BharatNotes What is Annual Financial Statement?
The Annual Financial Statement (AFS) is the statement of estimated receipts and expenditure of the Government of India for a financial year (1 April to 31 March) that the President causes to be laid before both Houses of Parliament under Article 112 of the Constitution. Though popularly called the Union Budget, the word "Budget" is not mentioned anywhere in the Constitution — Article 112 speaks only of the "annual financial statement". The AFS typically presents figures for three years: Budget Estimates for the ensuing year, Revised Estimates for the current year, and Actuals for the preceding year.
Constitutional Framework and Structure
The receipts and disbursements in the AFS are shown under the three parts in which Government accounts are kept:
| Fund | Article | Nature |
|---|---|---|
| Consolidated Fund of India | 266(1) | All revenues, loans raised and loan recoveries; no withdrawal without parliamentary authorisation |
| Contingency Fund of India | 267 | Imprest with the President for urgent, unforeseen expenditure; corpus raised from ₹500 crore to ₹30,000 crore (Finance Act, 2021) |
| Public Account | 266(2) | Banker-type transactions (provident funds, small savings); no parliamentary vote needed |
Article 112(2) further requires the AFS to show charged expenditure separately from other expenditure, and to distinguish expenditure on revenue account from other (capital) expenditure.
Charged vs Voted Expenditure
Under Article 112(3), expenditure charged on the Consolidated Fund of India includes the emoluments of the President; salaries and allowances of the Chairman and Deputy Chairman of the Rajya Sabha and the Speaker and Deputy Speaker of the Lok Sabha; debt charges of the Government of India; salaries, allowances and pensions of Supreme Court judges and of the Comptroller and Auditor-General; pensions of High Court judges; sums needed to satisfy court judgments, decrees or arbitral awards; and any other expenditure so declared by the Constitution or by Parliament. Under Article 113, charged expenditure is not submitted to the vote of Parliament, though either House may discuss it; all other expenditure is presented as demands for grants to the Lok Sabha.
Current Status (Budget 2026-27)
The AFS for FY 2026-27 was presented on 1 February 2026 by Finance Minister Nirmala Sitharaman. Total expenditure is budgeted at about ₹53.5 lakh crore (PRS Legislative Research analysis of BE 2026-27), with capital expenditure of ₹12.2 lakh crore and a fiscal deficit target of 4.3% of GDP, down from 4.4% in RE 2025-26. Since 2017 the Budget date stands advanced to 1 February (from the last working day of February), and the Railway Budget has been merged with the General Budget — the first combined presentation was on 1 February 2017.
UPSC Angle
Prelims tests Articles 112-117, the three funds, the items of charged expenditure, and the fact that the Constitution never uses the word "Budget". Mains (GS3/GS2) links the AFS to parliamentary control over public finance, fiscal consolidation under the FRBM framework, and budgetary reforms such as the railway-budget merger and removal of plan/non-plan classification. This is a foundational concept that underpins questions on the entire budgetary-process topic family.
