Parliamentary Control of Public Expenditure | Public Administration Optional for UPSC (Notes) PDF Download

Introduction

Parliamentary control over the public purse is the cornerstone of public financial administration, playing a vital role in ensuring public accountability. By setting goals for public financial management and monitoring the government's performance in these areas, Parliament exercises control over the effective utilization of public investments and holds the executive branch accountable.

Control and Accountability: Ensuring Legislative Oversight

Legislative controls over the executive branch involve a range of techniques such as goal setting, restrictions, and reporting. These measures aim to ensure that expenditures remain within the allocated grants and that the financial actions of the government align with the fiscal policies and objectives approved by Parliament. The exercise of parliamentary control over the public purse also serves as a tool for accountability at the highest level of government.

The Three Key Accountability Relationships

• Within the parliamentary system, accountability involves three interrelated groups: the public, political leaders, and the executives. The public, as recipients of government services, expects both politicians and executives to be accountable to them. Political leaders, who formulate policies and allocate resources, seek accountability from the executives responsible for policy implementation. The executives, as service providers, are obligated to account for the resources provided to them by the political leaders. 
• Accountability is not a choice but an essential obligation owed by Parliament, the government, and government departments to the people of the nation. Parliament acts on behalf of the people, obtaining accountability information from the executives who are obliged to provide it. The budget serves as an instrument for goal setting approved by Parliament, while the executive provides performance information through accounts and other reports. Audit reports contribute to the accountability process by providing objective and independent analysis of performance information, enabling Parliament to demand improvements.

Background Information: India's Westminster Model

India follows the Westminster model of responsible government, distinguishing it from the American model of separation of powers among the legislature, executive, and judiciary. In the Indian system, the executive branch is composed of members of the legislature, and the majority party or group in the legislature forms the government. During budget considerations, the legislature cannot increase or reduce proposed expenditures or taxation. This limitation stems from the fact that the government remains in power only as long as it maintains a majority in Parliament. As long as the executive retains its majority, the appropriations cannot be revised or altered.

Legal Framework of Parliamentary Control

The constitutional provision that all government revenues and receipts flow into a "Consolidated Fund" establishes the legal foundation for parliamentary control. Withdrawals from this fund can only be made in accordance with laws passed by Parliament. The paper outlines the constitutional provisions and conventions governing parliamentary control through the annual budget. It provides an overview of parliamentary financial control in the Central Government, emphasizing the need for capacity building. Although the analysis focuses on the Parliament of India, the conclusions are generally applicable to most states due to uniform practices at both the central and state levels.

The Role of Parliamentary Rules and Orders

Parliamentary rules and orders further enhance parliamentary control by introducing new services and instruments, approving excess demands for grants before their presentation to Parliament, and examining the appropriation accounts, annual finance accounts, and reports from the Comptroller and Auditor General (CAG). Various committees, such as the Public Accounts Committee (PAC) and Committee on Estimates, have specific functions related to financial control and accountability.

Challenges and Opportunities for Strengthening Parliamentary Control

• While parliamentary control over the public purse is crucial, there are challenges that need to be addressed. The article highlights several issues, such as structural problems, lack of transparency in the budget, and the need for reforms. Some of the proposed solutions include establishing a Parliamentary budget office, enhancing electronic data capture and reporting, resolving delays in budget implementation and reporting, strengthening the role of parliamentary committees, and promoting public participation in the budget process.
• Structural problems in parliamentary control arise from factors such as limited time for budget scrutiny, inadequate staff support, and a lack of technical expertise among parliamentarians. To address these challenges, the establishment of a Parliamentary Budget Office (PBO) can be considered. The PBO would provide independent analysis and support to parliamentarians, assisting them in understanding the budgetary implications of government policies and proposals.
• Enhancing electronic data capture and reporting systems can significantly improve transparency and accountability in the budget process. Digital platforms can streamline the collection and dissemination of financial information, making it easily accessible to parliamentarians and the public. This would enable more informed discussions and effective oversight of public funds.
• Delays in budget implementation and reporting can undermine parliamentary control. It is crucial to address these delays and ensure timely and accurate reporting by government departments. Strengthening the monitoring mechanisms and holding officials accountable for delays can help improve the efficiency and effectiveness of budget execution.
• Parliamentary committees, such as the Public Accounts Committee (PAC) and Committee on Estimates, play a crucial role in financial control and accountability. These committees should be empowered with more resources and authority to scrutinize budgetary matters. Strengthening their capacity and ensuring their recommendations are taken seriously can enhance parliamentary control over the public purse.
• Promoting public participation in the budget process is essential for fostering transparency and accountability. Engaging citizens through consultations, public hearings, and feedback mechanisms can provide valuable insights and ensure that the budget reflects the needs and priorities of the people. Civil society organizations and the media can also play a significant role in holding the government accountable and advocating for responsible fiscal management.

Conclusion

In conclusion, parliamentary control over the public purse is a vital component of public accountability. By setting goals, monitoring performance, and demanding transparency, Parliament ensures the effective utilization of public funds and holds the government accountable to the people. Addressing challenges, such as structural issues, lack of transparency, and delays, while embracing opportunities for reform, can strengthen parliamentary control and contribute to better financial governance in India.