सं Samvidhan

The Constitution of India

Article 112

Annual financial statement

(1) 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”.

(2) The estimates of expenditure embodied in the annual financial statement shall show separately —

(a) the sums required to meet expenditure described by this Constitution as expenditure charged upon the Consolidated Fund of India; and

(b) 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.

(3) The following expenditure shall be expenditure charged on the Consolidated Fund of India —

(a) the emoluments and allowances of the President and other expenditure relating to his office;

(b) 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;

(c) 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;

(d) (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 a Governor's Province of the Dominion of India;

(e) the salary, allowances and pension payable to or in respect of the Comptroller and Auditor-General of India;

(f) any sums required to satisfy any judgment, decree or award of any court or arbitral tribunal;

(g) any other expenditure declared by this Constitution or by Parliament by law to be so charged.

Why this exists

The framers wanted Parliament to control public money — a core principle of parliamentary democracy inherited from British practice, where 'no taxation or spending without representation' applies. At the same time, certain functions — like paying judges, the President, or honouring court judgments — need to be insulated from the annual political tug-of-war over budget votes, so that constitutional offices remain independent and the government's credit (debt obligations) stays reliable. Article 112 therefore creates a single annual budget process but splits spending into 'votable' items (which Parliament can cut) and 'charged' items (which are only discussed, not voted upon), balancing democratic control of finances with institutional independence.

How courts read it

Courts have generally treated the content and adequacy of the annual financial statement, and classification of expenditure as charged or non-charged, as matters primarily for Parliament's own procedures rather than for judicial interference, respecting the separation of powers over fiscal matters. There is no single landmark case reinterpreting Article 112 itself, but courts have referred to it while discussing the scope of the Consolidated Fund of India and the distinction between charged and voted expenditure, particularly in disputes over money bills and financial procedure under related Articles like 110, 113, and 114.

Common misconceptions
  • Myth: Parliament can refuse to pay 'charged' expenditure if it disagrees.
    Fact: Charged expenditure can be discussed in Parliament but cannot be put to a vote for reduction or rejection; it is constitutionally guaranteed.
  • Myth: The Union Budget and Article 112's 'annual financial statement' are different things.
    Fact: The annual financial statement described in Article 112 is the formal constitutional name for what is popularly called the Union Budget.
  • Myth: The President personally decides the budget's contents.
    Fact: The President's role is formal — to cause the statement (prepared by the government) to be laid before Parliament, not to decide its contents.