Budget bifurcation debate in Manipur Constitutional limits, Article 371C and the Hill Areas Committee
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Y Devendro Singh
In recent weeks, differing proposals have been voiced—some calling for two internal components within a single State Bud-get, and others suggesting the creation of two entirely separate budgets for the hill areas and the valley areas—leading to extensive public discussion. Much of the discourse circulated through various platforms has reflected continuing miscon- ceptions about the constitutional framework governing the presentation of the Annual Financial Statement and the special institutional arrangements established for the hill areas under Article 371C of the Consti- tution of India. These developments underscore the need for a clear and authoritative exposition of how the budgeting provisions under Articles 112 and 202, the structure of the Consolidated Fund under Article 266, and the consultative mechanisms associated with the Hill Areas Committee operate within the State’s constitutional order.
The purpose of this article is not to engage in political advocacy but to provide a rigorous and impartial analysis for legis- lators, administrators, scholars, media professionals, and the wider public. It explicates the relevant Constitutional provisions, elucidates the consultative and supervisory jurisdiction of the Hill Areas Committee under Sections 4, 5, 6, and 9 of the 1972 Presidential Order, and examines whether the constitutional scheme permits any territorial or functional bifurcation of the State Budget. It also clarifies the limited procedural role of executive forwarding and administrative correspondence under Articles 77, 166, and 350, which are often misconstrued as conveying substantive approval. By delineating these constitutional boundaries and institutional responsibilities, the article seeks to dispel confusion, reinforce cooperative federal governance, and reaffirm the obligation of all stakeholders to uphold unity, legality, and constitutional fidelity in matters pertaining to the State’s financial administration.
The Budget in the Indian constitutional context is not merely a financial document but a living expression of democratic accountability. It symbolises the Legislature’s control over the Executive, ensuring that public funds are raised and spent only with the consent of the people’s representatives. Although the term “Budget” does not appear in the Constitution of India, its essence is enshrined in the Annual Financial Statement under Article 112 for the Union and Article 202 for the States. These provisions institutionalise the principle that every government must present before the Legislature, each financial year, a comprehensive statement of estimated receipts and expenditure. The object is to ensure transparency, prevent arbitrary financial action, and reaffirm the supremacy of the Legislature in matters of public finance.
Under Article 112, the President causes to be laid before both Houses of Parliament the financial state- ment of the Government of India, known as the Union Budget. Correspondingly, Article 202 mandates that the Governor of each State shall lay before the State Legislature the statement of estimated receipts and expenditure of the Govern- ment of the State, known as the State Budget. These provisions, read with Articles 113–117 and 203–207, and reinforced by Articles 118–119 and 208–209 relating to rules of procedure for the conduct of financial business, lay down the complete legislative framework governing financial adminis- tration. They prescribe the stages of presentation, discussion, voting, and enactment of Appropriation and Finance Bills, ensuring that legislative sanction precedes every act of expenditure. This structure upholds the ancient democratic maxim of “no taxation without representation,” placing fiscal authority in the collective will of the Legislature.
The Union and State Budgets are each divided into two components: the Revenue Budget, which covers recurring receipts and expenditure such as taxation, administration, and maintenance, and the Capital Budget, which includes borrowings, investments, and asset creation. Together, these elements reflect both the immediate operational needs of government and its long-term developmental objectives. The classification provides insight into fiscal responsibility and developmental planning. A sound Budget seeks to maintain equilibrium between these two aspects—ensuring financial prudence without neglecting social investment. Thus, the Budget functions not only as a financial plan but also as a constitutional tool for the realisation of public welfare through parliamentary supervision.
The Consolidated Fund of India and the Consolidated Fund of each State, created under Article 266(1), form the bedrock of India’s fiscal system by requiring that all revenues and loans be credited to a single Fund and that no expenditure be incurred except under authority of law, thereby ensuring unity, discipline, and democratic control in public finance. This core principle operates within a wider constitutional architecture of fiscal accountability : Articles 112– 117 and 202–207 establish the legislative procedures for presentation, appropriation, and expenditure of public funds; Article 283 mandates that the custody of the Consolidated Fund and the manner of withdrawal of moneys be determined strictly by statute; and Articles 148–151 constitute the Comptroller and Auditor-General of India as the independent constitutional guardian of public finance, auditing every rupee spent from the Fund and reporting directly to the Legislature. Article 150 further requires that the accounts of the Union and the States be maintained in such form as the President may prescribe on the advice of the CAG, thereby ensuring uniformity, transpa- rency, and comparability of financial records across the federal system. Taken together, these provisions transform the Consolidated Fund from a mere fiscal repository into a constitutional institution of democratic oversight, creating an unbroken chain of authority and responsibility—from legislative sanc- tion to executive compliance to independent audit—that reaffirms the supremacy of Parliament and State Legislatures in all matters of public finance and upholds the principles of transparency, accountability, and fiscal integrity.
