Articles 202, 203 and 204 of the Constitution of India: State Budget, Grants and Appropriation Bills
Articles 202 to 204 form part of the constitutional procedure for State finances. They govern the annual financial statement, legislative consideration of expenditure and the law authorising withdrawal of money from the Consolidated Fund of the State.
Article 202 - Annual financial statement
Article 202 is the constitutional basis for the State annual financial statement. It requires the Governor, for every financial year, to cause a statement of the State's estimated receipts and expenditure to be laid before the House or Houses of the State Legislature.
Clause (1): The statement placed before the Legislature contains the estimated receipts and expenditure of the State for the financial year and is called the annual financial statement.
Clause (2): The expenditure estimates must separately show expenditure charged upon the Consolidated Fund of the State and other expenditure proposed from that Fund. Revenue expenditure must also be distinguished from other expenditure.
Clause (3): Charged expenditure includes the Governor's emoluments and office expenditure; specified presiding officers' salaries and allowances; State debt charges; salaries and allowances of High Court Judges; sums required to satisfy judgments, decrees or arbitral awards; and other expenditure declared by the Constitution or State law to be charged.
Article 203 - Procedure in Legislature with respect to estimates
Article 203 explains how the expenditure shown under Article 202 is dealt with by the State Legislature.
Clause (1): Expenditure charged upon the Consolidated Fund of the State is not submitted to the vote of the Legislative Assembly, although the estimates may be discussed in the Legislature.
Clause (2): Other expenditure is submitted to the Legislative Assembly as demands for grants. The Assembly may assent, refuse assent or assent subject to a reduction in the amount demanded.
Clause (3): A demand for a grant can be made only on the recommendation of the Governor.
Article 204 - Appropriation Bills
Article 204 provides the legal mechanism for appropriation from the Consolidated Fund of the State after the grants under Article 203 have been made.
Clause (1): An Appropriation Bill is introduced to provide for appropriation from the Consolidated Fund of the State of money required for grants made by the Assembly and for charged expenditure, within the amount shown in the statement previously laid before the House or Houses.
Clause (2): An amendment cannot be proposed if it would vary the amount or alter the destination of a grant, or vary charged expenditure. The decision of the presiding person on inadmissibility under this clause is final.
Clause (3): Subject to Articles 205 and 206, money cannot be withdrawn from the Consolidated Fund of the State except under an appropriation made by law in accordance with Article 204.
Meaning and constitutional scheme of Articles 202, 203 and 204
Annual financial statement
The annual financial statement is the constitutionally required statement of estimated State receipts and expenditure for a financial year. In common usage it forms the core of the State budget process.
Charged expenditure and voted expenditure
Article 202 identifies expenditure charged on the Consolidated Fund, while Article 203 makes clear that such expenditure is not put to the Assembly's vote. Other expenditure is presented as demands for grants and is subject to the Assembly's decision.
Appropriation
A grant or charged item does not by itself authorise withdrawal from the Consolidated Fund. Article 204 provides for appropriation by law, completing the constitutional authorisation required for withdrawal, subject to the supplementary and special procedures in Articles 205 and 206.
For authoritative wording and the latest official constitutional text, refer to the Government of India resources in the sidebar. This page is an explanatory legal resource and should be read with the official text.