Article 112- Annual Financial Statement

Introduction


  • The Indian Constitution, often hailed as the world’s lengthiest written constitution, is a masterpiece of legislative craftsmanship.
  • It lays down the fundamental principles that govern the nation’s functioning. Among its various provisions, Article 112 stands out as a crucial pillar that upholds the financial stability and accountability of the Indian government.
  • In this blog, we will delve into the intricacies of Article 112 and its significance in shaping the country’s fiscal policies.

Understanding Article 112


  • Article 112 of the Indian Constitution pertains to the presentation of the Union Budget.
  • It states that the President of India shall, at the commencement of every financial year, lay before Parliament a statement of estimated receipts and expenditure of the government for that year, which is commonly referred to as the Union Budget.
  • This constitutional provision ensures transparency and accountability in the government’s financial operations.

Key Components of Article 112


Annual Financial Statement:

  • Article 112 requires the President of India to lay before Parliament a statement of estimated receipts and expenditure of the Government of India for the ensuing financial year.
  • This statement comprises the revenue and capital accounts, detailing the government’s income and expenditure.

Classification of Expenditure:

  • The article distinguishes between two types of expenditure: revenue expenditure and capital expenditure.
  • Revenue expenditure is the day-to-day operational expenses, while capital expenditure is for investments in assets like infrastructure and development projects.

Consolidation of Accounts:

  • Article 112 mandates the consolidation of the Union budget with the budgets of the states and Union territories, ensuring a holistic view of India’s financial health.

Separate Statements for Contingency Fund:

  • It requires the presentation of separate statements for the Contingency Fund of India, which is a reserve fund to meet unforeseen and emergency expenses, and the Public Account, which holds funds of various government schemes.

Form of the Budget:

  • The budget can be presented in the form that the President deems fit. Traditionally, it is presented in three parts: the Consolidated Fund of India, the Contingency Fund of India, and the Public Account.

Significance of Article 112


Transparency:

  • Article 112 ensures transparency in the government’s financial operations by making it mandatory to present a detailed account of income and expenditure.
  • This transparency is essential for citizens to understand how their tax rupees are being utilized.

Parliamentary Oversight:

  • The budget presented under Article 112 is subject to parliamentary scrutiny and debate.
  • This ensures that the government’s fiscal policies and allocations are subject to the will and wisdom of the elected representatives.

Resource Allocation:

  • The Union Budget plays a pivotal role in allocating resources for various government programs and schemes.
  • It reflects the government’s priorities and its commitment to sectors such as healthcare, education, defense, and infrastructure.

Economic Planning:

  • It provides a framework for economic planning and development by allocating funds to key sectors, fostering economic growth, and addressing social and developmental challenges.

Fiscal Discipline:

  • Article 112 acts as a check on government spending. It promotes fiscal discipline by requiring the government to adhere to a budgetary framework, preventing extravagance or misuse of public funds.

Conclusion


  • Article 112 of the Indian Constitution is not merely a legal provision; it is the cornerstone of India’s financial management.
  • It encapsulates the principles of fiscal responsibility, transparency, and accountability.
  • Through the annual budget, the government outlines its vision for the nation’s economic development and social progress.
  • It is a testament to the framers of the Indian Constitution that they recognized the pivotal role of financial prudence in nation-building.
  • In essence, Article 112 is not just a legal requirement; it is the financial heartbeat of the Indian democracy, ensuring that the government serves the best interests of its people.

The document presented in the Parliament as per the mandate of Article 112 of the Constitution of India is the Annual Financial Statement. It is a statement of the estimated receipts and expenditure of the Government of India for the next financial year. The statement is presented by the Finance Minister in the Parliament in the month of February or March.

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