A misconception occasionally arises that the administrative forwarding of communications through governmental channels reflects institutional support for a divided State Budget. This overlooks the routine nature of such procedures under the Constitution. Communications exchanged under the Rules of Business framed pursuant to Articles 77 (Union) and 166 (State), and processed in accordance with the right to submit representations under Article 350, signify only procedural compliance and do not amount to substantive approval or any modification of the constitutional financial frame- work. It is therefore necessary to distinguish administrative process from constitutional authority: the expression and authentication of executive action merely indicate that a communication has entered ordinary scrutiny and do not imply endorsement or confer any sanction for budgetary bifurcation. Properly understood, the entire administrative chain is preliminary and without constitutional effect, and it does not alter the position established by Articles 266 and 202–207, which mandate a unified budgeting system based on a single Consolidated Fund and a single Annual Financial Statement. The Constitution provides no authority for dividing this unified structure into territorially separate components, and Article 371C cannot be interpreted to support such a division.
Within India’s constitutional architecture, the State of Manipur occupies a distinctive position owing to its social, ethnic, and geographical diversity, a reality addressed through Article 371C, introduced by the Constitution (Twenty-seventh Amendment) Act, 1971, to establish special arrangements for the administration of its hill areas. Article 371C requires the Governor to ensure the proper functioning of a Hill Areas Committee composed exclusively of members elected from hill constituencies, and a Presidential Order issued pursuant to this mandate outlines the Committee’s powers, functions, and procedures as a mechanism for institutional consultation within the Legislative Assembly.
(Contd )
In recent weeks, differing proposals have been voiced—some calling for two internal components within a single State Bud-get, and others suggesting the creation of two entirely separate budgets for the hill areas and the valley areas—leading to extensive public discussion. Much of the discourse circulated through various platforms has reflected continuing miscon- ceptions about the constitutional framework governing the presentation of the Annual Financial Statement and the special institutional arrangements established for the hill areas under Article 371C of the Consti- tution of India. These developments underscore the need for a clear and authoritative exposition of how the budgeting provisions under Articles 112 and 202, the structure of the Consolidated Fund under Article 266, and the consultative mechanisms associated with the Hill Areas Committee operate within the State’s constitutional order.
The purpose of this article is not to engage in political advocacy but to provide a rigorous and impartial analysis for legis- lators, administrators, scholars, media professionals, and the wider public. It explicates the relevant Constitutional provisions, elucidates the consultative and supervisory jurisdiction of the Hill Areas Committee under Sections 4, 5, 6, and 9 of the 1972 Presidential Order, and examines whether the constitutional scheme permits any territorial or functional bifurcation of the State Budget. It also clarifies the limited procedural role of executive forwarding and administrative correspondence under Articles 77, 166, and 350, which are often misconstrued as conveying substantive approval. By delineating these constitutional boundaries and institutional responsibilities, the article seeks to dispel confusion, reinforce cooperative federal governance, and reaffirm the obligation of all stakeholders to uphold unity, legality, and constitutional fidelity in matters pertaining to the State’s financial administration.
The Budget in the Indian constitutional context is not merely a financial document but a living expression of democratic accountability. It symbolises the Legislature’s control over the Executive, ensuring that public funds are raised and spent only with the consent of the people’s representatives. Although the term “Budget” does not appear in the Constitution of India, its essence is enshrined in the Annual Financial Statement under Article 112 for the Union and Article 202 for the States. These provisions institutionalise the principle that every government must present before the Legislature, each financial year, a comprehensive statement of estimated receipts and expenditure. The object is to ensure transparency, prevent arbitrary financial action, and reaffirm the supremacy of the Legislature in matters of public finance.
