Understanding Parliament's Financial Oversight in India

Understanding the Role of Parliament in Financial Oversight

In India, the Parliament plays a pivotal role in overseeing the government's financial activities. This oversight is crucial for ensuring transparency, accountability, and the efficient utilization of public funds. Various mechanisms are employed to facilitate this control, which we will explore in detail.

Constitutional Mechanisms

The Constitution of India provides the foundation for parliamentary control over public finance through provisions related to Money Bills and Financial Bills. The annual budget, a comprehensive financial statement, requires the approval of both houses of Parliament, as outlined in Article 112. This process grants Parliament the authority to modify budget allocations and ensures alignment with national priorities.

Statutory and Other Mechanisms

• Cut Motions: Members of the Lok Sabha can propose cut motions during budget discussions. These motions aim to reduce or eliminate specific demands for grants, allowing members to influence government policies and priorities effectively.
• Outcome Budget: Introduced in 2004-05, the outcome budget highlights the expected socio-economic impacts of government spending. This mechanism enables Parliament to hold the government accountable for achieving these outcomes through discussions and evaluations.
• Gender Budgeting: Many ministries have established dedicated cells for gender budgeting, which track expenditures specifically benefiting women. Parliament evaluates the government's progress in gender-sensitive budgeting and advocates for improvements in this area.

Parliamentary Financial Committees

Financial committees, such as the Public Accounts Committee (PAC), Estimates Committee, and Committee on Public Undertakings, play an essential role in scrutinizing government spending. These committees examine accounts, audit reports, and investigate financial irregularities to ensure transparency and accountability.

Tax Expenditure Statement

Annually, Parliament receives the Tax Expenditure Statement, which details revenue forgone due to tax breaks and exemptions. By analyzing this statement, Parliament can assess the effectiveness of these tax incentives and their impact on revenue generation.

Through these diverse mechanisms, the Indian Parliament exerts significant control over public finance. This oversight ensures judicious utilization of public funds, alignment of government policies with national interests, and maintains the executive's accountability to the legislature.

Frequently Asked Questions (FAQs)

Q1. What is the role of Parliament in public finance oversight?
Answer: Parliament oversees public finance through budget approval, cut motions, and financial committees, ensuring transparency and accountability in government spending.

Q2. What are cut motions in the Lok Sabha?
Answer: Cut motions are proposals made by Lok Sabha members during budget debates to reduce or eliminate specific demands for grants, influencing government priorities.

Q3. What is the purpose of the outcome budget?
Answer: The outcome budget helps Parliament evaluate the socio-economic impact of government spending, holding the government accountable for achieving specified outcomes.

Q4. How does gender budgeting work in India?
Answer: Gender budgeting involves tracking expenditures that benefit women, allowing Parliament to assess progress and advocate for improvements in gender-sensitive policies.

Q5. What is the Tax Expenditure Statement?
Answer: The Tax Expenditure Statement details revenue lost due to tax breaks, allowing Parliament to evaluate the effectiveness of these incentives on revenue generation.

UPSC Practice MCQs

Question 1: What constitutional article requires Parliament's approval for the budget?
A) Article 112
B) Article 110
C) Article 118
D) Article 120
Correct Answer: A

Question 2: Which committee examines the government's financial accounts and audit reports?
A) Estimates Committee
B) Public Accounts Committee
C) Finance Committee
D) Committee on Public Undertakings
Correct Answer: B

Question 3: What is one function of cut motions in the Lok Sabha?
A) Increase grant allocations
B) Propose budget modifications
C) Eliminate specific grant demands
D) Approve financial bills
Correct Answer: C

Question 4: When was the outcome budget introduced in India?
A) 2000-01
B) 2004-05
C) 2010-11
D) 2015-16
Correct Answer: B

Question 5: What does gender budgeting track in government spending?
A) Environmental impact
B) Expenditures benefiting women
C) Tax revenue generation
D) Infrastructure development
Correct Answer: B

Question 6: What is the focus of the Tax Expenditure Statement?
A) Government spending
B) Revenue forgone due to tax breaks
C) Budget surpluses
D) Financial irregularities
Correct Answer: B

Question 7: Which body ensures accountability in public finance in India?
A) Supreme Court
B) Election Commission
C) Parliament
D) Reserve Bank of India
Correct Answer: C