UPSC IAS exam preparation - Governance in India - Lecture 2

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Constitutional Provisions of Budget

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1.0 INTRODUCTION

The emergence of a welfare state has led to an increase in the scope of government activities. Governments today have to perform manifold functions from maintaining law and order, protecting their territories to implementation of plans for economic and social betterment. They have to provide for a variety of social services like education, health, employment and housing to the people. Therefore, Governments require adequate resources to discharge these functions effectively. 

The necessary funds are mobilised from the country's resources by way of taxes both direct and indirect, loans both long-term and short-term, to meet the Governmental expenditure. In India, the principal sources of revenue are customs and excise duties and income-tax on individuals and companies.

It is not as if the Government can tax, borrow and spend money the way it likes. Since there is a limit to the resources, the need for proper budgeting arises to allocate scarce resources to various governmental activities. Every item of expenditure has to be well thought out and total outlay worked out for a specific period. Prudent spending is essential for the stability of a Government and proper earnings are a pre-requisite to wise spending. Hence, planned expenditure and accurate foresight of earnings are sine-qua-non of sound governmental finance.

There are specific provisions in the Constitution of India which incorporate these tenets. For example, article 265 provides that 'no tax shall be levied or collected except by authority of law'; no expenditure can be incurred except with the authorisation of the Legislature (article 266); and President shall, in respect of every financial year, cause to be laid before Parliament, Annual Financial Statement (article 112). These provisions of our Constitution make the Government accountable to Parliament.

According to the Indian Constitution, the Prime Minister and the Council of Ministers are responsible to the Lok Sabha. While running a government, financial control is a very important aspect of overall control. Hence the Indian constitution contains provisions related to the income and expenditure of the government of India and how the Parliament will control it.

2.0 CONSTIUTIONAL PROVISIONS RELATING TO BUDGETARY PROCESS

Article 109 — Special procedure in respect of Money Bills

1. A Money Bill shall not be introduced in the Council of States.
2. After a Money Bill has been passed by the House of the People it shall be transmitted to the Council of States for its recommendations and the Council of States shall within a period of fourteen days from the date of its receipt of the Bill return the Bill to the House of the People with its recommendations and the House of the People may thereupon either accept or reject all or any of the recommendations of the Council of States.
3. If the House of the People accepts any of the recommendations of the Council of States, the Money Bill shall be deemed to have been passed by both Houses with the amendments recommended by the Council of States and accepted by the House of the People.
4. If the House of the People does not accept any of the recommendations of the Council of States, the Money Bill shall be deemed to have been passed by both Houses in the form in which it was passed by the House of the People without any of the amendments recommended by the Council of States.
5. If a Money Bill passed by the House of the People and transmitted to the Council of States for its recommendations is not returned to the House of the People within the said period of fourteen days, it shall be deemed to have been passed by both Houses at the expiration of the said period in the form in which it was passed by the House of the People.

Article 110 — Definition of "Money Bills''

• For the purposes of this Chapter, a Bill shall be deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters, namely —

1. the imposition, abolition, remission, alteration or regulation of any tax;
2. the regulation of the borrowing of money or the giving of any guarantee by the Government of India, or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;
3. the custody of the Consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund;
4. the appropriation of moneys out of the Consolidated Fund of India;
5. the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;
6. the receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money or the audit of the accounts of the Union or of a State; or
7. any matter incidental to any of the matters specified in sub-clauses (a) to (f).

• A Bill shall not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licences or fees for services rendered, or by reason that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes.
• If any question arises whether a Bill is a Money Bill or not, the decision of the Speaker of the House of the People thereon shall be final.
• There shall be endorsed on every Money Bill when it is transmitted to the Council of States under article 109, and when it is presented to the President for assent under article 111, the certificate of the Speaker of the House of the People signed by him that it is a Money Bill.

Article 111 — Assent to Bills When a Bill has been passed by the Houses of Parliament, it shall be presented to the President, and the President shall declare either that he assents to the Bill, or that he withholds assent therefrom:

Provided that the President may, as soon as possible after the presentation to him of a Bill for assent, return the Bill if it is not a Money Bill to the Houses with a message requesting that they will reconsider the Bill or any specified provisions thereof and, in particular, will consider the desirability of introducing any such amendments as he may recommend in his message, and when a Bill is so returned, the Houses shall reconsider the Bill accordingly, and if the Bill is passed again by the Houses with or without amendment and presented to the President for assent, the President shall not withhold assent therefrom.

