The recent 2G-controversy and the related debate over the role of the PAC as opposed to the JPC also raises a broader Issue regarding the general scrutiny of government finances by Parliament. Oversight of the government’s finances involves the scrutiny of the government’s financial proposals and policies. The Indian Constitution vests this power with the Parliament by providing that (a) taxes cannot be imposed or collected without the authority of law, and (b) expenditure cannot be incurred without the authorisation of the legislature. The Indian Parliament exercises financial oversight over the government budget in two stages: (1) at the time of presentation of the annual budget, and (2) reviewing the government’s budget implementation efforts through the year. The Parliament scrutinises the annual budget (a) on the floor of the House, and (b) by the departmentally related standing committees. Scrutiny on the floor of the House The main scrutiny of the budget in the Lok Sabha takes place through: (a) General discussion and voting: The general discussion on the Budget is held on a day subsequent to the presentation of the Budget by the Finance Minister. Discussion at this stage is confined to the general examination of the Budget and policies of taxation expressed during the budget speech. (b) Discussion on Demand for Grants: The general discussion is followed by a discussion on the Demand for Grants of different ministries. A certain number of days or hours are allocated for the discussion of all the demands. However, not all the demands are discussed within the allotted number of days. The remaining undiscussed demands are disposed of by the Speaker after the agreement of the House. This process is known as the ‘Guillotine’. Figure 1 shows the number of Demands discussed and guillotined over the last five years. It shows that nearly 90% of the Demands are not discussed every year. 
Some Important Budget Documents Annual Financial Statement – Statement of the estimated receipts and expenditure of the government. Demand for Grants –Expenditure required to be voted by the Lok Sabha. A separate Demand is required to be presented for each department of the government. Supplementary Demand for Grants – Presented when (a) authorized amounts are insufficient, or (b) need for additional expenditure has arisen. Finance Bill – Details the imposition of taxes, the rates of taxation, and its regulation. Detailed Demand for Grants – Prepared on the basis of the Demand for Grants. These show further break-up of objects by expenditure, and also actual expenditure in the previous year. For more details see detailed note on Financial Oversight by Parliament here.
Because of the interest in the Women’s Reservation Bill and the Civil Liability for Nuclear Damage Bill, we’ve received a number of queries about the process by which a bill becomes an Act. We have a more comprehensive primer on the subject, but here’s the process in brief: •The ministry drafts a text of the proposed law, which is called a ‘Bill’, after calling comments from other ministries, and even from the public. The draft is revised to incorporate such inputs and is then vetted by the Law Ministry. It is then presented to the Cabinet for approval. •After the Cabinet approves the Bill, it is introduced in Parliament. In Parliament, it goes through three Readings in both Houses. • During the First Reading the Bill is introduced. The introduction of a Bill may be opposed and the matter may be put to a vote in the House. •After a Bill has been introduced, the Bill may be referred to the concerned Departmentally Related Standing Committee for examination. •The Standing Committee considers the broad objectives and the specific clauses of the Bill referred to it and may invite public comments on a Bill. It then submits its recommendations in the form of a report to Parliament. •In the Second Reading (Consideration), the Bill is scrutinized thoroughly. Each clause of the Bill is discussed and may be accepted, amended or rejected. The government, or any MP, may introduce amendments to the Bill. However, the government is not bound to accept the Committee’s recommendations. •During the Third Reading (Passing), the House votes on the redrafted Bill. •If the Bill is passed in one House, it is then sent to the other House, where it goes through the second and third readings. •After both Houses of Parliament pass a Bill, it is presented to the President for assent. He/She has the right to seek information and clarification about the Bill, and may return it to Parliament for reconsideration. (If both Houses pass the Bill again, the President has to assent) • After the President gives assent, the Bill is notified as an Act.
