Why in the News?

The current budget process reduces the involvement of elected representatives, weakening democratic accountability.

How does the current budget process reduce the role of elected representatives and weaken democratic accountability?

• Executive Monopoly Over Budget Formulation: The Budget is drafted exclusively by the Finance Ministry, with even Cabinet Ministers kept unaware until its presentation in the Lok Sabha. Example: Unlike legislative bills, the Union Budget is not subjected to extensive cabinet discussions before being tabled in Parliament.
• Lack of Pre-Budget Consultations: Parliamentarians do not have an institutional mechanism to provide input before the Budget is finalized. Example: In contrast to countries like the UK, where parliamentary committees discuss budget priorities in advance, India lacks such structured engagement.
• Limited Role of the Rajya Sabha: The Upper House has no direct power to amend or reject the Budget, reducing its ability to scrutinize financial policies. Example: The Finance Minister, even if a Rajya Sabha member, cannot vote on the Budget in the Lok Sabha, where financial matters are decided.
• Weak Oversight by Parliamentary Committees: Parliamentary committees do not have the authority to modify budget proposals or demand policy changes. Example: Department-related Standing Committees review Demands for Grants but can only make recommendations, which the government is not bound to accept.
• Time Constraints and Superficial Debates: The Budget session allows limited time for discussion, leading to rushed approvals without in-depth scrutiny. Example: In many cases, the Guillotine Process is used, where multiple Demands for Grants are passed without discussion due to time limitations.

Why is the establishment of a Parliamentary Budget Office (PBO) considered essential for fiscal oversight?

• Independent and Data-Driven Budget Analysis: A PBO would provide legislators with non-partisan, expert analysis of government spending, revenue forecasts, and fiscal policies. Example: The U.S. Congressional Budget Office (CBO) conducts independent evaluations of federal budgets, ensuring transparency and evidence-based policy decisions.
• Enhanced Legislative Scrutiny and Accountability: It would strengthen Parliament’s ability to evaluate the financial implications of policies and hold the executive accountable. Example: Countries like Canada and the UK have PBOs that assess fiscal policies, preventing governments from making unrealistic budgetary claims.
• Support for Informed Decision-Making by Legislators: Parliamentarians often lack technical expertise in financial matters; a PBO would equip them with research reports and policy briefs. Example: Australia’s PBO helps legislators understand the long-term economic impact of proposed policies, ensuring fiscal discipline and responsible budgeting.

How do pre-Budget discussions contribute to a more transparent and democratic Budget-making process?

• Greater Legislative Involvement and Accountability: Pre-Budget discussions allow parliamentarians to voice public concerns, debate fiscal priorities, and influence resource allocation before the Budget is finalised. Example: In Germany, the Bundestag conducts pre-budget debates, ensuring the government considers legislative recommendations before finalizing financial plans.
• Improved Public Participation and Transparency: Open discussions increase public awareness and trust by making the Budget-making process more inclusive and participatory. Example: South Africa holds public consultations before the Budget, allowing citizens to provide inputs, and ensuring financial policies align with public needs.
• Better Coordination Among Subject Committees: Structured discussions help parliamentary committees collaborate effectively, leading to more informed scrutiny of sector-wise allocations. Example: In Sweden, parliamentary finance committees review preliminary budget proposals, enabling sector-specific recommendations before the final Budget is tabled.

Which global models of legislative Budget scrutiny can India learn from to enhance parliamentary engagement?

Way forward: 

• Establish a Parliamentary Budget Office (PBO) for Independent Analysis: A PBO should be set up to provide non-partisan, expert-driven financial analysis to Parliament, similar to the U.S. Congressional Budget Office (CBO). This would enhance legislative oversight, fiscal transparency, and informed decision-making by equipping parliamentarians with independent budget assessments.
• Institutionalize Pre-Budget Consultations and Strengthen Committee Oversight: Implement structured pre-Budget discussions involving parliamentary committees, policymakers, and stakeholders to ensure greater transparency and inclusivity in Budget-making.

Mains question for practice:

Question: “The growth of cabinet system has practically resulted in the marginalisation of the parliamentary supremacy.” Elucidate. (UPSC 2024)

Reason: This question addresses the broader theme of parliamentary supremacy being undermined by the executive. The budget being primarily an executive-driven process, with limited parliamentary influence, is a prime example of this marginalization.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now