Procedure in Financial Matters

Article 112 — Annual financial statement 

• The President shall in respect of every 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, in this Part referred to as the "annual financial statement''.
• The estimates of expenditure embodied in the annual financial statement shall show separately—

1. the sums required to meet expenditure described by this Constitution as expenditure charged upon the Consolidated Fund of India; and
2. the sums required to meet other expenditure proposed to be made from the Consolidated Fund of India, and shall distinguish expenditure on revenue account from other expenditure.

• The following expenditure shall be expenditure charged on the Consolidated Fund of India—

1. the emoluments and allowances of the President and other expenditure relating to his office;
2. the salaries and allowances of the Chairman and the Deputy Chairman of the Council of States and the Speaker and the Deputy Speaker of the House of the People;
3. debt charges for which the Government of India is liable including interest, sinking fund charges and redemption charges, and other expenditure relating to the raising of loans and the service and redemption of debt; (i)the salaries, allowances and pensions payable to or in respect of Judges of the Supreme Court; (ii)the pensions payable to or in respect of Judges of the Federal Court;(iii)the pensions payable to or in respect of Judges of any High Court which exercises jurisdiction in relation to any area included in the territory of India or which at any time before the commencement of this Constitution exercised jurisdiction in relation to any area included in Governor's Province of the Dominion of India;
4. the salary, allowances and pension payable to or in respect of the Comptroller and Auditor-General of India;
5. any sums required to satisfy any judgment, decree or award of any court or arbitral tribunal;
6. any other expenditure declared by this Constitution or by Parliament by law to be so charged.

Article 113 — Procedure in Parliament with respect to estimates

1. So much of the estimates as relates to expenditure charged upon the Consolidated Fund of India shall not be submitted to the vote of Parliament, but nothing in this clause shall be construed as preventing the discussion in either House of Parliament of any of those estimates.
2. So much of the said estimates as relates to other expenditure shall be submitted in the form of demands for grants to the House of the People, and the House of the People shall have power to assent, or to refuse to assent, to any demand, or to assent to any demand subject to a reduction of the amount specified therein.
3. No demand for a grant shall be made except on the recommendation of the President.

Article 114 — Appropriation Bills 

• As soon as may be after the grants under article 113 have been made by the House of the People, there shall be introduced a Bill to provide for the appropriation out of the Consolidated Fund of India of all moneys required to meet—

1. the grants so made by the House of the People; and
2. the expenditure charged on the Consolidated Fund of India but not exceeding in any case the amount shown in the statement previously laid before Parliament.

• No amendment shall be proposed to any such Bill in either House of Parliament which will have the effect of varying the amount or altering the destination of any grant so made or of varying the amount of any expenditure charged on the Consolidated Fund of India, and the decision of the person presiding as to whether an amendment is inadmissible under this clause shall be final.
• Subject to the provisions of articles 115 and 116, no money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law passed in accordance with the provisions of this article.

Article 115 — Supplementary, additional or excess grants

• The President shall—

1. if the amount authorised by any law made in accordance with the provisions of article 114 to be expended for a particular service for the current financial year is found to be insufficient for the purposes of that year or when a need has arisen during the current financial year for supplementary or additional expenditure upon some new service not contemplated in the annual financial statement for that year, or 
2. if any money has been spent on any service during a financial year in excess of the amount granted for that service and for that year, cause to be laid before both the Houses of Parliament another statement showing the estimated amount of that expenditure or cause to be presented to the House of the People a demand for such excess, as the case may be.

• The provisions of articles 112, 113 and 114 shall have effect in relation to any such statement and expenditure or demand and also to any law to be made authorising the appropriation of moneys out of the Consolidated Fund of India to meet such expenditure or the grant in respect of such demand as they have effect in relation to the annual financial statement and the expenditure mentioned therein or to a demand for a grant and the law to be made for the authorisation of appropriation of moneys out of the Consolidated Fund of India to meet such expenditure or grant.

