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Article 202 of Indian Constitution- Detailed Analysis

Last Updated on Apr 11, 2025
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Overview

Name of the Article

Article 202 of Indian Constitution- Annual financial statement

Part of the Constitutional Article

Part VI

Under Part VI of the Constitution, The Indian Constitution through Article 202 requires states to present their Annual Financial Statement before the state legislature which serves as the state budget. This provision guarantees financial openness and responsibility throughout Indian states. Article 202 of Indian Constitution establishes procedures for budget presentation which are fundamental to state financial administration. Explore in-depth analysis of other Constitutional Articles.

Background of Article 202 of Indian Constitution

The  Indian Constitution, adopted in 1950, established a federal structure with a clear division of powers between the Union and state governments.Financial autonomy together with responsibility serve as fundamental components of this structure. Article 202 exists to enforce financial accountability and transparency across each state's financial management system. The Governor is required to deliver an annual financial statement to the state legislature which includes projected receipts and expenditures for the next financial year. The system helps maintain financial responsibility while allowing legislators to examine and give approval to budget plans.

Interpretation of Article 202 of Indian Constitution

The Governor is required to present an annual financial statement to the state legislature each financial year based on Article 202. This statement encompasses: 

  1. Estimated Receipts: Projections of the state's income from various sources, including taxes, fees, and grants.
  2. Estimated Expenditures: Spending that is anticipated in areas including infrastructure, administrative tasks, healthcare, and education.

The article further distinguishes between:

  • Expenditure Charged Upon the Consolidated Fund of the State: Expenses that are not subject to the vote of the legislature, such as salaries of high-ranking officials and judges.
  • Other Expenditures: Expenses that require legislative approval.

This bifurcation sees that certain essential expenditures are safeguarded, while others undergo legislative scrutiny.

Landmark Cases and Judgments of Article 202 of Indian Constitution

While Article 202 primarily outlines procedural aspects of financial administration, there have been instances where its interpretation has been subject to judicial review:

  1. State of Karnataka v. Union of India (1977): The Supreme Court reviewed the financial independence of states while assessing the Governor's function in budget presentations which strengthened the principles set forth in Article 202 of the Indian Constitution.
  2. PUCL v. Union of India (2003): Although not directly related to Article 202, this case emphasized the importance of financial transparency and accountability in governance, principles that underpin the article.

Significance of Article 202 of Indian Constitution

Article 202 holds substantial significance in the financial governance of states:

  • Fiscal Transparency: The requirement to present an annual financial statement guarantees that both legislative bodies and the public can examine the financial plans of the state.
  • Legislative Oversight:Approval of expenditures by the state legislature creates a checks and balances system which prevents public funds from being used arbitrarily.
  • Public Accountability: When citizens have access to budgetary information they are able to hold the government accountable by evaluating its financial goals and operations. 

Developments and Amendments of Article 202 of Indian Constitution

Since its inception, Article 202 has remained unamended. However, its application has evolved with changing governance practices:

  • Technological Integration: Modern states have adopted digital platforms to present and disseminate budgetary information, enhancing accessibility and transparency.

Participatory Budgeting: Participatory budgeting processes launched by certain states enable citizens to get involved in budget decisions which strengthens the democratic foundation described in Article 202 of Indian Constitution.

Conclusion

Under Article 202, state fiscal management is based. State financial management is made public and accountable by the required yearly financial statement presented under Article 202. This clause improves financial responsibility and discipline while empowering citizens and legislative bodies to make well-informed choices about the distribution of the state budget. The Indian Constitution's Article 202 remains a fundamental directive which guides states in developing effective and transparent financial administration amidst evolving governance practices.
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FAQs on Article 202 of Indian Constitution

What is Article 202 of Indian Constitution? Article 202 of Indian Constitution requires the Governor to present the annual financial statement, detailing the state's estimated receipts and expenditures.

It includes estimated receipts, charged expenditures like Governor’s and High Court judges’ salaries, and other expenditures requiring legislative approval.

Charged expenditures include salaries of the Governor, Speaker, Deputy Speaker, High Court judges, debt charges, and court-ordered payments.

The Governor of the respective state presents the financial statement before the state legislature for scrutiny and approval.

It ensures fiscal transparency and accountability by mandating that the state’s financial estimates are presented for legislative review.
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