Illustration: Jayachandran/Mint
Illustration: Jayachandran/Mint

Parliament in public finance

India requires greater emphasis on the examination and discussion of the budget on the floor of the House

This series on making Parliament more effective started with an argument against the anti-defection law. The next two parts focused on Parliament’s role in making laws and in holding the government accountable. In this concluding part, we look at its role in allocating financial resources of the central government.

The Constitution lays down the primacy of Parliament in the process of determining the spending priorities of the government. The government cannot impose any taxes unless a law is passed by Parliament. Any expenditure from the Consolidated Fund of India needs prior sanction of Parliament. Being Money Bills, they need to be passed only by Lok Sabha, and Rajya Sabha has only an advisory role.

Usually, each ministry’s Demand for Grants (the detailed spending plan) is referred to the relevant departmentally related standing committee. This committee reports its recommendations to Parliament. Lok Sabha debates these demands. Members of Parliament (MPs) may move motions to cut the expenditure on any particular item. After all the demands are passed, and the appropriations approved, the government may go ahead with its expenditure.

However, the process is often not followed in spirit (and even in letter). The reference to committees is not mandatory, and this process was bypassed in 2009 and 2012. Lok Sabha discusses only a few demands for grants: in the last 10 years, just 6% of demands have been discussed on average. There have also been instances when the standing committee reports have been submitted just before the demand for grants were discussed. For example, in 2010, the standing committee on external affairs submitted its report at 12 noon on 20 April, and the discussion on the demands started at 2pm the same day. The way forward is obvious. There has to be greater emphasis on the examination of the budget by the committees as well as on more detailed discussion on the floor of the House. In the first three Lok Sabhas, the budget was discussed for 134 hours on average each year. This has fallen to 35 hours each year in the last three Lok Sabhas. This trend has to be reversed.

Indeed it is ironic that there is media and public attention on the Members of Parliament Local Area Development Scheme (MPLADS), with MPs being asked about their individual performance on this score. The total annual budget for MPLADS is about 4,000 crore. The annual central government budget is about 17 trillion. That means that MPLADS is about 0.2% of the overall budget. Perhaps, as citizens, we should ask our Lok Sabha MPs about their contribution to the discussion on the budget rather than focus on the MPLADS spending.

However, there is a related technical problem. By convention, Money Bills are taken as equivalent to a vote of confidence. That is, the government is expected to resign if it is not granted the amount demanded. This convention limits Parliament’s flexibility to make changes to the budget without voting out an incumbent government. It would be useful to revisit this convention.

Parliament has an important role in monitoring the expenditure too. The Constitution provides for a Comptroller and Auditor General (CAG) who audits government accounts. The Public Accounts Committee of Parliament examines the reports of the CAG and can make recommendations related to the working of the government. This committee needs to be strengthened in several ways. It needs in-house expert research staff. It should have the powers to summon ministers to explain policy decisions. Its proceedings should be reported to improve transparency in its working.

As we conclude this series, it may be useful to take a quick look at some other reforms that can make Parliament more effective. Many of the proposals made in this series need Parliament to meet more often. Sittings have declined from 600 days on average in the first three Lok Sabhas to 350 days in the 15th Lok Sabha. One reason for less frequent meetings is that Parliament session dates are decided by the government. Note the inherent conflict: Parliament meets to hold the government to account only on dates that the government decides. This conflict can be resolved in two ways. First, have a pre-determined calendar of sitting dates. Second, require that a session is called if a significant minority of MPs (say, 25% or 33% of the total membership) demands so.

We also need reforms in the way the daily business agenda is decided. The current system requires a consensus of all parties to get any discussion on the agenda. This means that everyone, including the government, has a veto on what may be discussed. Again, one could consider changing the rules to require a discussion if a significant minority gives a written notice.

In sum, there is urgent need for several reforms to Parliamentary processes in order to enable our MPs to be more effective. Even if some of the proposals made in this series are pursued, there could be a significant improvement in Parliament’s ability to make laws in an informed manner, hold the government accountable for its actions, and allocate financial resources in the best way, all for the greater good of Indian citizens. We hope the 16th Lok Sabha rises to the challenge.

M.R. Madhavan is president of PRS Legislative Research.

This is the last of a four-part series. Comments are welcome at theirview@livemint.com

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