Part VI: The State Legislature

Article 202: Annual Financial Statement

Original Article:

Article 202. Annual financial statement:

(1) The Governor shall in respect of every financial year cause to be laid before the House or Houses of the Legislature of the State a statement of the estimated receipts and expenditure of the State for that year, in this Part referred to as the "annual financial statement".

(2) The estimates of expenditure embodied in the annual financial statement shall show separately—

• (a) the sums required to meet expenditure described by this Constitution as expenditure charged upon the Consolidated Fund of the State; and
• (b) the sums required to meet other expenditure proposed to be made from the Consolidated Fund of the State; and shall distinguish expenditure on revenue account from other expenditure.

(3) The following expenditure shall be expenditure charged on the Consolidated Fund of each State—

• (a) the emoluments and allowances of the Governor and other expenditure relating to his office;
• (b) the salaries and allowances of the Speaker and the Deputy Speaker of the Legislative Assembly and, in the case of a State having a Legislative Council, also of the Chairman and the Deputy Chairman of the Legislative Council;
• (c) debt charges for which the State is liable including interest, sinking fund charges and redemption charges, and other expenditure relating to the raising of loans and the service and redemption of debt;
• (d) expenditure in respect of the salaries and allowances of Judges of any High Court;
• (e) any sums required to satisfy any judgment, decree or award of any court or arbitral tribunal;
• (f) any other expenditure declared by this Constitution, or by the Legislature of the State by law, to be so charged.

Explanations:

Article 202 establishes the process of presenting the annual financial statement in state legislatures. It categorizes expenditures into "charged" and "votable" categories, ensuring fiscal accountability while protecting essential governance functions.

Clause-by-Clause Breakdown:

Clause (1): Governor's Responsibility

The Governor must present the annual financial statement detailing the state's estimated receipts and expenditures.

Clause (2): Expenditure Categories

Expenditures are categorized as charged or other expenditures, distinguishing between revenue and capital accounts.

Clause (3): Charged Expenditures

• Includes Governor's emoluments, legislative salaries, debt obligations, High Court Judges' salaries, court judgments, and other declared expenditures.

Historical Significance:

Inspired by British governance practices, Article 202 ensures financial independence for essential state functions, maintaining the balance between accountability and autonomy.

Legislative History:

Article 202, originally Article 177 in the Draft Constitution, was debated on June 10, 1949, and adopted with amendments ensuring fiscal clarity and state accountability.

Debates and Deliberations:

Dr. B.R. Ambedkar emphasized the need for clear financial provisions, proposing amendments to include "Consolidated Fund" instead of "revenues." This was adopted to align state practices with national standards.

Members like Shri T.T. Krishnamachari supported provisions ensuring judiciary independence by protecting judges' salaries under charged expenditures.

References:

• Constitution of India, Article 202.
• Constituent Assembly Debates, 1949.
• State Legislative Procedures, 2021.