BY HEIGRUJAM PREMKUMAR
It is a fundamental principle that a democratically constituted legislature exercises the most important control over the public finances. Likewise, in the administration of finance in India, legislature plays the key role. All other agencies of financial administration act on behalf of the legislature and are responsible to it for all their activities. Thus, responsibility for the sound administration of finances of the country lies with the legislature.
The financial system of India consists of two branches: revenue and expenditure.
As regards revenue, it is laid down by the Constitution of India that no tax shall be levied or collected except by authority of law. The executive cannot impose any tax without legislative action.
As regards expenditure, the pivot parliamentary control is the Consolidated Fund of India. No money can be issued out of this Fund unless the expenditure is authorised by an Act of Appropriation passed by the Parliament. It means that the executive cannot spend the public revenue without parliamentary sanction.
While an Act of Appropriation ensures that there cannot be any expenditure of the public revenues without the sanction of Parliament, Parliament’s control over the expenditure cannot be complete unless it is able to ensure economy in the volume of expenditure. On this point, however, a reconciliation has to be made between two conflicting principles- the need for parliamentary control and the responsibility of the Government in power for the administration and its policies.
Mechanisms through which parliamentary control is exercised
Committee on Estimates
The Government has the sole initiative in formulating its policies and in presenting its demands for carrying out those policies. Parliament can hardly refuse such demands or make drastic cuts in such demands without reflecting on the policy and responsibility of the government in power. Nor is it expedient to suggest economies in different items of the expenditure proposed by the Government when the demands are presented to the House for its vote, in view of the shortage of time at its disposal. The scrutiny of the expenditure proposed by the Government is therefore made by the House in the informal atmosphere of a committee, known as the Committee on Estimates.
After the annual financial statement is presented before the Lok Sabha, this committee of the House, annually constituted, examines the estimates in order to-
- report to the House what economies, improvements in organisation, efficiency or administrative reform, consistent with the policy underlying the estimates, may be affected.
- suggest alternative policies in order to bring efficiency and economy in administration.
- examine whether the money is well laid out within the limits of the policy implied in the estimates.
- suggest the form in which estimates are to be presented to Parliament.
Though the report of the Estimates Committee is not debated in the House, the fact that it carries on its examination throughout the year and places its views before the members of the House as a whole exerts a statutory influence in checking governmental extravagance in making demands in the coming year, and in moulding its policies without friction in the House.
The Comptroller and Auditor-General (CAG)
Another important factor to be considered is the system of parliamentary control to ensure that the expenditure sanctioned by Parliament has actually been spent in terms of the law of Parliament, i. e. the Appropriation Act. The office of the Comptroller and Auditor-General is the fundamental agency which helps Parliament in this work. The CAG is the guardian of the public purse and it is his function to see that not a rupee is spent without the authority of Parliament. It is the business of the CAG to audit the accounts of the Union and to satisfy himself that the expenditure incurred has been sanctioned by the Parliament and that it has taken place in conformity with the rules sanctioned by Parliament. The CAG then submits his report of audit relating to the accounts of the Union Government to the President who has to lay it before each House of Parliament.
Committee on Public Accounts (PAC)
After the report of the CAG is laid down before the Parliament, it is examined by the Public Accounts Committee. Though this is a committee of the House of the People, by an agreement between the two Houses, seven members of the Council of States are also associated with this committee in order to strengthen it. The Chairman of PAC is generally a member of the Lok Sabha who is not a member of the ruling party.
In scrutinising the Appropriation Accounts of the Government and the report of the CAG thereon, it is the duty of the PAC to satisfy itself that-
- the money shown in the accounts as having been disbursed were legally available for and applicable to the service or the purpose to which they have applied or charged.
- the expenditure conforms to the authority which governs it.
- every re-appropriation has been made in accordance with the provisions made in this behalf under the rules framed by competent authority.
PAC, in short, scrutinises the report of the CAG in detail and then submits its report to the House of the People so that the irregularities noticed by it may be discussed by the Parliament and effective steps taken to correct it.
Besides, Article 267 of the Indian Constitution empowers Parliament and the legislature of a state to create a Contingency Fund for India or for a state, as the case may be. The Fund will be at the disposal of the executive to enable advances to be made from time to time for the purposes of meeting unforeseen expenditure, pending authorisation of such expenditure by the legislature by supplementary, additional or excess grants. The amount of the Fund is subject to be regulated by the appropriate legislature.
The custody of the Consolidated Fund of India and the Contingency Fund of India, the payment of money into such funds, withdrawal of money therefrom, custody of public money other than those credited to such funds, their payment to the public accounts of India and the withdrawal of money from such account, and all other matters connected with or ancillary to matters aforesaid shall be regulated by law of Parliament, and until provision in that behalf is so made shall be regulated by rules made by the President.
In this way, the legislature exercises an unparalleled control over financial administration in India. Like any other democratically instituted legislature, India’s legislature plays an enormous and significant role in the administration of public finances in the country. With its strict vigilance over the Government, it exerts a great deal of influence on the part of the Government to spend the public money wisely and economically. The legislature through its role in the financial administration of the country makes the Government a responsible one in regard to the use of public finances.