Article 204

Article 204 of the Constitution of India governs the procedure for introducing and passing Appropriation Bills in the State Legislature. It provides the constitutional mechanism through which the state government obtains legal authorisation to withdraw money from the Consolidated Fund of the State. The Article safeguards financial accountability and legislative oversight, ensuring that no public funds are spent without the explicit sanction of the elected representatives.

Constitutional Objective and Framework

The purpose of Article 204 is to establish a system of parliamentary control over government expenditure. Once the State Legislature has discussed and approved demands for grants under Article 203, an Appropriation Bill is introduced to authorise the withdrawal of funds from the Consolidated Fund of the State.
This process upholds the fundamental democratic principle that “no money shall be spent from the public exchequer without legislative approval.”

 Introduction of the Appropriation Bill

Article 204, provides that after the State Legislature has approved the grants under Article 203, an Appropriation Bill shall be introduced to authorise the withdrawal of funds required to:

1. Meet the grants approved by the Legislative Assembly, and
2. Meet expenditure charged upon the Consolidated Fund of the State (as specified in Article 202).

The introduction of the Appropriation Bill follows the completion of the budgetary process. It consolidates all expenditure proposals—both votable and non-votable—into one comprehensive financial enactment.
This Bill is usually introduced by the Finance Minister on behalf of the government and is a formal step to translate the approved budget into enforceable law.

 Restrictions on Amendments

Article 204, imposes strict limitations on the Legislature’s power to amend an Appropriation Bill. The Constitution explicitly prohibits any amendment that would:

• Alter the amount of any grant approved under Article 203;
• Change the purpose for which the grant was made; or
• Vary the amount of expenditure charged on the Consolidated Fund of the State.

This restriction ensures that the financial approvals given during the demands for grants cannot be revisited or undermined during the passage of the Appropriation Bill. The decision of the presiding officer of the Legislative Assembly regarding the admissibility of amendments is final and binding.
Such procedural rigidity safeguards the integrity of the budget process and prevents any arbitrary or retrospective alteration of financial allocations after legislative approval.

Withdrawal of Funds from the Consolidated Fund

Under Article 204, no money shall be withdrawn from the Consolidated Fund of the State except under the authority of an Appropriation Act.
This clause serves as a constitutional safeguard against unauthorised expenditure. Even though the budget may have been approved, actual withdrawal and spending can only occur after the enactment of the Appropriation Act.
The provision ensures that all government spending is:

• Legally authorised,
• Purpose-specific, and
• Subject to legislative scrutiny.

The clause must be read in conjunction with Articles 205 and 206, which deal with supplementary, additional, and excess grants, ensuring flexibility for unforeseen expenditure while maintaining parliamentary control.

Legislative Process of Appropriation

The passage of an Appropriation Bill follows a well-defined procedure:

1. Preparation and Presentation:After the completion of voting on demands for grants, the Appropriation Bill is prepared, including both charged and votable expenditures. The Governor’s recommendation is required for its introduction.
2. Introduction in the Legislative Assembly:The Bill is introduced, usually by the Finance Minister, and presented as part of the final stage of the budgetary process.
3. Discussion and Passage:Unlike ordinary Bills, the discussion on an Appropriation Bill is limited to procedural and general financial matters, as no amendment can affect the grants already voted upon.
4. Assent of the Governor:After the Bill is passed by the Legislature, it is presented to the Governor for assent. Upon receiving assent, it becomes an Appropriation Act, granting the government legal authority to withdraw money from the Consolidated Fund.
5. Implementation:Once enacted, the Appropriation Act enables the government to incur expenditure within the limits authorised by the Legislature.

This process reflects the constitutional principle of legislative supremacy in financial matters while preserving administrative efficiency in state governance.

Relationship with Related Articles

Article 204 functions within a broader constitutional framework governing state finances:

• Article 202: Mandates the presentation of the annual financial statement (state budget).
• Article 203: Specifies the procedure for discussion and voting on demands for grants.
• Article 205: Provides for supplementary, additional, and excess grants to meet unforeseen expenditures.
• Article 206: Relates to the authorisation of expenditure in advance when the Appropriation Act is delayed.

Together, these provisions ensure systematic financial management and legislative control over public expenditure.

Judicial Interpretations and Important Case Laws

The Supreme Court has clarified and reinforced the constitutional significance of Article 204 through various judgments:

• Keshavananda Bharati v. State of Kerala (1973): The Court’s formulation of the basic structure doctrine indirectly affirmed that legislative procedures for financial management are part of the Constitution’s democratic and accountable framework.
• State of West Bengal v. Committee for Protection of Land Rights (2006): The Court reiterated that financial legislation must strictly adhere to constitutional provisions, reinforcing the Legislature’s exclusive control over state finances.
• Indira Gandhi v. Raj Narain (1975): The Court underscored that adherence to procedural requirements in financial and legislative processes is vital for upholding the rule of law and the integrity of representative government.

These decisions emphasise that financial propriety and legislative authorisation are fundamental to constitutional governance.

Significance of Article 204

Article 204 plays a pivotal role in ensuring financial discipline and responsible governance within the states. Its importance can be summarised as follows:

• Authorisation of Expenditure: Ensures that public funds are withdrawn only with legislative approval.
• Prevention of Misuse: Protects the Consolidated Fund from arbitrary or unauthorised spending.
• Transparency and Accountability: Makes the financial operations of the government open to legislative and public scrutiny.
• Fiscal Responsibility: Promotes efficient use of public resources in line with democratic priorities.

The Appropriation Bill thus acts as a constitutional instrument that transforms legislative intent into binding financial authority.

Practical Implications

In practice, every state government introduces an Appropriation Bill annually following the approval of the budget. The Act authorises all withdrawals required for expenditure on various heads—developmental, administrative, and charged.
Additionally, when unforeseen circumstances arise, such as natural disasters or new policy initiatives, supplementary and additional appropriation Bills are introduced under Article 205 to cover the extra expenditure.
Through these mechanisms, Article 204 ensures continuous legislative control over fiscal management and upholds the constitutional tenet that the power of the purse belongs to the people’s representatives.

Constitutional Significance

Article 204 forms the constitutional bridge between budgetary authorisation and fiscal implementation. It encapsulates the democratic doctrine that public money must be spent only with legislative sanction, thereby upholding the principles of accountability, transparency, and financial propriety.