Under Article 112, the President causes to be laid before both Houses of Parliament the financial state- ment of the Government of India, known as the Union Budget. Correspondingly, Article 202 mandates that the Governor of each State shall lay before the State Legislature the statement of estimated receipts and expenditure of the Govern- ment of the State, known as the State Budget. These provisions, read with Articles 113–117 and 203–207, and reinforced by Articles 118–119 and 208–209 relating to rules of procedure for the conduct of financial business, lay down the complete legislative framework governing financial adminis- tration. They prescribe the stages of presentation, discussion, voting, and enactment of Appropriation and Finance Bills, ensuring that legislative sanction precedes every act of expenditure. This structure upholds the ancient democratic maxim of “no taxation without representation,” placing fiscal authority in the collective will of the Legislature.
The Union and State Budgets are each divided into two components: the Revenue Budget, which covers recurring receipts and expenditure such as taxation, administration, and maintenance, and the Capital Budget, which includes borrowings, investments, and asset creation. Together, these elements reflect both the immediate operational needs of government and its long-term developmental objectives. The classification provides insight into fiscal responsibility and developmental planning. A sound Budget seeks to maintain equilibrium between these two aspects—ensuring financial prudence without neglecting social investment. Thus, the Budget functions not only as a financial plan but also as a constitutional tool for the realisation of public welfare through parliamentary supervision.
The Consolidated Fund of India and the Consolidated Fund of each State, created under Article 266(1), form the bedrock of India’s fiscal system by requiring that all revenues and loans be credited to a single Fund and that no expenditure be incurred except under authority of law, thereby ensuring unity, discipline, and democratic control in public finance. This core principle operates within a wider constitutional architecture of fiscal accountability : Articles 112– 117 and 202–207 establish the legislative procedures for presentation, appropriation, and expenditure of public funds; Article 283 mandates that the custody of the Consolidated Fund and the manner of withdrawal of moneys be determined strictly by statute; and Articles 148–151 constitute the Comptroller and Auditor-General of India as the independent constitutional guardian of public finance, auditing every rupee spent from the Fund and reporting directly to the Legislature. Article 150 further requires that the accounts of the Union and the States be maintained in such form as the President may prescribe on the advice of the CAG, thereby ensuring uniformity, transpa- rency, and comparability of financial records across the federal system. Taken together, these provisions transform the Consolidated Fund from a mere fiscal repository into a constitutional institution of democratic oversight, creating an unbroken chain of authority and responsibility—from legislative sanc- tion to executive compliance to independent audit—that reaffirms the supremacy of Parliament and State Legislatures in all matters of public finance and upholds the principles of transparency, accountability, and fiscal integrity.
A misconception occasionally arises that the administrative forwarding of communications through governmental channels reflects institutional support for a divided State Budget. This overlooks the routine nature of such procedures under the Constitution. Communications exchanged under the Rules of Business framed pursuant to Articles 77 (Union) and 166 (State), and processed in accordance with the right to submit representations under Article 350, signify only procedural compliance and do not amount to substantive approval or any modification of the constitutional financial frame- work. It is therefore necessary to distinguish administrative process from constitutional authority: the expression and authentication of executive action merely indicate that a communication has entered ordinary scrutiny and do not imply endorsement or confer any sanction for budgetary bifurcation. Properly understood, the entire administrative chain is preliminary and without constitutional effect, and it does not alter the position established by Articles 266 and 202–207, which mandate a unified budgeting system based on a single Consolidated Fund and a single Annual Financial Statement. The Constitution provides no authority for dividing this unified structure into territorially separate components, and Article 371C cannot be interpreted to support such a division.
Within India’s constitutional architecture, the State of Manipur occupies a distinctive position owing to its social, ethnic, and geographical diversity, a reality addressed through Article 371C, introduced by the Constitution (Twenty-seventh Amendment) Act, 1971, to establish special arrangements for the administration of its hill areas. Article 371C requires the Governor to ensure the proper functioning of a Hill Areas Committee composed exclusively of members elected from hill constituencies, and a Presidential Order issued pursuant to this mandate outlines the Committee’s powers, functions, and procedures as a mechanism for institutional consultation within the Legislative Assembly.
(Contd )