India does not have a Parliamentary Budget Office so far? What are different proposals towards this and how establishment of a Parliamentary Budget office can help? Discuss highlighting major issues.
Parliamentary budget office is a body directly linked to Parliament which independently and impartially analyses budgets and public finances and reports to parliament.
Currently the budget is laid in the parliament and discussed in both the houses. This does not result in an objectives analysis as:
- Lack of expertise among MPs to evaluate the budget
- Lack of access to high quality research as MPs do not have staff of high quality researchers
- Outlook towards the budget is along the party lines.
- Parliament does not have enough time. Data released by PRS Legislative Research for years from 2000 shows that LS has spent only 45 % of time on budget discussion.
- Report of comptroller and auditor general provides ex-post analysis of public expenditure
Fourteenth Finance Commission had recommended establishment of Independent Fiscal Council to evaluate budget proposals and make forecast using objective criteria. State fiscal roadmaps are monitored by Centre but there is no body to monitor centre’s adherence to fiscal targets. Committee on Fiscal responsibility and Budget management law too recommended Fiscal Council, an autonomous body under finance ministry
Parliamentary Budget Office can:
- Independent and objective analysis of budget and allocations to different sector,
- Provide medium to long term analysis
- Financial implication of legislative proposals
- Monitor centre’s fiscal announcements in meeting fiscal deficit targets etc
- Advise government when to trigger escape clause
- Provide independent forecast of marco-economic indicators like GDP growth, tax buoyancy
Credibility of the Council would depend on its independence from government and analysis with members having fixed tenure, independence in appointment. Making the body constitutional like Election Commission, CAG can go long way in creating institution which enjoys immense trust.
Parliamentary Budget Office is the need of hour and would restore fiscal credibility of the government.
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