Supplementary and Excess Grants

Article 115(1)(b): a demand shall be presented where money has been spent in excess of the amount granted.

The second describes a state of affairs the first forbids. An excess is money withdrawn beyond the appropriation, and the Constitution provides for it not because it is permissible but because it happens, and something must be done about it.

And here is the point. The House is being asked to authorise, after the event, expenditure it never sanctioned. On what material?

Not on the executive's word, because the executive is the party in default.

On the audit. The Comptroller and Auditor General establishes the excess in his report under article 151; the Public Accounts Committee examines the accounting officer on it, chapter 1010; and the House votes the excess grant on the Committee's recommendation.

Which makes the Public Accounts Committee's work constitutionally necessary and not merely useful. Chapter 1010 called the Committee's loop the only closed one in this paper; article 115(1)(b) is the provision that requires it to close. Without the audit and the examination, an excess grant would be the House regularising, unexamined, a breach of article 114(3).

Say that in an answer and the connection between the two labels of this module is made in a sentence.

Article 116: three further devices

116(1)(a): the vote on account. The House of the People may make any grant in advance in respect of the estimated expenditure for a part of any financial year pending the completion of the procedure prescribed in article 113 for voting the grant and passing the article 114 law.

What it is for. The financial year begins on a fixed date; the demands take weeks to vote. A vote on account keeps the administration paid until the full Appropriation Act is passed. It is a grant in advance for a part of the year, and it is on account of the grants that will be made.

116(1)(b): the vote of credit. A grant 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 an annual financial statement.

Notice the justification: not urgency but INDESCRIBABILITY. The House votes a sum without the usual details because the details cannot be given, the classic case being a war or an emergency of unknown scale. A vote of credit is a blank cheque and the Constitution says so in as many words, which is why it is confined to a demand that cannot be stated with the details ordinarily given.

116(1)(c): the exceptional grant. A grant which forms no part of the current service of any financial year.

And the closing words of 116(1): Parliament shall have power to authorise by law the withdrawal of moneys from the Consolidated Fund of India for the purposes for which the said grants are made.

116(2): articles 113 and 114 apply to the making of such grants and to the law made under the clause.

Note which articles are applied. 113 and 114, but not 112. A vote on account, a vote of credit and an exceptional grant do not require a fresh annual financial statement; they require the voting and the appropriation law.

How the four devices relate to the Contingency Fund

Students confuse the Contingency Fund with a supplementary grant, and the distinction is clean.

The Contingency Fund, article 267, chapter 1310, is a fund from which the President makes an advance for unforeseen expenditure pending authorisation. No vote is involved.

A supplementary, additional or excess grant under article 115, and a vote on account, vote of credit or exceptional grant under article 116, are votes of the House.

The relationship is sequential. Money is advanced from the Contingency Fund when the need cannot wait; the House later votes a supplementary grant under article 115; and the Fund is recouped from the appropriation. Article 267 itself says the advance is "pending authorisation of such expenditure by Parliament by law under article 115 or article 116." The Contingency Fund is the bridge and article 115 is the far bank.

A worked example

A financial year begins on 1 April and the demands will not be voted until the middle of May.

How is the administration paid in the interval? A vote on account under article 116(1)(a): a grant in advance for a part of the year, pending completion of the article 113 procedure.

In August a scheme provided for at four hundred crores is found to need five hundred. A supplementary grant under article 115(1)(a), first limb: the amount authorised is found to be insufficient.

In September a flood requires a relief programme nobody had contemplated. An additional grant under article 115(1)(a), second limb: a new service not contemplated in the annual financial statement. And if the money is needed before the House can vote, an advance from the Contingency Fund under article 267, recouped when the additional grant is made.

A conflict breaks out and the scale of the requirement cannot be stated. A vote of credit under article 116(1)(b): the demand cannot be stated with the details ordinarily given because of its magnitude or indefinite character.

And at the end of the year the accounts show that a Ministry spent thirty crores more on a service than was granted for it. That is an excess, contrary to article 114(3).

What happens? The Comptroller and Auditor General establishes it in his report, laid under article 151. The Public Accounts Committee examines the Secretary on how it occurred and recommends. Only then is a demand for the excess presented to the House of the People under article 115(1)(b), and an Appropriation Act passed under article 114 as applied by article 115(2).

Note the order. Audit, examination, then regularisation. The House does not forgive an excess it has not had explained.

What beginners get wrong

That a supplementary grant and an excess grant are the same. A supplementary or additional grant is prospective; an excess grant regularises money already spent.

