On 1 February, Nirmala Sitharaman, the Finance Minister of India, presented the Union Budget 2022-23 in the Parliament. Article 112 of the Constitution of India 1950 (Article 92, Draft Constitution of India 1948) is the Article relevant to this discussion. It directs the President of India to present the ‘Annual Financial Statement’ to both Houses of Parliament: Lok Sabha and Rajya Sabha. In this article, we focus on the spirited interventions by the Economist K.T. Shah in the Constituent Assembly during a debate on the constitutional provisions related to the Union Budget.
The Constituent Assembly took up Draft Article 92 for discussion on 8 and 10 June 1949. K.T. Shah, was not satisfied with the Draft Article and moved a series of amendments to change it. First, he wanted the Draft Article to explicitly state that the ‘Finance Minister’ under the ‘authority of the President’ would present the budget. Second, he felt that the Article suggested equality between the two Houses of Parliament. For Shah, the Lok Sabha, by virtue of representing popular sovereignty was superior of the two.
On the President’s role, the Assembly had previously decided that all executive action would be conducted under the authority of the President - Shah acknowledged this. However, he argued, ‘…it does not still seem to be appropriate that, in this matter, the President should be made to figure as the authority for getting the Budget presented to Parliament...’. He believed that the Finance Minister, by virtue of being closely involved in financial administration, was the real authority.
Shah saw something bigger at stake in mentioning the Finance Minister in the Draft Article: ‘it involves a great principle of Parliamentary democracy and responsible government in as much as it excludes the executive head from taking part even by implication in matters of this kind’. He felt that this was a separation of powers issue vis-à-vis the executive and the legislature.
Further, Shah suggested that by not specifically mentioning the finance minister, the Draft Article gave room for other individuals to present the budget in the future. There was no direct response to Shah from other Assembly members. However, when his amendment came up for voting, the Assembly rejected it.
When it came to the question of which House of the Parliament should the budget be presented to, Shah was of the firm belief that matters of finance should be the Lok Sabha’s exclusive domain by ‘constitutional right and constitutional policy’. The budget should not be presented to any other institution but the Lok Sabha.
Further, Shah moved an amendment proposing that once the budget was placed before the Lok Sabha, no other institution was ‘competent to make any modifications, addition or alternation in the financial statement or to accept or reject it, in part or in toto.’
He argued that his proposal was nothing new or radical. The Draft Constitution, in any case, gave primacy to the Lok Sabha. The lower house being the ultimate decision-maker in public finance was a well-established principle of parliamentary democracy. He cited the United Kingdom where only the House of Commons had authority with regards to public finance.
Again, there was no response to Shah and his amendment was rejected by the Assembly. Shah seemed to have erected a straw man: the Draft Constitution, in other provisions, gave primacy to the House of People in matters of finance; A Money bill could only originate in the Lok Sabha, and it was only the Lok Sabha that was given the authority to decide upon ‘demands for grants’.
We don’t find a clear rationale in the Assembly debates for presenting the budget to the Rajya Sabha. The Rajya Sabha or the Council of States (as the name suggests) represents the interests of the States. Plausibly, the Assembly would have felt that it was important for the Rajya Sabha to be involved, albeit in a junior way, in something as significant as the presentation of the budget.