An outgoing government has no mandate to budget for the whole year

[dropcap]T[/dropcap]HE Budget, in essence, is a financial statement made by the government in Parliament detailing the income and expenditure for a particular year. This year's budget was prese​​nted by the Union Government in Parliament amid some controversy regarding the Constitutional right of an outgoing government to present the budget containing a large number of new schemes and proposals. A question was raised whether an outgoing government whose term is ending in a few months time can present such a budget.

This is an important constitutional issue, which merits a closer examination.

Under Article 112 of the Constitution, the President of India has a duty to have an annual financial statement detailing the income and expenditure for that year presented before both the Houses of Parliament.

Incidentally, the Constitution nowhere uses the term 'Budget'. The term used, instead is 'annual financial statement'.

This Article on a surface view would suggest that a government has the constitutional obligation to present the budget irrespective of whether it is an outgoing government or not. To answer the question of whether an outgoing government has the constitutional right to present a budget for the whole year, one needs to look at this article a little more carefully and closely.

It speaks about the receipts and expenditure for "that year". This would imply that the government must be in a position to know what exactly will be the receipts for the whole year and what will be the total expenditure for that year.

A major part of receipts comes from new taxes, which the government may levy to meet the growing expenditure for the year. It is a matter of common knowledge that a government which is going out in a couple of months will not be able to assess the actual receipts or the expenditure for the whole year and present a real picture thereof before Parliament.

A normal budget contains a number of new schemes for the development of the country, welfare measures and so on and an estimate of total expenditure and proposals to raise resources for meeting such expenditure. Can an outgoing government present such a budget? Certainly, not.

That is why traditionally, an outgoing government only presents before Parliament what is known as 'vote on account'.

Vote on account mentioned in Article 116 of the Constitution is a grant made by Parliament in advance to meet the expenditure for a part of the financial year pending the completion of the whole budgetary exercise in Parliament.

Anything beyond a vote on account is not constitutionally correct. In fact, it would amount to non-compliance with Article 112.

An outgoing government has no mandate to budget for the whole year (Article 112 uses the term 'that year') because its mandate expires on the day when the House of the People completes five years from the first day of its first sitting.

Article 83 makes it clear that the expiration of the five-year period will operate as a dissolution of the House. Once the House is dissolved, there shall be no responsible government in office. Therefore such a government cannot present the estimate of receipts and expenditure for 'that year'.

Then why do governments announce a whole lot of schemes and concessions along with the vote on account? In fact, these schemes and concessions could have been announced in the earlier years and a major part thereof could have been implemented during those years.

There is no need to rush through with them at the last moment by abandoning constitutional practices and legislative conventions. These schemes and concessions do not make much sense now, because a budget as per Article 112 of the Constitution will be presented by the next government, which will take office by the end of May.

The new Government will have its own schemes and plans and priorities. Thus the grandiose schemes announced in the "interim budget" will come to virtually nothing.

This is the reason why a government does not bring a budget in the constitutional sense in what is called the election year. It brings no advantage to the citizens except some amount of propaganda advantage to the party in power. That seems to be the object of this exercise.

The Finance Minister read the budget speech with such gusto and relish for almost two hours to the intermitent desk thumping by his fellow Parliamentarians on his side, that everyone including the media just went along with him.

The 'gigantic' income tax concession he announced in a dramatic way had everyone believe that tax-exemptions were raised uniformly to Rs 5 lakh for all the taxpayers. The electronic media went on with breaking news about it for a major part of the day. Only later they realised that the exemption limit was not raised by even one rupee.

All that was done was to allow reduction of income tax of those taxpayers whose income does not exceed Rs 5 lakh under Section 87 A of the Income Tax Act. They still need to file tax returns and can claim a certain rebate. It was a false hope of the income tax payers that tax exemption has been raised to Rs 5 lakh. This is the effect of dramatic presentation.

In contrast, there was no drama at all in levying an additional surcharge on income tax from the taxpayers. No one seemed to have noticed it. Section 2 (a)(iii) of this year's Finance Bill provides for an additional surcharge called "Health and Education Surcharge" to "fulfill the commitment of the government to provide and finance quality health services and universalised quality basic education and secondary and higher education".

This is the strangest thing that a Union Government can say about basic quality education and quality health services to the people of India although the tax levied from them have increased many times over and now the government has to depend on an additional surcharge on income tax to achieve this.

It is the primary duty of any government to provide quality health services and basic education to the people with the normal taxes collected from them.

A surcharge is outside the normal tax system and is levied for a certain period and for a specific purpose. It is discontinued once that purpose is fulfilled. A surcharge for providing basic education and quality health services is unheard of in any system.

This was a bit of a digression. The basic point is that the Finance Bill, which is presented along with the vote on account, is meant to continue the existing rates of income tax beyond March 31, 2019, till a new government takes over.

New taxes, concessions and reliefs for the financial year beyond March 31, 2019, will be the responsibility of the new government.  That is the right practice to be followed by any government in a parliamentary system.

Any departure from this time-honoured practice will distort the constitutional scheme of budget and create difficulties for a new government, which comes with a new mandate, different priorities and perspectives. Even when the same government comes back it will also have to present a new budget for the whole year.​