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When the annual Union Budget is not passed by the Lok Sabha.
Explanation
In the Indian parliamentary system, the Union Budget is treated as a Money Bill and its passage is a test of the government's majority in the Lok Sabha [1]. Under the principle of collective responsibility, if the annual budget is defeated or not passed by the Lok Sabha, it signifies that the government has lost the confidence of the House. Since the government cannot function without the authority to withdraw funds from the Consolidated Fund of India, the failure to pass the budget is equivalent to a vote of no-confidence. Consequently, the Prime Minister must submit the resignation of the entire Council of Ministers to the President. The Rajya Sabha has limited powers regarding the budget; it can only discuss and suggest recommendations, but cannot reject it or prevent its passage if the Lok Sabha remains firm [2].
Sources
- [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > Finance Bill > p. 149
- [2] Democratic Politics-I. Political Science-Class IX . NCERT(Revised ed 2025) > Chapter 4: WORKING OF INSTITUTIONS > Two Houses of Parliament > p. 62