Parliamentary Budget Office in India When most people vote for their representatives their votes are influenced by months and years of conversations, long-held opinions and ideally, hard facts and evidence provided by different sources (Such as media).
- This tells us about how important it might be that our chosen representatives to have an independent, non-partisan source for these hard facts and evidence.
- Having some reliable sources will help to stir the political and economic debates in the right direction.
- This especially holds true for the Parliament, which controls where and how money flows into our government and our country.
- For the Parliament to be fully efficient, it needs to have expertise in budgetary, fiscal and economic matters rather than being guided by political allegiance or expediency.
- This role can be fulfilled by a specialized agency in Parliament i.e. Parliamentary Budget Office (PBO).
What is Parliamentary Budget Office (PBO)
- One of the key functions involving both executive and legislature is Public finance and Government Budgeting.
- Experts have repeatedly suggested for a “more active role of Parliament in budgetary governance and budget decision-making” through establishing a Parliamentary Budget Office (PBO).
- PBO is an independent and impartial body linked directly to the Parliament which provides a technical and objective analysis of budgets and public finance to parliament and its committees including general economic analysis, tax analysis and options for spending cuts.
- PBOs have been set up in many countries such as the US, the UK, Canada, Australia, Korea, Hungary, Uganda, Kenya, Thailand, and Bangladesh.
- PBOs provide legislators with a high-quality analysis that is independent of the executive.
- They specialize in neutral analysis on the full budget cycle, the broad fiscal challenges facing the government, budgetary trade-offs and the financial implications of legislative proposals.
- Such research can raise the quality of debate and scrutiny in Parliament as well as enhance fiscal discipline.
- Most importantly, it strengthens the role of Parliament in financial oversight.
- Similar offices have been established across the world, with the most prominent being the Congressional Budget Office in the United States which provides impartial advice to both upper and lower houses of the legislature.
- PBOs have started emerging in economies in Sub-Saharan Africa and Southeast Asia.
Why is there a need for a PBO in India?
- According to data released by PRS Legislative Research since 2000, the Lok Sabha has not spent more than 45% of its time discussing the budget.
- There has been an increase in the number of bills that are “guillotined" e., put to vote without any discussion.
- Even in the case of bills that are being debated, the debate hardly ever goes into their fiscal details and their implications on the economy.
- For example, the Right to Education Bill, 2008, which required the government to pay unaided schools for expenditure on every child, did not provide any financial estimate for this purpose.
- The Food Safety and Standards Bill, 2005, only budgeted for setting up the Food Safety and Standards Authority of India and no other fiscal details were mentioned or discussed.
- It did not specify how much the cost of implementing this law would be different from the existing system or how much enforcement charges the state governments will have to bear.
- The heart of the issue is the lack of expertise among MPs and the lack of access to objective and high-quality research that is independent of the executive to guide them.
- There is also a lack of staff of high-quality researchers (unlike in other developed democracies) to help MPs gain expertise in budgetary matters in the country.
- The research support within Parliament meant to help the Parliamentarians is limited to library and reference service which is also in bad shape due to resource constraints.
Taking the example of Canadian PBO
- We can take an example of the Canadian PBO which gave a cost estimate for Canada’s purchase of F-35 jets in 2011. This estimate far exceeded the one presented by the Department of National Defence. Similar cost estimate in India may have helped us to budget the cost overruns in the Rafale deal with Dassault Aviation.
Will there be a conflict between PBO and Auditor General?
- A PBO provides prospective futuristic economic and fiscal projections, as well as policy costings.
- Whereas the role of the auditor general in India is mostly post mortem, i.e. it looks into issues that have already occurred.
- PBO can play a vital role in protecting legislatures and their control over finance and budgeting from an increasingly stronger executive
- Though not a panacea, the PBO is a relatively cost-efficient way to solve the above-mentioned problems.
- It would be very advantageous for parliamentarians to examine the case for a PBO looking at the globally successful examples more deeply.