What is Demand for Grants?

Each ministry sends out a demand for grants for funds it needs for the next financial year for various schemes. Once the process is over, the government then collectively presents them in Lok Sabha as part of the Union Budget.

Article 113 of the Indian Constitution requires that any estimate of expenditure from the Consolidated Fund of India should be voted in Lok Sabha in the form of demand for grants. A summary is given at the beginning of this.

It is presented at the Lower House along with the Annual Financial Statement, which shows the estimated receipts and expenditure of the government in the Budget year, revised estimates for the current year and actual amounts for the previous year.

Generally, one Demand for Grant is presented in respect of each Ministry or Department. However, more than one Demand may also be presented for a Ministry or Department depending on the nature of expenditure.

For Union Territories without Legislature, a separate Demand is presented for each of the Union Territories.

Each Demand first gives the grand total of the amount of expenditure for which the Demand is presented. This expenditure is then given under different Major heads of account. 

Demand for Grants includes aid given to states and Union Territories and loans and advances related to a scheme. The Lok Sabha has the power to deny or reduce the requested amount for a particular scheme. 

Sometimes, the expenditure authorised in the Annual Financial Statement can fall short of the required expenditure. In that case, the government can present a statement of supplementary grants before the Parliament showing the estimated amount of further spending in respect of a financial year.

These grants are to be presented and passed by the Parliament before the end of the fiscal. For instance, the Lok Sabha in July last year approved the first batch of Supplementary Demand for Grants authorising the government to spend an additional Rs 23,675 crore. 

And in December, it cleared the second batch of Supplementary Demands authorising the government to spend an additional Rs 3.73 lakh crore during the current fiscal. Come February 1, and the government will table another set of demands for grants for approval as part of the annual exercise. 

Watch video