Different types of grants
- In addition to the budget that contains the ordinary estimates of income and expenditure for one financial year, various other grants are made by the Parliament under extraordinary or special circumstances.
- It is granted when the amount authorised by the Parliament through the appropriation act for a particular service for the current financial year is found to be insufficient for that year.
- It is granted when a need has arisen during the current financial year for additional expenditure upon some new service not contemplated in the budget for that year.
- It is granted when money has been spent on any service during a financial year in excess of the amount granted for that service in the budget for that year. It is voted by the Lok Sabha after the financial year.
- Before the demands for excess grants are submitted to the Lok Sabha for voting, they must be approved by the Public Accounts Committee of Parliament.
Vote of Credit
- It is granted for meeting an unexpected demand upon the resources of India, when on account of the magnitude or the indefinite character of the service, the demand cannot be stated with the details ordinarily given in a budget.
- Hence, it is like a blank cheque given to the Executive by the Lok Sabha.
- It is granted for a special purpose and forms no part of the current service or any financial year.
- It is granted when funds to meet the proposed expenditure on a new service can be made available by reappropriation. A demand for the grant of a token sum (of Re 1) is submitted to the vote of the Lok Sabha and if assented, funds are made available.
- Reappropriation involves transfer of funds from one head to another. It does not involve any additional expenditure.
- Supplementary, additional, excess and exceptional grants and vote of credit are regulated by the same procedure which is applicable in the case of a regular budget.
Why in News?
- Finance Minister Nirmala Sitharaman tabled the first batch of Supplementary Demands for Grants for this financial year in the Lok Sabha, in which the Centre has sought Parliament approval for a gross additional expenditure of ₹2.35 lakh crore.
- Out of the ₹2.35 lakh crore gross additional expenditure, the proposals involving net cash outgo add up to almost ₹1.67 lakh crore. The rest of the money will come either through savings or reallocation of funds allocated to other ministries.
News in detail
- The biggest chunk goes towards the State governments, including ₹44,340 crore in post-devolution revenue deficit grants, and ₹2,262 crore as grants-in-aid for the State Disaster Response Funds, in accordance with the interim recommendations of the 15th Finance Commission.
- The other large allocation is for the ₹40,000 crore additional funding promised to the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme.