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Legislature's Supremacy and Executive's Excess

When state governments spend more than what is authorised by the legislature, the Constitution mandates that they approach the latter to regularise the excess expenditure. However, many states repeatedly fail to do so, thus eroding the legislature's authority, weakening the executive's accountability and sometimes even letting scams go undetected.

Legislature’s Supremacy and Executive’s Excess

When state governments spend more than what is authorised by the legislature, the Constitution mandates that they approach the latter to regularise the excess expenditure. However, many states repeatedly fail to do so, thus eroding the legislature’s authority, weakening the executive’s accountability and sometimes even letting scams go undetected.


inancial supremacy of the legislature is the cornerstone of parliamentary democracy. Supremacy of the legislature is enshrined in the Constitution by a stipulation that all expenditure must have the authority of the legislature. Over time this has suffered serious erosion in several states because of massive excess spending beyond what the legislatures had authorised. The situation is serious enough to warrant consideration of an amendment to the Constitution.

Under the Constitution, all government receipts, tax, non-tax and borrowings as well as moneys received back in repayment of previous government loans, must necessarily be credited to the state’s Consolidated Fund.1 No amount shall be withdrawn from the Consolidated Fund except in accordance with law and for the purposes and in the manner provided in the Constitution.2 This is enacted in an Appropriation Act passed by the legislature3 and fixes the purposes of expenditure.4

The government must approach the legislature with a supplementary budget if the amount provided in the original budget is found to be inadequate during the year or if a need arises for expenditure on new service.5 The supplementary budget must be passed during the financial year itself and before the expenditure is incurred.

A further mechanism of recourse to the Contingency Fund is available for meeting any unforeseen expenditure of an emergent nature. It is in the nature of an imprest placed at the disposal of the governor to enable advances being made for the purpose of meeting unforeseen expenditure pending its authorisation by the legislature.6 Any amount advanced from the Contingency Fund is returned to that fund after the legislature authorises the expenditure. State governments have established elaborate expenditure monitoring and control systems to prevent overspending. Additionally, the state accountant general, who compiles the accounts of government,7 keeps cautioning the government against any possible likelihood of the budget being overshot.

If despite all this, the government ends up overspending, it must approach the legislature for obtaining what is called an “excess grant”.8 The objective is to secure that no amount of expenditure shall remain outside the scrutiny and approval of the legislature. The excess grant is obtained after the expenditure has been incurred and the financial year is over, as distinguished from supplementary grant, which must be obtained before the close of the financial year.

During the debates in the Constituent Assembly, apprehensions were expressed that the mechanism of excess grant might undermine the effectiveness of legislature’s control over expenditure and the budget would cease to have any sanctity. Ambedkar defended and justified the inclusion of this mechanism in the Constitution with the observation that “the passing of an excess grant is nothing but an immunity act passed by Parliament (legislature) to exonerate certain officers who have in good faith done something which is contrary to the law for the time being”.

It is one of the duties of the comptroller and auditor general (CAG) of India, to report whether the moneys shown in the accounts as having been disbursed were legally available for and applicable to the service or purpose to which they have been applied. The CAG reports cases of excess expenditure both through his audit reports and as part of the appropriation accounts audited and certified by him and submitted to the governor who causes them to be laid before the legislature.9

Public Accounts Committee

The post facto examination of government accounts conducted by the Public Accounts Committee (PAC) is intended to further strengthen legislative oversight. It represents the legislature in miniature and functions on non-partisan lines.

The PAC makes searching inquiries into the circumstances that caused excess expenditure, whether the excess expenditure occurred because of flawed budgeting, or due to failure of the prescribed expenditure monitoring and control system or for any other reason, the necessity and urgency of expenditure, the reasons why the extra requirement could not have been met through supplementary budget or an advance from the Contingency Fund and so on. While making its recommendations for regularisation of the excess expenditure, the PAC also recommends remedial and corrective action and submits its reports to the legislature, setting the stage for the government to approach the legislature.

Government departments are required to revert to the PAC with reports of action taken by them on its recommendations. The objective is to hold the executive accountable for overspending and to learn and implement lessons for the future.

The design of the system ensures that while any expenditure from out of the Consolidated Fund can ordinarily be incurred only after prior authorisation by the legislature, the executive is not hamstrung in cases of emergency. However, this excellent system is being undermined because of overspending by the state governments and their failure to seek post facto authorisation.

According to the audit reports of the CAG for the year ended March 31, 2005, the states had not been merely overspending but they had also not obtained excess grants for a whopping amount of Rs 2,65,356.59 crore up to the year 2004-05 out of the amounts that they had overspent. In some of the cases excess expenditure of over Rs 8,300 crore related to the period prior to the year 1992-93; in Meghalaya from 1971-72, in Bihar from 1977-78 and so on. West Bengal topped the list with an excess expenditure of Rs 50,073 crore for which it

Economic and Political Weekly February 17, 2007 had not obtained the post facto approval of the legislature; followed by Uttar Pradesh with its unregularised excess expenditure of Rs 32,396 crore. State-wise and year-wise details are given in the table.

Supremacy of the legislature and public accountability have been hit by a double whammy; first by the violation of the appropriation laws, and second by the failure to abide by the provisions of the Constitution which mandate that the executive must explain the overspending to the legislature for post facto approval and regularisation.

Concerned at this state of affairs, Era Sezhian, a former chairman of the Central Public Accounts Committee had moved the Supreme Court by way of a public interest litigation (PIL). Spurred perhaps by this, some of the state governments like Assam, Bihar and Punjab rushed to seek excess grants for the amounts that had been overspent over the years: Assam for the years 1995-96 to 1999-2000, Bihar for the years 1977-78 to 1997-98 (part) and Punjab for the years up to 2000-01. This might have completed a formality but it is doubtful whether such “mass regularisation” served the purpose of effectively holding the executive accountable for the excess expenditure or learning and implementing lessons for the future.

Excess expenditure upsets the budgetary allocations and priorities approved by the legislature. The passage of time renders it increasingly difficult to explain the circumstances that caused excess expenditure, more so if the persons responsible have moved elsewhere in the mean time. Also, the valuable opportunity for lessons learnt is missed and the system and other deficiencies and failures that cause excess expenditure are likely to persist. The culture of casualness is insidiously nurtured and the accountability of the executive is a casualty.

According to a report of the CAG, timely investigation into and follow up action on cases of excess expenditure of the animal husbandry department that occurred and were reported year after year might have prevented the continuance of what is popularly known as the fodder scam in Bihar.10

States like Assam, Bihar and Punjab that had taken recourse to “mass regularisation” had once again piled up significant amounts of excess expenditure that had not been regularised. The other states had probably remained unshaken even by the PIL. Repeated reporting of excess expenditure in the audit reports of the CAG has apparently come to be regarded as nothing more than a mere ritual not worthy of serious notice and action.

Underlying Reasons?

The main underlying reason is that the Constitution does not prescribe any timeline by which the government must approach the legislature for seeking regularisation of excess expenditure. The timelines for presentation of notes for regularisation of excess expenditure to the PAC are prescribed by executive instructions, and these are not always adhered to. On the other hand no timeline has been prescribed for the PAC to make its recommendations. A recommendation made by the Constitution Review Commission that the follow-up action on audit reports of the CAG should be completed within 12 to 18 months has remained largely unimplemented.11 Thus delays could occur because of the failure of the executive to present the notes for regularisation to the PAC in time, or because of the time taken by the latter to make its recommendations, or a combination of both. An atmosphere of what might be described as apathy, complacency and casualness appears to have come to prevail. Interestingly, the situation has prevailed irrespective of the political party or parties in power.

Table : State-wise and Year-wise Amounts of Excess Expenditure Not Regularised up to March 2005

(Rupees in crore)

Sl No State Up to 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000-01 2001-02 2002-03 2003-04 2004-05 Total 2000

1 Andhra Pradesh 0 0 0 0 0 0 405 311 846 414 428 546 9303 15 12268 2 Arunachal Pradesh 192 28 31 64 38 15 25 25 14 13 27 10 20 46 548 3Assam 0 0 0 0 0 0 0 0 0477321421619 404 6 8944 4 Bihar 821.63 93 158 170 213 22 0.01 0.33 196 712 491 10 3782 6 6674.97 5 Chhattisgarh 0 0 0 0 0 0 0 0 0 126 0115 591 133 965 6 Himachal Pradesh 0 0 0 0 0 0 0 0 0 2060 2965 3296 4516 3095 15932 7Goa 0 0 0 0 015 12 1 0 15 308 675 550 294 1870 8 Gujarat 0 0 575 373 564 534 734 981 1295 380 2640 114 401 1788 10379 9Haryana 0 0 0 0 0 0 0 0 0 0 0173 2227221 2621 10 Jammu and Kashmir 3157 1030 1730 2057 2937 3482 4189 4185 5851 6310 6393 505 9770 2108 53704 11 Jharkhand 0 0 0 0 0 0 0 0 0 0 0.03 1241 937 576 2754.03 12 Karnataka 120 107 57 8 28 104 84 36 333 114 113 1090 2818 1919 6931 13 Kerala 224 0.31 0.74 1 41 1 24 8 22 347 93 1403 1308 5840 9313.05 14 Madhya Pradesh 0 0 258 407 252 224 303 1276 1585 265 6 425 2.54 84 5087.54 15 Maharashtra 0 0 0 0 0 0 0 1838 2299 3682 2543 1015 407 11784 16 Manipur 0 0 0 0 0 0 384 294 845 86 895 957 13 0 3474 17Meghalaya 51 34 264 183 13 10 8 23 3 11 2 22 30 37 691 18 Mizoram 0 0 0 0 0 0 0 0 0 0 454 595 387 309 1745 19 Nagaland 152 0 0 77 43 33 241 264 167 52 28 724 231 29 2041 20 Orissa 0 0 0 0 0 107 990 126 2659 2474 394 2069 0 994 9813 21 Pondicherry 0 00 000 000 0 00 00 0 22 Punjab 0 0 0 0 0 0 0 0 0 0386 290 194 396 1266 23 Rajasthan 0 0 0 0 0 0 0 0 0 56 98 856 324 50 1384 24 Sikkim 0 0 0 000 0 0 0 08683 125 897 25 Tamil Nadu 0 0 0 0 0 0 299 233 363 2239 379 2437 155 3 6108 26 Tripura 0 0 0 0 0 0 0 0 0 276 267 234 321 1098 27 Uttar Pradesh 3609 1816 931 2011 621 712 590 731 8786 844 669 5532 3645 1899 32396 28 Uttaranchal 0 0 0 0 0 0 0 0 0 0 13001843 500 952 4595 29 West Bengal 0 0 0 0 0 0 0 0 5217 8545 9650 11160 10734 4767 50073 Total 8326.63 3108.31 4004.74 5351 4750 5259 8288.01 8494.33 30020 32135 34687.03 40520 54092.54 26320 265356.59

Economic and Political Weekly February 17, 2007

The implicit trust of the founding fathers that executive would immediately approach the legislature for regularisation of excess expenditure and thereby seek immunity for any amounts that may have been overspent in good faith has apparently proved to be misplaced.

What is needed is an automatic in-built, discipline-enforcing mechanism in the Constitution that firmly guarantees that no amount of excess expenditure remains unregularised for any considerable length of time. The audited accounts are ready generally within six months of the close of the financial year; cases of excess expenditure are reported to and within the knowledge of government departments even before that date. It should therefore be possible for government to approach the legislature for excess grants for any overspent amount within one year of the close of the financial year. Necessary discipline can be built into the system by linking the subsequent years’ budgets with the regularisation of all past cases of excess expenditure.

