Article 206

Article 206 of the Constitution of India provides for temporary financial authorisations to ensure the uninterrupted functioning of government in cases where the full budgetary process cannot be completed in time or when unforeseen expenditures arise. This Article empowers the State Legislature, particularly the Legislative Assembly, to grant funds in advance or make exceptional provisions for financial exigencies. It mirrors Article 116, which applies to the Union Parliament.

Constitutional Purpose and Context

The purpose of Article 206 is to maintain continuity in public administration and financial stability, especially when the regular budget has not yet been passed or when extraordinary circumstances require urgent expenditure. It prevents any disruption in essential services or governmental operations due to procedural or unforeseen delays in the annual financial process.
In a parliamentary democracy, financial authority rests with the Legislature. However, delays in passing the Appropriation Act under Article 204 may leave the government temporarily unable to withdraw funds from the Consolidated Fund of the State. Article 206 provides constitutional remedies in such situations through mechanisms like Vote on Account, Vote of Credit, and Exceptional Grants.

Powers of the Legislative Assembly

Under Article 206, the Legislative Assembly of a State may make the following types of grants:

(a) Vote on Account

A Vote on Account authorises the government to withdraw money from the Consolidated Fund of the State to meet routine expenditure for a short period until the regular budget is passed.

• It is typically sought when the financial year is about to begin but the annual financial statement (budget) has not yet been fully discussed and approved.
• The grant usually covers one-sixth of the total estimated expenditure for a period of two to four months.
• It is passed in the same manner as the Appropriation Bill but with limited debate, focusing only on ensuring continuity in essential public services.

Purpose: To enable the government to maintain normal administration during the interim period before the full budget is enacted.

(b) Vote of Credit

A Vote of Credit is granted to meet unexpected or urgent demands on the state’s resources that cannot be fully detailed or foreseen in the annual financial statement.

• It is used in exceptional circumstances such as natural disasters, security emergencies, or public health crises.
• Unlike a Vote on Account, the Vote of Credit may involve large, unspecified expenditures, and the details of such spending are presented later for legislative approval.

Purpose: To empower the government to respond swiftly to emergencies that require immediate financial action.

(c) Exceptional Grants

An Exceptional Grant is authorised for special purposes not covered by the current financial year’s services or budgetary provisions.

• It may be used to finance new schemes or programmes introduced mid-year or for special one-time projects.
• Exceptional grants are not part of the regular budget cycle and require a separate legislative procedure for approval.

Purpose: To accommodate non-recurring or new financial needs that arise after the annual financial statement has been presented.

Application of Rules and Procedures

Under Article 206, all grants made under Clause (1)—whether a Vote on Account, Vote of Credit, or Exceptional Grant—are subject to the same constitutional procedures as those applicable to ordinary grants under Articles 203 and 204.
This means that:

• Each grant must be recommended by the Governor before being introduced;
• It must be approved by the Legislative Assembly; and
• It must be followed by an Appropriation Bill authorising the withdrawal of funds from the Consolidated Fund of the State.

Thus, even in urgent or exceptional circumstances, legislative control and accountability over public finances are preserved.

Related Constitutional Provisions

Article 206 operates in harmony with other constitutional articles that collectively govern state financial management:

• Article 202: Presentation of the annual financial statement (State Budget).
• Article 203: Procedure in the Legislature with respect to demands for grants.
• Article 204: Appropriation Bills authorising withdrawals from the Consolidated Fund.
• Article 205: Supplementary and additional grants for unforeseen expenditure.

Together, these provisions ensure that state finances are managed responsibly, combining fiscal flexibility with legislative oversight.

Judicial Interpretations and Key Case Laws

Although Article 206 has rarely been the direct subject of litigation, several constitutional judgments have elaborated on the principles of financial accountability and legislative control, which underpin this Article:

• Keshavananda Bharati v. State of Kerala (1973): Established the basic structure doctrine, affirming that parliamentary control over finances forms part of the Constitution’s fundamental democratic structure.
• State of West Bengal v. Union of India (1963): Discussed the division of financial powers between the Centre and the States, highlighting that all expenditure must follow constitutional processes.
• Indira Gandhi v. Raj Narain (1975): Emphasised the necessity of maintaining the constitutional balance between the executive and legislature in financial decision-making.

These rulings collectively reinforce the view that financial emergency powers and temporary authorisations must remain within the boundaries of legislative control.

Significance of Article 206

Article 206 plays a crucial role in ensuring continuity and stability in governance, especially during periods of financial or administrative uncertainty. Its importance lies in the following aspects:

• Uninterrupted Governance:It prevents administrative paralysis by allowing government operations to continue even when the full budget is pending.
• Fiscal Flexibility:Provides the state with the means to respond to unforeseen situations requiring immediate financial intervention.
• Legislative Accountability:Although temporary, all grants under this Article are subject to legislative approval, ensuring transparency and democratic oversight.
• Emergency Preparedness:Empowers the government to deal with natural calamities, epidemics, or other emergencies without violating constitutional procedures.

Practical Applications in State Governance

In practice, Article 206 is invoked in three key scenarios:

1. Transition between Governments: When a new government assumes office shortly before the start of the financial year and requires time to prepare its own budget.
2. Financial Emergencies: When unforeseen circumstances such as floods, earthquakes, or epidemics demand immediate financial response.
3. Parliamentary Delays: When prolonged debates prevent the timely passing of the annual budget.

In such cases, Votes on Account and Votes of Credit allow the government to access funds temporarily while maintaining constitutional legitimacy.

Legislative Control and Accountability

Even though Article 206 provides for temporary authorisation of expenditure, it does not diminish legislative control. Every such grant must eventually be:

• Incorporated into the annual or supplementary budget;
• Subjected to audit and review by the Comptroller and Auditor General (CAG); and
• Presented to the Legislature for retrospective approval and scrutiny.

This process ensures that fiscal transparency and legislative supremacy are upheld even during emergencies or budgetary delays.

Constitutional and Democratic Significance

Article 206 embodies the principles of responsible government and financial accountability, which are essential features of India’s parliamentary democracy. It ensures that the executive can act swiftly in emergencies without bypassing the Legislature’s authority over public funds.By balancing fiscal flexibility with constitutional discipline, Article 206 preserves both efficiency in governance and accountability in financial administration.