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Summary
Polity Class 23

A BRIEF OVERVIEW OF THE PREVIOUS CLASS (05:00 PM)

FINANCIAL BUSINESS OF THE HOUSE (05:06 PM)

  • Article 112 of the constitution has provisions for annual financial statements. It is popularly known as Budget. The budget provides information about the financial condition of the government and the country. 
  • The fiscal policy of the government can be seen in the budget. Fiscal policy includes the revenue and expenditure policies of the government, both of which can be seen in the Budget. 
  • Till 2017, Railway Budget and General Budget were presented separately. Railway Budget was separated from General Budget in 1924. In 2017, the government decided to merge Railway Budget with General Budget. 
  • Different Stages in the Passing of Budget 
  • 1) Presentation of Budget. 
  • 2) General Discussion.  
  • 3) Scrutiny by departmental-related committees. 
  • 4) Voting on demand for grants. 
  • 5) Passing of Appropriation Bill. 
  • 6) Passing of Finance Bill. 
  • Presentation of Budget 
  • Formulation of the Budget is under the exclusive domain of the Finance Ministry. It is the Department of Economic Affairs that is responsible for the formulation of the Economic Survey and Budget. 
  • Economic Survey provides information about the present status of the Indian economy. It also analyzes various economic problems confronting the country and also provides alternatives to the government. On the other hand, a Budget is a political document that reflects the policies of the government. 
  • Budgets are mostly influenced by Short term political populism. They are used by governments to win elections and retain power for longer periods of time. 
  • As part of Budgetary reforms, the government had preponed the presentation of the Budget from 28th February to 1st February. Previously ministries and departments had the freedom to spend their allocations only for a period of 10 months due to a vote on the Account budget. 
  • In order to give complete freedom to ministries and departments to spend finances for all 12 months of the financial year, a Budget presentation has been preponed to the 1st of February. It will help the government to pass the entire budget before the 31st of March so that the ministries and departments can spend their monies from the 1st of April 
  • The finance minister presents the Budget in Lok Sabha, along with the Budget, other documents are also presented by the Finance Minister including annual Financial statements, demand for grants, Appropriation Bills, Finance Bills, and other documents mandated under FRBM legislation. They include Macroeconomic framework statements, Fiscal policy strategy statements, Medium term fiscal policy statements, Expenditure Budgets, Revenue Budgets, Outcome budgets, and so on. 
  • "Fisc"= Finance [* Fiscal policy- Revenue policy+ expenditure policy]. Fiscal year= Financial Year. 
  • Stage of General Discussion (05:35 PM)
  • It takes place after the presentation of the Budget. It takes place in both Rajya Sabha and Lok Sabha. The finance minister at the end of the discussion replies to questions raised by members on the floor of the house regarding the Budget
  • Scrutiny by Departmental Committees 
  • One of the most important functions of legislature is to fix accountability on the part of the executive. It was felt that Financial Accountability can be ensured by allowing parliamentary committees to scrutinize the demand for grants of all ministries and departments.
  • In 1993, on the basis of recommendations of the rules committee of Lok Sabha, 17 departmental committees had come into existence. 
  • In 2004, 7 more committees were added. At present, there are 24 committees. These 24 committees can scrutinize the demand for grants of all ministries and departments. 
  • Each committee consists of 31 members- 21 from Lok Sabha and 10 From Rajya Sabha. Members of LS are nominated by the speaker, whereas Members of RS are nominated by the chairman of Rajya Sabha. A minister is not eligible to become a member. Their term is one year. Out of 24 committees, 8 work under Rajya Sabha, and 16 work under Lok Sabha. 
  • Functions:- 
  • They consider the demand for grants of Ministries and departments before they are discussed and voted on by Lok Sabha.
  • They also consider the annual reports of ministries and departments.
  • They will take into consideration long-term policy documents presented to the house. 
  • They should not take into consideration day to day administration of Ministries and departments. 
  • These departmental-related committees are expected to scrutinize the demand for grants and give their recommendations
  • Recommendations are only advisory in nature
  • [* Why it came into existence?- Finance is the most important instrument to ensure the accountability of the executive. So these committees were created so that they can ensure accountability of the executive to the legislature.]
  • Voting on Demand for Grants (05:55 PM)
  • At this stage, Lok Sabha takes up demand for grants of various ministries and departments. Members of Parliaments can move cut motions during this stage. 
  • There are three different types of cut motions
  • a) Policy cut- Here members are expressing their disapproval of the policy of that particular ministry. They demand that the amount of money should be reduced to 1 rupee.  
  • b) Economy Cut- Here the members demand a significant reduction in the amount of money given to a particular ministry. 
  • c) Token cut- Here members are expressing their token disapproval of policies and members demand that the amount of money should be reduced by 100rs. 
  • Normally this cut motion is not passed as the government always has the majority in Lok Sabha. If they are passed, it means the Lok Sabha is expressing a lack of confidence in the government and may lead to the government's resignation. 
  • The passing of appropriation Bill (06:08 PM)
  • According to our parliamentary practices, No money can be withdrawn from the Consolidated Fund of India except under appropriation made by law. 
  • Appropriation Bill contains the first charged expenditure and the second, Non-charged expenditure (Demand for grants). 
  • In the case of a charged expenditure, parliament can discuss and debate but can not vote. This is to ensure the independence of constitutional bodies. At this stage, members are not allowed to move any cut motion. 
  • The passing of Finance Bill 
  • It is the last stage in the passing of the Budget. It contains the taxation proposals of the government. 
  • Members are allowed to move amendments but they can only ask for the removal of a tax and a reduction in tax rates. They can not ask imposition of new taxes or an increase in tax rates. 
  • Once, Finance Bill is passed, it means the passage of the entire Budget.  
  • If the Budget is not passed, the Government will have to resign. It requires only a simple majority. Only Lok Sabha has to pass the Budget. 
  • Rajya Sabha can discuss and debate but cannot vote on Budgetary proposals.  

