Context

The Lok Sabha has passed the Appropriation Bill 2020-21, authorising the government to draw over Rs 110 lakh crore from the Consolidated Fund of India for its working as well as the implementation of its programs and schemes.

About

• Appropriation Bill gives power to the government to withdraw funds from the Consolidated Fund of India for meeting the expenditure during the financial year.
• Post the discussions on Budget proposals and the Voting on Demand for Grants, the government introduces the Appropriation Bill in the Lok Sabha.
• It is intended to give authority to the government to withdraw from the Consolidated Fund, the amounts so voted for meeting the expenditure during the financial year.

Consolidated Fund of India:

• The Consolidated Fund of India includes revenues, which are received by the government through taxes and expenses incurred in the form of borrowings and loans.
• It represents one of the three parts of the Annual Financial Statement with the other two:
  • the Contingency Fund
  • Public Account
• All government expenditures are met by consolidated funds except a few made by contingency fund or public fund.
• The Consolidated Fund of India was created under Article 266 of the Constitution. It is also considered as the most important part of the financial statement.
• Similar to the Centre, every state has its own Consolidated Fund as well.

What goes into Consolidated Fund of India?

• All the government revenue generated from taxes, asset sale, earnings from state-run companies, etc go into the Consolidated Fund of India.
• The fund gets money from:
  • Revenue earned in direct taxes such as income tax, corporate tax, etc
  • Revenue earned in indirect taxes such as GST
  • Dividends and profits from PSUs (Public Sector Undertakings)
  • Money earned through government’s general services
  • Disinvestment receipts

The process:

• This completes two-thirds of the exercise for approval of the Budget for 2020-21.
• Lok Sabha and Rajya Sabha had debated on Finance Minister Nirmala Sitharaman's second Budget in the first half of the current session
• In the second part, the lower house of Parliament passed the Appropriation Bill.
• In the third stage, the Finance Bill, which details the tax proposals, will be discussed and approved.
• The house passed the Appropriation Bill, envisaging spending of Rs 110.4 lakh crore during the financial year 2020-21
• With Parliament having very limited time for scrutinising the expenditure demands of all the ministries, it takes up discussion on spending or demands for grants for a few ministries during a pre-decided period of time.
• Once this is over, a guillotine is applied.
• Once the speaker applies the guillotine, all the outstanding demands for grants, whether discussed or not, are put to vote at once and passed.
• After this, Appropriation Bill was taken into consideration and passed.