Article 116 — Votes on account, votes of credit and exceptional grants

• Notwithstanding anything in the foregoing provisions of this Chapter, the House of the People shall have power—

1. to make any grant in advance in respect of the estimated expenditure for a part of any financial year pending the completion of the procedure prescribed in article 113 for the voting of such grant and the passing of the law in accordance with the provisions of article 114 in relation to that expenditure;
2. to make a grant for meeting an unexpected demand upon the resources of India when on account of the magnitude or the indefinite character of the service the demand cannot be stated with the details ordinarily given in an annual financial statement;

• The provisions of articles 113 and 114 shall have effect in relation to the making of any grant under clause (1) and to any law to be made under that clause as they have effect in relation to the making of a grant with regard to any expenditure mentioned in the annual financial statement and the law to be made for the authorisation of appropriation of moneys out of the Consolidated Fund of India to meet such expenditure.

Article 117 — Special provisions as to financial Bills

1. A Bill or amendment making provision for any of the matters specified in sub-clauses (a) to (f) of clause (1) of article 110 shall not be introduced or moved except on the recommendation of the President and a Bill making such provision shall not be introduced in the Council of States: Provided that no recommendation shall be required under this clause for the moving of an amendment making provision for the reduction or abolition of any tax.
2. A Bill or amendment shall not be deemed to make provision for any of the matters aforesaid by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licences or fees for services rendered, or by reason that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes.
3. A Bill which, if enacted and brought into operation, would involve expenditure from the Consolidated Fund of India shall not be passed by either House of Parliament unless the President has recommended to that House the consideration of the Bill.

3.0 Types of controls

1. Annual Financial Statement (AFS): Art. 112: Under this article, the President of India shall cause to be presented before both houses of Parliament, the estimated receipts and expenditure of the Government for that financial year. This statement is also known as the Annual Financial Statement. The Annual Financial Statement (AFS), the document as provided under Article 112, shows estimated receipts and expenditure of the Government of India (for example) for 2013-14 in relation to estimates for 2012-13 as also expenditure for the year 2011-12. The receipts and disbursements are shown under the three parts, in which Government Accounts are kept viz., (i) The Consolidated Fund, (ii) The Contingency Fund and (iii) The Public Account. Under the Constitution, Annual Financial Statement distinguishes expenditure on revenue account from other expenditures. Government Budget, therefore, comprises Revenue Budget and Capital Budget. The estimates of receipts and expenditure included in the Annual Financial Statement are for the expenditure net of refunds and recoveries, as will be reflected in the accounts.
2. Demands for Grants (DG): Art. 113: Article 113 of the Constitution provides that the estimates of expenditure from the Consolidated Fund of India included in the Annual Financial Statement shall not be 'votable'. Expenditure required to be voted by the Lok Sabha are submitted in the form of Demands for Grants. The Demands for Grants are presented to the Lok Sabha along with the Annual Financial Statement. Generally, one Demand for Grant is presented in respect of each Ministry or Department. 
3. Appropriation Bill: Art. 114(3): Under Article 114(3) of the Constitution, no amount can be withdrawn from the Consolidated Fund without the enactment of such a law by Parliament. After the Demands for Grants are voted by the Lok Sabha, Parliament's approval to the withdrawal from the Consolidated Fund of the amounts so voted and of the amount required to meet the expenditure charged on the Consolidated Fund is sought through the Appropriation Bill. The whole process beginning with the presentation of the Budget and ending with discussions and voting on the Demands for Grants requires sufficiently long time. The Lok Sabha is, therefore, empowered by the Constitution to make any grant in advance in respect of the estimated expenditure for a part of the financial year pending completion of procedure for the voting of the Demands. 
4. Finance Bill: Art. 110(a): At the time of presentation of the Annual Financial Statement before Parliament, a Finance Bill is also presented in fulfillment of the requirement of Article 110 (1)(a) of the Constitution, detailing the imposition, abolition, remission, alteration or regulation of taxes proposed in the Budget. A Finance Bill is a Money Bill as defined in Article 110 of the Constitution. It is accompanied by a Memorandum explaining the provisions included in it.