That an additional grant tops up an existing service. It funds a new service not contemplated in the statement; the supplementary grant tops up.

That a vote on account is a small budget. It is a grant in advance for a part of the year pending completion of the article 113 procedure, and articles 113 and 114 apply to it.

That a vote of credit is for urgency. It is for a demand that cannot be stated with the details ordinarily given, by reason of its magnitude or indefinite character.

That the Contingency Fund and a supplementary grant are alternatives. The Fund gives an advance pending authorisation; the grant is the authorisation, and the Fund is then recouped.

Quick revision

Art 115(1)(a): supplementary where the authorised amount is found insufficient; additional where a need arises for expenditure on some new service not contemplated in the statement. Both prospective; another statement is laid before both Houses.

Art 115(1)(b): excess, where money has been spent on a service in excess of the amount granted for that service and for that year; a demand for such excess is presented to the House of the People. Retrospective regularisation of a breach of art 114(3).

Art 115(2): arts 112, 113 and 114 apply to such statements, demands and laws.

Why the PAC becomes constitutionally necessary: the House is asked to authorise after the event what it never sanctioned, and it does so on the auditor's finding and the Committee's examination. Audit, examination, then regularisation.

Art 116(1): (a) vote on account, a grant in advance for part of the year pending the art 113 procedure; (b) vote of credit, for a demand which cannot be stated with the details ordinarily given because of its magnitude or indefinite character; (c) exceptional grant, forming no part of the current service of any financial year. 116(2): arts 113 and 114 apply, not art 112.

Against art 267: the Contingency Fund gives an advance, no vote; arts 115 and 116 are votes; and the advance is pending authorisation under art 115 or 116, after which the Fund is recouped.

Test yourself

1. Distinguish supplementary, additional and excess grants. A supplementary grant is sought under the first limb of article 115(1)(a) where the amount authorised by the Appropriation Act for a particular service for the current year is found to be insufficient for the purposes of that year; it tops up a service already provided for. An additional grant is sought under the second limb of the same clause where a need has arisen during the year for expenditure upon some new service not contemplated in the annual financial statement; it funds something the statement did not cover. Both are prospective, and in each case the President causes another statement showing the estimated amount to be laid before both Houses. An excess grant is different in kind: under article 115(1)(b), where money has been spent on a service during a financial year in excess of the amount granted for that service and for that year, the President causes a demand for the excess to be presented to the House of the People. The tense is past, and the grant regularises money already withdrawn beyond the appropriation.

2. Why does the excess grant make the Public Accounts Committee constitutionally necessary? Because article 114(3) provides that no money shall be withdrawn from the Consolidated Fund except under appropriation made by law, and an excess is by definition a withdrawal beyond the appropriation. Article 115(1)(b) therefore asks the House of the People to authorise, after the event, expenditure it never sanctioned. It cannot do so on the executive's own account, since the executive is the party in default. The material on which it acts is the audit: the Comptroller and Auditor General establishes the excess in a report laid before the House under article 151, the Public Accounts Committee examines the accounting officer on how it occurred and reports, and the demand for the excess is then presented. The Committee's examination is accordingly not a convenience but the constitutional precondition of regularisation, which is why chapter 1010 can describe its loop as the only closed one in this paper and this article as the reason it must close.

3. What are a vote on account, a vote of credit and an exceptional grant? Under article 116(1)(a) the House of the People may make any grant in advance in respect of the estimated expenditure for a part of any financial year, pending the completion of the article 113 procedure for voting the grant and the passing of the article 114 law; this is the vote on account, and it keeps the administration paid between the start of the financial year and the passing of the full Appropriation Act. Under clause (b) it may make a grant to meet 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 an annual financial statement; this is the vote of credit, and its justification is not urgency but the impossibility of stating the details. Under clause (c) it may make an exceptional grant which forms no part of the current service of any financial year. Parliament may authorise by law the withdrawal of moneys for the purposes of these grants, and articles 113 and 114, though not article 112, apply to them.

4. How does the Contingency Fund fit with articles 115 and 116? Sequentially rather than as an alternative. The Contingency Fund under article 267 is a fund in the nature of an imprest at the disposal of the President from which advances may be made for unforeseen expenditure, and no vote of the House is involved in the advance. Articles 115 and 116 provide for votes of the House. Article 267 itself states the relationship, since the advance is for expenditure pending authorisation by Parliament by law under article 115 or article 116. In practice, therefore, money is advanced from the Fund when the need cannot wait for the House, the House afterwards votes a supplementary or additional grant under article 115, and the Fund is recouped out of the appropriation so made. The Fund is the bridge and article 115 is the far bank.