Amendments to the Constitution

Ideally, the budget for the second financial year should be presented and passed only after the cases of excess expenditure relating to the second preceding year have been regularised. Thus the budget for the year 2007-08 should not be presented and passed till excess expenditure for and up to the years 2005-06 has been regularised. If this is considered to be too stringent a conditionality, the least that can be prescribed is that, while presenting the budget for the financial year, the government must also table a statement before the legislature showing the year-wise amounts of excess expenditure for and up to the second preceding financial year for which excess grants are still to be obtained, the reasons for the delay and the timeline by which it will approach the legislature for regularisation of excess expenditure. Such a statement should continue to be tabled before the legislature on the first working day of every session of the legislature in the second financial year (i e, during 200708 in the above example).

However, there can be no justification for delay in the regularisation of excess expenditure beyond the second following year. The budget for the third following year, including even the vote on account,12 should not be allowed to be presented and passed till excess expenditure for and up to the third preceding year has been explained to and regularised by the legislature. In other words the budget, for example, for the financial year 2007-08 shall not be presented and passed till excess grants have been obtained for any excess expenditure for and up to the year 2004-05. The governor shall be automatically bound to refuse to recommend any Appropriation Bill for the consideration of the legislature if any amount of the excess expenditure for and up to the third preceding year has not been regularised.

Currently, the timeline for presentation of notes on excess expenditure to the PAC is prescribed by executive instructions, which are not always implemented and sometimes conveniently ignored. The timeline may be laid down in the rules of procedure so that any instance of delay automatically attracts the consequences of contempt of the legislature for the departmental secretary and the finance secretary. The rules of procedure may also prescribe the timeline by which the PAC must complete its examination of cases of excess expenditure and render its recommendation to the legislature. These timelines should be so fixed that the regularisation of excess expenditure can invariably be completed before the budget for the third following financial year is due to be presented.

If the PAC is in arrears in following up the audit reports of the CAG (and this is the position in several states), its examination of cases of excess expenditure need not be held up for that reason. Examination of cases of excess expenditure and other matters included in the audit reports need not necessarily remain linked. There is no constitutional or statutory requirement for this and excess expenditure should be delinked and fast-tracked to meet the timelines suggested above.

Similar acute situations have not been encountered at the union government level so far, but corresponding amendments in the Constitution should also be considered for the provisions relating to the union government budget.13

The statement required to be tabled before the legislature explaining the circumstances why government has not been in a position to apply for excess grants for the amounts overspent would provide an opportunity for introspection to government as well an opportunity to the legislature to assert itself and hold the executive accountable. With this there may not be any occasion for the more extreme remedy of denying any further spending after the second following year till the overspending of the past is explained and got regularised. The latter may as well remain a reserve or sleeping provision, but a necessary and effective one.

The budget is not a mere statement of income and expenditure of government. It represents the hopes and aspirations of the people as articulated through their representatives in the legislature. The legislature’s control over the executive is not a mere formality; it is basic to the country’s polity. If the good faith assumed by Ambedkar has been found to be misplaced, it is time that the supremacy of the legislature is restored through necessary amendments to the Constitution and the Rules of Procedure framed thereunder.




1 The Constitution of India: Article 266. 2 The Constitution of India: Article 266. 3 The Constitution of India: Article 204. 4 The Constitution of India: Article 204. 5 The Constitution of India: Article 205. 6 The Constitution of India: Article 267. 7 This does not apply to the governments of the

National Capital of Delhi, Goa, Pondicherry and Mizoram; these governments compile their own accounts.

8 The Constitution of India: Article 205.

9 The Constitution of India: Articles 148 to 151; also the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971.

10 Report of the Comptroller and Auditor General of India for the year ended March 31, 1996, No 2 (Civil), Volume II, government of Bihar.

11 Report of the Commission to Review the Working of the Constitution: “It is imperative to evolve a system whereby the PACs consider all reports submitted to them and report to the legislature within a time limit of 12 to 18 months”.

12 This is important since in the past some of the state governments have taken more than one vote on a account and come up with a regular budget much later in the financial year.

13 The Constitution of India; Articles 112,114 and 116, Article 118 is also relevant.

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