An independent fiscal watchdog for Parliament Editorial 21st Sep’19 TheHindu

Headline : An independent fiscal watchdog for Parliament Editorial 21st Sep’19 TheHindu

Details :

Access to all of good quality analysis on economic, fiscal or financial matters is important for democracy:

  • For an effective democracy, it is important for our electorate and the representatives to have an independent, non-partisan source for these hard facts and evidence.
  • This is particularly important for our Parliament, which controls where and how money flows into our government and our country.
  • But besides the few Ministers privy to expertise from the civil service, most parliamentarians do not benefit from timely access to good quality analysis on economic, fiscal or financial matters.

Need a non-partisan body like Parliamentary Budget Office (PBO) in India:

  • A non-partisan body needs to be appointed with expertise in budgetary, fiscal and economic matters.
  • Regardless of a majority or minority government, this body serves parliamentarians equally and without prejudice.
  • This body exists in many countries around the world, usually called as Parliamentary Budget Offices (PBOs).

 

Work of PBOs:

  • These bodies help shape the debate and discourse around the state of the nation’s finances and the fiscal implications of significant proposals.
  • The work done by PBOs helps drive smarter, more focused debate in the media and with our electorate.
  • Besides costing policies and programmes, PBOs provide significant and sometimes the sole source of information on fiscal and economic projections.
  • Another data point, different from the government’s, generated by an independent, non-partisan office, helps the parliamentarians to ensure that these projections and estimates continue to be reliable enough for them to make decisions on.

Example of how this body will be useful:

  • In the recent time, the Rafale deal controversy in India resulted from uncertainty regarding the true lifecycle costs of the aircraft bought.
  • If parliamentarians could access analysis, information and research about defence costing from a PBO (like they do in Canada), they could hold the government to account in case of any discrepancies.

 

Will there be conflict with the office of CAG?

  • A question that arises is the necessity of such an office when we already have an auditor general (CAG).
  • However, an Auditor General’s role is to provide retrospective audits and analysis of the financial accounts and performance of government operations. These audits are often focused on the day-to-day goings on of government, and often hone in on the performance of the civil service.
  • On the other hand, the PBO provides prospective, forward-looking economic and fiscal projections, as well as policy costings.
  • This distinguishes PBO it from an auditor general, which provides useful information, but only after the fact.

 

Examples of PBO like institutions internationally:

  • Internationally, offices like PBO have been established across the world.
  • The most prominent such office is the Congressional Budget Office in the United Stateswhich provides impartial advice to both the houses of the legislature.
  • Offices in the Netherlands, Korea, Australia and the United Kingdom have also been established for varying lengths of time.
  • PBOs are also making an appearance in emerging economies in Sub-Saharan Africa and Southeast Asia.
  • Wider role in some countries:
    • In some countries, including Australia, the Netherlands, and most recently, Canada, PBOs have also been playing the role of costing electoral platforms during an election campaign.
    • In this period, PBOs provide independent cost estimates of electoral platform measures to political parties.

 

Way forward – India should consider having a PBO:

  • Legislatures across the world have witnessed an increasingly stronger executive try to wrest away its rightful power of the purse.
  • The amount of information parliamentarians need to scrutinise in Budget documents has exponentially increased and a PBO would assist parliamentarians in this process of scrutiny.
  • As the process toward the Union Budget 2020 has already kicked off, it would be relevant for parliamentarians to examine the case for a PBO more deeply.

 

Importance:

GS Paper II: International Relations

Section : Editorial Analysis

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