BUDGET PROCESS: POLITY
NEWS: India’s marginalised Parliament in budgetary affairs
WHAT’S IN THE NEWS?
The current budgetary process in India suffers from executive dominance and limited Parliamentary scrutiny, with minimal involvement of the Rajya Sabha. Proposed reforms, such as pre-Budget discussions and the establishment of a Parliamentary Budget Office (PBO), aim to strengthen Parliament’s oversight and enhance democratic involvement in the Budget-making process.
Budget Overview and Current Process in India
Definition of the Budget:
• The Budget represents the estimated receipts (income) and expenditure (spending) of the Government of India for a given financial year, which spans from April 1 to March 31.
• The Annual Financial Statement, commonly known as the Budget, is mandated by Article 112 of the Indian Constitution, which states that it must be presented by the President before both Houses of Parliament every financial year.
• The Budget is primarily prepared by the Budget Division, which is part of the Department of Economic Affairs under the Ministry of Finance.
Current State of Budgetary Process in India
Executive Dominance in Budget Formulation:
• Finance Ministry's Role: The Finance Ministry is the principal authority responsible for crafting the Budget in India. The entire Budget formulation process is largely controlled by the Ministry of Finance, and other government departments, including Cabinet Ministers, are kept largely uninformed until the Budget is presented in the Lok Sabha.
• Lack of Cabinet Discussions: Unlike other legislative bills, the Budget is not subjected to thorough Cabinet discussions before being introduced in Parliament. This centralization of power in the executive body significantly limits Cabinet involvement in financial planning.
Weak Parliament Scrutiny:
• Limited Role of Parliament: Parliament’s involvement in the Budget formulation and scrutiny is mostly ceremonial in India. Due to the executive’s monopoly over financial planning, debates within Parliament regarding the Budget are often fragmented, with limited oversight or meaningful discussion, weakening the representative democracy.
• Parliamentary Approval: Members of Parliament (MPs) lack the power to amend or substantially influence the Budget proposals. As a result, their role is mostly restricted to approving the proposals, making their involvement passive.
• Rajya Sabha's Role: Despite the democratic nature of the Rajya Sabha (the upper house of Parliament), it has no substantive role in the Budget discussions. Ironically, even though the Finance Minister may be a member of Rajya Sabha, they are unable to vote on their own Budget proposals in the Lok Sabha.
Proposed Reforms to Strengthen Parliamentary Oversight in the Budget Process
1. Institutionalizing Pre-Budget Discussions:
• Dedicated Pre-Budget Session: It is suggested that there be a five to seven-day pre-Budget discussion period during the monsoon session of Parliament, prior to the presentation of the Budget.
• Democratization of the Budget Process: Such a session would allow elected representatives to assess the nation’s fiscal health, voice public concerns, and suggest equitable resource allocation. This would promote a more democratic approach to Budget formulation.
• Enhanced Coordination: The pre-Budget discussions would encourage better coordination among subject committees, enabling them to provide more informed input during the Budget-making process.
• Public Engagement: By including discussions that reflect public concerns, this reform would foster transparency and trust in the financial governance of the country.
2. Establishment of a Parliamentary Budget Office (PBO):
• PBO's Role and Function: The Parliamentary Budget Office (PBO) would be an independent, non-partisan institution designed to provide objective financial and economic analysis of the government’s Budget.
• Support to Parliament: The PBO’s primary function would be to support Parliament’s budgetary oversight, fiscal planning, and economic policymaking by providing evidence-based, expert analysis.
• Policy Briefs and Analysis: The PBO would offer policy briefs to parliamentarians, helping them make informed decisions and ensuring that legislative scrutiny is supported by objective research.
• Expert Assessments: The PBO would also provide expert assessments of the government's spending, revenue forecasts, and the financial impact of policies, enhancing Parliament's ability to scrutinize and hold the government accountable.
Impact of Proposed Reforms
Enhancing Parliamentary Power:
• By integrating pre-Budget discussions and establishing a Parliamentary Budget Office, Parliament would transition from a passive recipient of financial proposals to an active and influential institution in shaping national economic policies and the Budget process.
Strengthening Democracy:
• These reforms would strengthen the democratic process by allowing more public involvement, improving the coordination between committees, and ensuring that the Budget reflects the needs of the public, making it more inclusive and transparent.
Improved Oversight and Accountability:
• The introduction of the PBO would enhance Parliament’s capacity to scrutinize government spending and provide evidence-based policy discussions. It would also help in increasing accountability and ensuring that government financial decisions are more thoroughly examined and debated.
Conclusion
• The current budgetary process in India suffers from executive dominance, limited Parliamentary scrutiny, and a lack of meaningful involvement of the Rajya Sabha.
• By institutionalizing pre-Budget discussions and establishing an independent Parliamentary Budget Office (PBO), Parliament would have the tools necessary to actively influence the Budget, ensuring better oversight, accountability, and public trust in the country’s financial governance.
Source: https://www.thehindu.com/opinion/lead/indias-marginalised-parliament-in-budgetary-affairs/article69358975.ece