TYPES OF GRANTS (06:26 PM)

  • Supplementary Grants- It is granted by parliament when the money given for a particular service is insufficient for that particular financial year. 
  • Additional Grants- It is granted when additional expenditure is incurred for a new service that is not part of the Budget. 
  • Excess Grants- It is granted when the government had spent an excessive amount of money on service than what is mentioned in the Budget. Approval will be given by Lok Sabha after the end of the Financial year. Before Lok Sabha gives its approval, it must be approved by the Public accounts committee.  
  • Vote of Credit- It is granted for meeting an unexpected demand. The government will not know the exact amount of money required to overcome the problem. Parliament gives approval to the executive to spend any amount of money. 
  • Exceptional Grant- It is granted for a special purpose that is not part of the current service of any financial year
  • Token Grant- It is granted when the executive has no complete information about the money to be spent on a new service. The executive demands a token amount of 1 rupee for that particular service and after monies are spent, parliament will give approval.  

PARLIAMENTARY COMMITTEES (06:57 PM)

  • Why committee?
  • LS has 545 members. The parliamentarians neither have the time nor the expertise to make a detailed scrutiny of the legislative functions. Therefore, they are assisted by a number of committees. 
  • Ad-hoc committee- A committee is constituted for a particular purpose. After their purpose is over the committee will be dissolved. 
  • JPC- [Pesticides in cold drink, Scam, 2G spectrum scam]- It has members from both LS and RS. 
  • Permanent committees- These are divided into two categories- Financial committee and Non-Financial committee
  • Financial committee- Public accounts committee, Estimates committee, DRSCs, Committee on PSEs. 
  • Non-financial committee- Overall functioning of the parliament- Ethics committee, Rules committee, Privileges committee, Business advisory committee, etc 
  • Public accounts committee
  • Oldest committee of our parliament. It came into existence in the 1920s
  • It evaluates the performances of ministries and departments. 
  • It looks into the money given to the ministries and departments and checks whether the money is spent for that purpose and whether the rules are followed or not. 
  • It is also called a "mini parliament". It has 22 members- 15 from LS + 7 from RS. The tenure is 1 year. Members are elected through PRS/ STV system. 
  • CAG evaluates the performance of all the ministries and departments and submits this report to President. 
  • PM tables the report to the house and then PAC will take up the report and it evaluates the performance.  
  • PAC gets support from CAG. [* CAG acts as friend, philosopher, and guide to PAC]. After evaluating the performance it submits the report to parliament. 
  • Estimates Committee
  • It came into existence in the 1950s
  • It is called a continuous economics committee. It has members only from Lok Sabha. 
  • It looks into the demand for grants made by the departments and it will suggest measures to reduce them. 
  • Why important?- Bureaucrats working in these departments always demand more (* Bureaucrats= Budget maximizers). The estimates committee scrutinizes the demand and suggests a reduction. 
  • Committee on Public sector enterprises. 
  • It came into existence in 1964. 
  • It also has 22 members- 15 from LS + 7 from RS. 
  • They evaluate the performances of PSEs
  • Departmental-related committees
  • In 1993, parliament felt that there should be more detailed scrutiny of the demand for grants. 
  • In 1993, the Rules Committee suggested having more no. of DRSCs
  • It scrutinizes the Bills. They perform financial as well as non-financial matters. 
  • Why committees did not perform well? (07:32 PM)
  • The term is only one year- It takes time to understand the functioning of the committee (Such as on matters related to technical subjects). 
  • The recommendations are only advisory in nature- Government does not take the recommendations seriously. Committees also lose interest after some time. 
  • There are 58 ministries and PACs evaluate an average of 7-8 ministries in a year, thus parliamentary control over the executive is neither sufficient nor effective. 
  • Service of CAG is only available to PAC and not available to DRSCs and estimates committee. 
  • CAG itself does a Post-mortem function. 
  • Conflict of interest- A member of the committee on PSEs may blackmail the company to sell them raw materials. Example-Vijay Mallya was elected to the committee on transport, tourism, and culture and he used this position to benefit his own airlines.
  • MPs are the first part of a Political party and then members of a committee, thus, they usually do not allow negative comments against their political parties (especially ruling parties). [* In the UK, the members comment against their own political party and they participate in these committees by raising above their party lines]. 
  • [* In India, democracy runs on party lines and there are no unbiased and impartial functions]
  • These committees work in a highly secretive manner i.e in-camera proceedings. [* In the UK they telecast these proceedings]
  • The government never produces the document required for the committee evaluation. The government frequently uses the official secrets Act. 
  • Bureaucrats also do not attend the meetings. 
  • What should be done? (07:53 PM)
  • Government should submit an Action taken report on the recommendations made by the committees. 
  • a) Which are accepted
  • b) Time period of the implementation 
  • c) Which ones are rejected and Why?
  • The tenure of the committees can be increased to 3 years. 
  • The service of CAG can be made available to other committees
  • Conflict of interest must be taken into consideration while appointing the members. 
  • The background of the members should be taken into the consideration
  • Official Secrets Act should be scrapped
  • Committees should be given the power to punish the officers who do not attend after getting summon
  • The live telecast of the proceedings. 
  • Question:- Do Departmentally related parliamentary standing committees keep the administration on its toes and inspire reverence for parliamentary control? Evaluate the working of such committees with suitable examples. (15 marks/ 250 words)

The Topic for the next class:- Analysis of the parliamentary committees.