that expenditures are legally authorized and properly spent. Proposals for taxation or expenditures, however, may be initiated only within the Council of Ministers--specifically by the
minister of finance. The
minister of finance is required to submit to Parliament, usually on the last day of February, a financial statement detailing the estimated receipts and expenditures of the central government for the forthcoming fiscal year and a financial review of the current fiscal year.
The
Lok Sabha has one month to review and modify the
government's budget proposals. If by April 1, the beginning of the fiscal year, the
parliamentary discussion of the
India National Budget has not been completed, the
India National Budget as proposed by the
minister of finance goes into effect, subject to retroactive modifications after the parliamentary review. On completion of its
India National Budget discussions, the
Lok Sabha passes the annual appropriations act, authorizing the executive to spend money, and the finance act, authorizing the executive to impose and collect taxes. Supplemental requests for funds are presented during the course of the fiscal year to cover emergencies, such as war or other catastrophes. The bills are forwarded to the
Rajya Sabha (Council of States--
the upper house of Parliament) for comment. The
Lok Sabha, however, is not bound by the comments, and the
Rajya Sabha cannot delay passage of
money bills. When signed by the president, the bills become law. The
Lok Sabha cannot increase the request for funds submitted by the executive, nor can it authorize new expenditures.
Taxes passed by Parliament may be retroactive.