 

4.0 THE FRBM ACT, 2003

The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) was enacted by the Parliament to bring about strong financial discipline, improve macroeconomic management and the overall management of the public funds by moving towards a balanced budget. The main purpose was to eliminate revenue deficit of the country (building revenue surplus thereafter) and bring down the fiscal deficit to a manageable 3% of the GDP by March 2008. However, due to the 2007 global financial crisis (precipitated by the US housing market collapse), the deadlines for the implementation of the targets in the act was initially postponed and subsequently suspended in 2009. In 2011, given the process of ongoing recovery, Economic Advisory Council publicly advised the Government of India to reconsider reinstating the provisions of the FRBMA.

4.1 Documents mandated

The documents mandated by the FRBM Act, 2003 are

1. Memorandum Explaining the Provisions in the Finance Bill, 2013
2. Macro-economic framework for the relevant financial year
3. Fiscal Policy Strategy Statement for the financial year
4. Medium Term Fiscal Policy Statement

 5.0 OTHER DOCUMENTS

Other documents are in the nature of explanatory statements supporting the above documents.

 

In addition to the above, individual Departments/Ministries also prepare and present to Parliament their Detailed Demands for Grants, Outcome Budget, and their Annual Reports.

 

5.1 The Economic Survey

 

The Economic Survey, which highlights the economic trends in the country and facilitates a better appreciation of the mobilization of resources and their allocation in the Budget, is brought out by the Economic Division of Department of Economic Affairs, Ministry of Finance. The Economic Survey is presented to Parliament in advance of the Union Budget.

 

5.2 Result Framework Document

 

To monitor the performance management of various Ministries/Departments, Result Framework Document (RFD) system has been adopted by the Government. The RFD system is being implemented in the various Ministries/Departments in phased manner. RFD was implemented to 70 Ministries/Departments during 2012-13.

 

Performance Management in the Government is a new concept which determines the performance index based upon the agreed objectives, policies, programs and projects/schemes. To ensure the success in achieving the agreed objectives and implementing agreed policies, programs and projects, the RFD also includes a commitment for required resources and necessary operational autonomy.

6.0 CONSTITUTIONAL PROVISIONS REGARDING VARIOUS FUNDS

Article 264 — Interpretation In this Part, "Finance Commission" means a Finance Commission constituted under article 280.

Article 265 — Taxes not to be imposed save by authority of law No tax shall be levied or collected except by authority of law.

Article 266 — Consolidated Funds and public accounts of India and of the States

1. Subject to the provisions of article 267 and to the provisions of this Chapter with respect to the assignment of the whole or part of the net proceeds of certain taxes and duties to States, all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled  "the Consolidated Fund of India", and all revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled "the Consolidated Fund of the State".
2. All other public moneys received by or on behalf of the Government of India or the Government of a State shall be credited to the public account of India or the public account of the State, as the case may be.
3. No moneys out of the Consolidated Fund of India or the Consolidated Fund of a State shall be appropriated except in accordance with law and for the purposes and in the manner provided in this Constitution.

Article 267 — Contingency Fund

1. Parliament may by law establish a Contingency Fund in the nature of an imprest to be entitled "the Contingency Fund of India" into which shall be paid from time to time such sums as may be determined by such law, and the said Fund shall be placed at the disposal of the President to enable advances to be made by him out of such Fund for the purposes of meeting unforeseen expenditure pending authorisation of such expenditure by Parliament by law under article 115 or article 116.
2. The Legislature of a State may by law establish a Contingency Fund in the nature of an imprest to be entitled "the Contingency Fund of the State" into which shall be paid from time to time such sums as may be determined by such law, and the said Fund shall be placed at the disposal of the Governor of the State to enable advances to be made by him out of such Fund for the purposes of meeting unforeseen expenditure pending authorisation of such expenditure by the Legislature of the State by law under article 205 or article 206.

7.0 CONSOLIDATED FUND OF INDIA

The Constitution of India provides for a Consolidated Fund both for the centre and each of the states. All incomes received by the government are credited to this fund. These income comprise all revenues (i) tax or non-tax; (ii) all short-term loans like the Treasury Bills and ways and means, and (3) moneys received by the government in repayment of loans it had advanced previously.

Certain expenditures like the salaries and allowances of the President, the Chief Election Commissioner, the Comptroller and Auditor General of India, the Supreme Court are charged upon it. They have to be paid out of regardless of legislative sanction. They are described as non-votable items of expenditure.

All government expenditure is made from this fund, except for exceptional items met from the Contingency Fund or the Public Account.

