Introduction 

• Part VI of the Constitution of India, 1950 (COI) deals with the articles related to the States. 
• The financial procedure established under the Constitution of India represents a fundamental aspect of democratic governance, ensuring systematic management and oversight of public finances.  
• Chapter III of COI states Articles 202 to 207 which delineate the constitutional framework governing the presentation, deliberation, and approval of financial matters in state legislatures.  
• These provisions establish crucial checks and balances between the executive and legislative branches while safeguarding public funds. 
• The framework established by Articles 202-207 continues to guide state finances in modern India, providing both stability and adaptability in financial governance.  
• It represents a crucial element of India's constitutional democracy, ensuring that public funds are managed with transparency, accountability, and proper legislative oversight.   

Provisions Related to Procedure in Financial Matters 

• Article 202: Annual Financial Statement 
  • Article 202 mandates that the Governor shall cause a statement of estimated receipts and expenditure for each financial year to be presented before the state legislature.  
  • This statement, known as the Annual Financial Statement or State Budget, comprises: 
    • Revenue expenditure and receipts shown separately from other expenditure and receipts. 
    • Charged expenditure shown distinctly from other expenditure. 
    • Expenditure on revenue account shown separately from other expenditure. 
  • The charged expenditure includes: 
    • Emoluments and allowances of the Governor. 
    • Salaries and allowances of Speaker and Deputy Speaker of Legislative Assembly. 
    • Salaries, allowances, and pensions of High Court judges. 
    • Expenditure relating to the State Public Service Commission. 
    • Debt charges for which the state is liable. 
• Article 203: Procedure in Legislature with Respect to Estimates 
  • Article 203 prescribes the following procedure: 
    • Budget estimates are presented in the form of demands for grants. 
    • The Legislative Assembly has the power to:  
      • Assent to demands for grants. 
      • Refuse assent to any demand. 
      • Reduce the amount specified in any demand. 
    • No demand for a grant shall be made except on the Governor's recommendation. 
    • The Legislative Assembly may not discuss the expenditure charged upon the Consolidated Fund. 
    • The Legislative Council has no power to vote on demands for grants, though it can discuss them. 
• Article 204: Appropriation Bills 
  • This article establishes that: 
    • No money shall be withdrawn from the Consolidated Fund except under appropriation made by law. 
    • A bill must be introduced to provide for:  
      • Appropriation of money out of the Consolidated Fund to meet grants voted by Assembly. 
      • Appropriation to meet charged expenditure. 
    • No amendment can be proposed to an Appropriation Bill that would:  
      • Vary the amount of any grant voted by Assembly. 
      • Vary the nature of any expenditure charged on the Consolidated Fund. 
      • Vary the destination of any grant. 
• Article 205: Supplementary, Additional, or Excess Grants 
  • This article provides for additional financial requirements through: 
    • Supplementary Grants: When the authorized grant is insufficient. 
    • Additional Grants: For new services not contemplated in the Annual Financial Statement. 
    • Excess Grants: When money has been spent in excess of amounts authorized. 
  • The procedure for these grants follows the same process as the regular budget. 
• Article 206: Votes on Account, Votes of Credit and Exceptional Grants 
  • This article enables: 
    • Votes on Account: Advance grants pending detailed consideration. 
    • Votes of Credit: For meeting unexpected demands. 
    • Exceptional Grants: For special purposes not forming part of current service. 
  • The article ensures financial flexibility while maintaining legislative oversight. 
• Article 207: Special Provisions Regarding Financial Bills 
  • This article classifies and regulates financial bills: 
    • Money Bills: As defined under Article 199 of the COI. 
    • Financial Bills Category I: Those containing matters specified in Article 199 
    • Financial Bills Category II: Other financial matters not specified in Article 199 

Conclusion 

These articles collectively create a robust system balancing fiscal discipline with administrative flexibility, while ensuring democratic oversight of public finances. The procedure reflects the federal structure of India's governance system and embodies the principles of responsible financial management essential for effective state administration.