PACs Ensure Efficient use of Public Money: Lok Sabha Speaker

Syllabus: GS2/ Polity and Governance

Context

• Lok Sabha Speaker urged Public Accounts Committees (PACs) for time-bound action on pending audit observations and greater scrutiny of the outcomes of government spending.

Recommendations by LS Speaker

• For infrastructure projects, committees should, wherever appropriate, visit sites to examine construction quality, timely completion and compliance with prescribed standards.
• Scrutiny of welfare schemes should assess their actual impact on beneficiaries rather than focus solely on the amount spent, he said.
• Artificial intelligence, data analytics and other technologies could help committees analyse large volumes of expenditure data, identify trends, detect potential irregularities and monitor pending audit observations.
• Parliamentary Discussion: At least one PAC report, along with the government’s action taken on it, be discussed during every session of Parliament.

About Public Accounts Committee (PAC)

• The Public Accounts Committee (PAC) is a parliamentary committee that examines the government’s expenditure and ensures that public money is spent in accordance with the approval granted by Parliament.
• It is one of the three Financial Committees of Parliament, along with:
  • Estimates Committee.
  • Committee on Public Undertakings.
• It was established in 1921, following the Government of India Act, 1919.
  • It is a Standing Parliamentary Committee, a standing committee is a specific type of parliamentary committee that is permanent and continuous, reconstituted periodically.
• Constitutional Status: Not a constitutional body; formed under Rule 308 of the Rules of Procedure and Conduct of Business in Lok Sabha.
• Composition: 22 members (15 from Lok Sabha, 7 from Rajya Sabha)
  • Members are elected by Parliament every year through the system of proportional representation by means of a single transferable vote.
• The term of office of members is one year.
• A minister cannot be elected as a member of the PAC.
• The Chairperson is appointed by the Speaker of the Lok Sabha.
  • Since 1967, by convention, the Chairperson of the PAC is appointed from the Opposition.
• Functions:
  • Examines audit reports of the CAG of India,
  • Scrutinises public expenditure to ensure it is not extravagant or irregular.
  • Ensures accountability of the Executive to the Legislature.
  • Works in tandem with CAG to maintain fiscal discipline and transparency.

What are Parliamentary Standing Committees?

• Parliamentary Standing Committees (PSCs) are permanent committees of Parliament constituted to examine, scrutinise, and oversee the functioning of the executive.
• These committees continue to function throughout the year, unlike ad hoc committees which are temporary.
• Types of Parliamentary Standing Committees:
  • Department-Related Standing Committees (DRSCs): It examines demands for Grants of ministries, bills referred to them and policy issues. Example: Parliamentary Standing Committee on Finance.
  • Financial Committees: Public Accounts Committee (PAC), Estimates Committee and Committee on Public Undertakings.
  • Other Standing Committees: Business Advisory Committee, Committee on Privileges and Rules Committee.

Role of Parliamentary Standing Committees

• Detailed Financial Scrutiny Beyond Parliament: Parliamentary debates often lack time for detailed examination of budgetary provisions.
  • Standing Committees undertake granular scrutiny of Demands for Grants, expenditure trends, and utilisation patterns.
• Evidence-Based and Non-Partisan Oversight: Committees function in a non-partisan manner, relying on expert inputs and data-driven analysis. Their reports provide objective evaluation of policy implementation and fiscal discipline.
• Monitoring of Executive Functioning: Committees operate throughout the year and ensure continuous oversight over ministries and departments. This enhances transparency and accountability in governance.

Challenges in India’s Budgetary Forecasting and Utilisation

• Unrealistic and Inflated Budgetary Forecasting: Ministries often project expenditure requirements without realistic assessment of implementation capacity. The continuous rise in allocations despite poor utilisation reflects weak forecasting mechanisms.
• Underutilisation of Allocated Funds: There exists a significant gap between Budget Estimates (BE) and Actual Expenditure (AE). Underutilisation leads to idle public resources and delayed developmental outcomes.
• Incremental Budgeting without Outcome Orientation: Budget allocations continue to rise annually without linking them to past performance or outcomes.
  • This reflects the dominance of input-based budgeting rather than outcome-based budgeting.
• Fiscal Indiscipline: Ministries resort to excessive spending in the final quarter to exhaust allocated funds. Such spending violates Quarterly Expenditure Plan (QEP) norms and fiscal prudence principles.

Way Ahead

• The observations of the Parliamentary Committee reaffirm its critical role in ensuring executive accountability and fiscal prudence.
• Strengthening outcome-based budgeting and integration of policy with finance is essential for improving governance outcomes and restoring credibility to India’s fiscal framework.

Source: DD