No money can be withdrawn from this fund without the Parliament's approval. The time of withdrawal is at the time of Budget. Budget is a procedure to withdraw the generated money for useful purposes.

Non-votable Expenditure part of Consolidated Fund of India is not subjected or reduced under Cut Motions.

As per the provisions of Article 112, the following expenditure shall be charged on the Consolidated Fund of India

1. the emoluments and allowances of the President and other expenditure relating to his office;
2. the salaries and allowances of the Chairman and the Dy. Chairman of the Council of States and the Speaker and Dy. Speaker of the House of the People;
3. debt charges for which Government of India is liable including interests, sinking fund charges and redemption charges, and other expenditure relating to the raising of loans and the service and redemption of debt;
4. the salaries and pensions payable in respect to judges of the Supreme Court and High Courts;
5. the salary and pension payable to the Comptroller and Auditor General of India;
6. any sums required to satisfy any judgment, decree or award of any court or arbitral tribunal; and
7. any other expenditure declared by this Constitution or by Parliament by law so charged.

Demand For Grants: Lok Sabha takes up for discussion each ministry's expenditure proposals, and this is known as demand for grants - a process that takes several weeks and spills over to the next financial year.

The Appropriation Bill is intended to give authority to Government to incur expenditure from and out of the Consolidated Fund of India. The procedure for passing this Bill is the same as in the case of other money Bills. This bill is introduced only after the general discussion on Budget proposals and the completion of voting on grants.

Vote On Account: The demand for grants takes time, and the government cannot wait for Parliament to clear the expenditure proposals of ministries before meeting its expenses from April 1. The constitution, therefore, empowers Lok Sabha to grant a vote-on-account (Article 116) so that the government can continue with the necessary expenditure into the new fiscal, before the Budget proposals actually get passed after necessary discussions. The vote-on-account normally covers the expenditure requirement of the government for two months.

7.1 Contingency Fund of India — Article 267(1)

The Contingency Fund of India is in the nature of an imprest i.e. money maintained for a specific purpose. It has been placed at the disposal of President of India to make advances to meet urgent unforeseen expenditure (like disasters, natural calamities and business interruption), subject to pending authorization by the Parliament. If the Parliament approves such expenditure, it will transfer such equivalent amount from the Consolidated Fund to Contingency Fund so that the total corpus of the fund Rs.500 crores remains same. The fund is held by the finance secretary on behalf of the President of India and it can be operated by executive action.

Contingency Fund of each State Government is established under Article 267(2) of the Constitution - this is in the nature of an imprest placed at the disposal of the Governor to enable him/her to make advances to meet urgent unforeseen expenditure, pending authorization by the State Legislature. Approval of the Legislature for such expenditure and for withdrawal of an equivalent amount from the Consolidated Fund is subsequently obtained, whereupon the advances from the Contingency Fund are recouped to the Fund. The corpus varies across states and the quantum is decided by the State legislatures.

7.2 Public Account of India — Article 266(2)

All monies received by the Government which are not included in the Consolidated Fund of India are credited to the Public Account mentioned under Article 266 (2) of the Constitution. Therefore, Parliamentary authorization for payments from the Public Account is not required. Receipts under this account mainly flow from the sale of Savings Certificates, contributions into General Provident Fund and Public Provident Fund, Security Deposits and Earnest Money Deposits received by the Government. In respect of such receipts, the Government is acting as a Banker or Trustee and refunds the money after completion of the contract/event. Therefore these represent the liabilities of the Government of India. The six sub-divisions of the Public Account are:

1. Small Savings, Provident Funds etc.
2. Reserve Funds
3. Deposits and Advances
4. Suspense and Miscellaneous
5. Remittances
6. Cash Balance.

8.0 SIGNIFICANCE OF THE CONSOLIDATED FUND, THE CONTINGENCY FUND AND THE PUBLIC ACCOUNT

The existence of the Consolidated Fund of India (CFI) flows from Article 266 of the Constitution. All revenues received by Government, loans raised by it, and also its receipts from recoveries of loans granted by it form the Consolidated Fund. All expenditure of Government is incurred from the Consolidated Fund of India and no amount can be drawn from the Consolidated Fund without authorisation from Parliament.

