Demand for Grants definition: Wondering what demand for grants is all about? It is a well established principle among modern democracies that no money can be withdrawn from the exchequer of the country without the authority of law.
Demand for Grants definition: Wondering what demand for grants is all about? It is a well established principle among modern democracies that no money can be withdrawn from the exchequer of the country without the authority of law. Put simply, this means that 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.
What are Grants in Parliament?
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.
Demand for Grants are proposed by Ministry
Therefore, 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.
Demand for Grants: What does it include?
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 it is 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
In addition to giving the break-up of charged and voted expenditure and revenue and capital expenditure, a demand for grants also gives a gross estimate of the total expenditure to be incurred.
A demand for grants also gives the following:
- Break-up of expenditure under different heads of account and
- Lists out the recoveries to be made from the scheme.
- The net amount of expenditure after deducting the recoveries is also shown.
Note that each demand for grants also includes:
- The total provisions required for a service or scheme, basically both revenue and capital expenditure
- Any assistance to be given to states and UTs
- Loans and advances related to that service or scheme
Demand for Grants: Powers of Lok Sabha
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.
How Demand for Grants are Presented
Article 113 (iii) 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.