The financial year in India commences from 1st April every Year. During a financial year, the government is expected to make expenditures on different heads such as defense, education, health, agriculture, environment etc. So it has to raise income to meet these expenditures.

Before the start of each financial year, the government of India seeks the permission/approval of the Parliament to raise income and to make expenditures in the coming financial year. This is in line with the democratic principle of no taxation or expenditure without the authority of the legislature. It is only the executive which can make demands before the legislature for taxation and expenditure.

A detailed financial procedure has been started in the Article 112 of the constitution of India. The budget, introduced by the Finance Minister, shows the estimated receipts and expenditure for the coming financial year.

Article 112 of the constitution of India provides that at the beginning of the every financial year, the President shall, in respect of the 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. This statement is called the Annual Financial Statement which is popularly known as the budget.


The budget consists of two parts, namely, the Railway Budget and the General Budget. The Railway Budget relates to the Railway Finance while the General Budget deals with the overall financial position of the government of India excluding the Railways. A separate Railway Budget was presented for the first time in 1925.

The Railway Budget is presented generally in the third week of February while the General Budget is normally presented on the last working day of February at 5 P.M.The RailwayBudget is presented by the Railway Minister while the General Budget is presented by the Finance Minister of India.

While delivering the budget speech, in the Lok Sabha, the Finance Minister lays on the table the Annual Financial Statement. A copy of this statement is also laid on the table of the Rajya Sabha. The Budget statement shows the receipts and payments of the government of India under three heads, namely, (i) Consolidated Fund; (ii) Contingency Fund, and (iii) Public Account.

Consolidated Fund of India


All revenues received by the government of India except certain taxes which are transferred to states, all loans raised by the government, and all money received by the government in repayment of loans are credited to the Consolidated Fund of India.

Under Article 112 (3), the salary and allowances of the President of India, the presiding officers of both Houses of the Parliament, the Judges of the Supreme Court and the High Courts of India, the Comptroller and Auditor General of India, and certain other expenditures are charged upon the Consolidated Fund of India. These items, though placed before the Parliament, are not votable.

However, other items of expenditure, which are votable, are presented to the Lok Sabha in the form of demands for grants. The House has the power to either grant or reduce or reject these demands, but it cannot increase the demands.

The Contingency Fund of India


Under the Contingency Fund of India Act, 1950, the Contingency Fund of India has been constituted. It is an impress placed at the disposal of the President of India to meet urgent unforeseen expenditure pending authorization by the Parliament.

Public Account of India

Besides the normal receipts and expenditure of the government of India which pertain to the Consolidated Fund of India, certain other transactions enter the government account. In respect of these transactions the government acts as a banker.

They induce transactions relating to Provident Funds, Small Savings, Collections, other deposits etc. The money, thus received, is kept in the Public Account of India. This covers the money received by an officer or court in connection with affairs of the union. The related disbursements are also made from the account.