Article 267 of the Constitution authorises the Contingency Fund of India which is an imprest placed at the disposal of the President of India to facilitate Government to meet urgent unforeseen expenditure pending authorization from Parliament. Parliamentary approval for such unforeseen expenditure is obtained, post-facto, and an equivalent amount is drawn from the Consolidated Fund to recoup the Contingency Fund. The corpus of the Contingency Fund as authorized by Parliament presently stands at Rs. 500 crores.

Moneys held by Government in Trust as in the case of Provident Funds, Small Savings collections, income of Government set apart for expenditure on specific objects like road development, primary education, Reserve/Special Funds etc. are kept in the Public Account. Public Account funds do not belong to Government and have to be finally paid back to the persons and authorities who deposited them. Parliamentary authorisation for such payments is, therefore, not required, except where amounts are withdrawn from the Consolidated Fund with the approval of Parliament and kept in the Public Account for expenditure on specific objects, in which case, the actual expenditure on the specific object is again submitted for vote of Parliament for drawal from the Public Account for incurring expenditure on the specific object.

9.0 FEATURES OF REVENUE AND CAPITAL BUDGETS

 

The distinguishing features of Revenue and Capital Budget are:

Revenue Budget consists of the revenue receipts of Government (tax revenues and other revenues) and the expenditure met from these revenues. Tax revenues comprise proceeds of taxes and other duties levied by the Union. The estimates of revenue receipts shown in the Annual Financial Statement take into account the effect of various taxation proposals made in the Finance Bill. Other receipts of Government mainly consist of interest and dividend on investments made by Government, fees, and other receipts for services rendered by Government. Revenue expenditure is for the normal running of Government departments and various services, interest payments on debt, subsidies, etc. Broadly, the expenditure which does not result in creation of assets for Government of India is treated as revenue expenditure. All grants given to State Governments/Union Territories and other parties are also treated as revenue expenditure even though some of the grants may be used for creation of assets.

Capital Budget consists capital receipts and capital payments. The capital receipts are loans raised by Government from public, called market loans, borrowings by Government from Reserve Bank and other parties through sale of Treasury Bills, loans received from foreign Governments and bodies, disinvestment receipts and recoveries of loans from State and Union Territory Governments and other parties. Capital payments consist of capital expenditure on acquisition of assets like land, buildings, machinery, equipment, as also investments in shares, etc., and loans and advances granted by Central Government to State and Union Territory Governments, Government companies, Corporations and other parties.

10.0 CUT MOTIONS

Rules 209, 210, 211 and 212 of the Rules of Procedure and Conduct of Business in Lok Sabha and Direction 43 of the Directions by the Speaker, Lok Sabha lay down in detail the formalities relating to raising of Cut Motions in the House.

10.1 What is a Cut Motion?

The motions to reduce the amounts of demands for grants are called 'Cut Motions'. The object of a cut motion is to draw the attention of the House to the matter specified therein.

Cut Motions can be classified into three categories viz., Disapproval of Policy Cut; Economy Cut; and Token Cut.

10.2 Disapproval of Policy Cut

Where the object of a motion is to disapprove the policy underlying a demand, its form is "That the amount of the demand be reduced to Re. 1". The member giving notice of such a Cut Motion has to indicate in precise terms the particulars of the policy, which he proposes to discuss. Discussion is confined to the specific point or points mentioned in the notice and it are open to the member to advocate an alternative policy.

10.3 Economy Cut

Where the object of the motion is to effect an economy in the expenditure, the form of the motion is "that the amount of the demand be reduced by a specified amount". The amount suggested for reduction is either a lump sum reduction in the demand or omission or reduction of an item in the demand. The notice has to indicate briefly and precisely the particular matter on which discussion is sought to be raised and speeches are confined to the points as to how the economy can be effected.

10.4 Token Cut

Where the object of the motion is to ventilate a specific grievance within the sphere of the responsibility of the Government of India, the form is "That the amount of the demand be reduced by Rs. 100". Discussion on such a Cut Motion is confined to the particular grievance specified in the motion.

It is necessary that a Cut Motion, irrespective of its nature or type, should mention briefly and precisely the objectives. In fact, the practice of indicating briefly and precisely the particulars of the policy, the specific matter or grievance, as the case may be, that the member wants to discuss on his cut motion-whether disapproval of policy cut or economy cut or token cut-was started in 1925 during the Budget Session.

    

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