Article 205

Article 205 of the Constitution of India provides the constitutional framework for supplementary, additional, or excess grants in the states. It enables the State Government, through the Governor, to seek legislative approval for expenditures that were either unforeseen or inadequately provided for in the original budget. This provision ensures fiscal flexibility, accountability, and legislative oversight in state financial management.

Constitutional Purpose and Context

Article 205 acts as a corrective and supplementary mechanism to the annual financial process governed by Articles 202 to 204. While Article 202 provides for the presentation of the annual financial statement (state budget) and Article 204 authorises withdrawals from the Consolidated Fund of the State, Article 205 addresses situations where:

• The sanctioned funds are insufficient for the current financial year;
• New services or schemes require additional expenditure; or
• The actual spending has exceeded the amount authorised by the Legislature.

Thus, Article 205 ensures that every rupee spent by the government, whether budgeted or unforeseen, remains subject to legislative sanction and scrutiny.

Governor’s Responsibilities under Article 205

The Governor plays a key constitutional role in initiating and overseeing the process of supplementary and additional grants. The Article empowers the Governor to act in the following situations:

1. Supplementary Grants:When the authorised amount for a service or scheme proves insufficient for the financial year, the Governor may present to the State Legislature a statement showing the estimated additional expenditure required to meet the shortfall.
2. Additional Grants:When new services or projects, not included in the annual financial statement, need to be financed during the financial year, the Governor may propose additional grants to cover such expenditure.
3. Excess Grants:When expenditure on any service during a financial year exceeds the amount previously authorised, the Governor must present to the Legislature a statement of such excess expenditure, seeking retrospective approval.

In each of these cases, the Governor ensures that no expenditure is incurred or regularised without legislative approval, thereby preserving the Legislature’s constitutional authority over public finances.

Legislative Procedure and Process

The procedure for supplementary, additional, and excess grants mirrors that for the original budget, as outlined in Articles 202, 203, and 204.

1. Presentation of the Statement:The Governor lays before the House or Houses of the Legislature a statement showing the estimated additional or excess expenditure for the financial year.
2. Demands for Grants:Each new or supplementary expenditure proposal is presented as a demand for grant under Article 203. The Legislative Assembly (and Legislative Council, where applicable) debates and votes on these demands.
3. Appropriation Bill:Once the demands are approved, an Appropriation Bill is introduced under Article 204 to authorise the withdrawal of the approved sums from the Consolidated Fund of the State.
4. Legislative Approval:No withdrawal or expenditure is permissible without the passing of the Appropriation Act, ensuring that all financial adjustments receive formal legislative sanction.

This process ensures that financial control and transparency are maintained even when adjustments to the budget become necessary.

Types of Grants under Article 205

Article 205 distinguishes between three forms of financial authorisation:

• Supplementary Grants:Sought when the original allocation is insufficient due to factors such as cost escalation, increased demand, or administrative expansion.Example: An unforeseen rise in public health expenditure due to a pandemic.
• Additional Grants:Required when new schemes, services, or emergencies arise that were not included in the original budget.Example: Introduction of a new social welfare programme or natural disaster relief fund.
• Excess Grants:Required after the financial year ends, when actual expenditure exceeds authorised allocations. These excesses must be submitted to the Public Accounts Committee (PAC) for examination before legislative approval.Example: Over-expenditure on infrastructure or disaster management due to unforeseen circumstances.

Related Constitutional Articles

The following Articles complement Article 205 in regulating state financial administration:

• Article 202: Provides for the annual financial statement (the budget).
• Article 203: Outlines the legislative procedure for discussion and voting on estimates.
• Article 204: Deals with Appropriation Bills authorising withdrawals from the Consolidated Fund.
• Article 206: Provides for a Vote on Account and advance authorisation for expenditure pending passage of the Appropriation Bill.

Together, these Articles create a comprehensive constitutional framework for fiscal responsibility and financial control.

Judicial Interpretations and Key Case Laws

The judiciary has reinforced the principles underlying Article 205 through various landmark rulings:

• State of West Bengal v. Union of India (1963): The Supreme Court discussed the financial powers of the Governor and affirmed that state financial management must adhere strictly to constitutional procedures.
• K. C. Gajapati Narayan Deo v. State of Orissa (1953): The Court addressed the legislative competence of the State regarding grants and financial authorisations, highlighting that legislative sanction is indispensable for all government expenditures.
• Indira Gandhi v. Raj Narain (1975): The judgment emphasised the importance of legislative oversight and the need for the executive to operate within constitutionally defined financial limits.

Through these rulings, the judiciary has consistently upheld the principle that fiscal authority flows from the Legislature, not from the executive, reaffirming the democratic character of India’s financial governance.

Significance of Article 205

Article 205 is integral to the financial architecture of the states, ensuring that the government remains accountable to the Legislature for all expenditures, whether planned or unforeseen. Its significance can be summarised as follows:

• Ensures Fiscal Discipline:Prevents unauthorised spending and reinforces adherence to budgetary allocations.
• Maintains Transparency:Requires all supplementary and excess expenditures to be disclosed and debated in the Legislature.
• Provides Financial Flexibility:Allows the government to respond to emergencies, development needs, and economic fluctuations without violating constitutional norms.
• Enhances Legislative Oversight:Empowers elected representatives to review, approve, or reject additional spending proposals.
• Safeguards Public Funds:Ensures that every instance of spending, including post-facto excesses, receives legislative scrutiny and approval.

Practical Implications in State Governance

In practice, Article 205 is invoked multiple times within a financial year to address evolving fiscal requirements.

• Supplementary budgets are often presented mid-year to fund new initiatives or adjust allocations.
• Excess grants are reviewed by the Public Accounts Committee, which scrutinises reasons for over-expenditure and reports to the Legislature.
• Additional grants help the government meet unforeseen demands such as disaster relief, infrastructure development, or new policy measures.

This continuous legislative supervision ensures that executive spending remains constitutionally compliant and that the financial interests of the state are protected.

Constitutional and Democratic Importance

Article 205 embodies the principle of responsible government, ensuring that the executive remains answerable to the Legislature for every act of public spending. It reinforces the doctrine of separation of powers by giving the Legislature control over the executive’s financial operations while allowing flexibility for effective administration.