Parliamentary Control over Expenditure How to Make It More Effective

A P r e m Chand

The Central Government's expenditure has increased sharply during the last decade.

If ith the rise in expenditure the question of parliamentary control has assumed an added significance.

How effectively can Parliament control expenditure incurred by the executive ?

Parliament exercises control over expenditure through discussions on the appropriations proposed by the executive and through its two financial committees.

An attempt is made here to assets the effectiveness of Parliamentary debates as an instrument of con­trol over expenditure. The work of the financial committees is not considered here.

An attempt is also made to evaluate the suggestions that have been made from time to rime to make Parliament's control over expenditure more effective.

ONE of the impor t an t ways in wh ich Parl iament exercises con­

t ro l on the executive is th rough its power to discuss and accept the "demands for grants ' presented to i t . The general procedure and techni­ques adopted by the Parl iament in this respect are n o r m a l l y known. But the mere provis ion of rules and extensive regulations in the 'rules of procedure' is by itself not adequate; the real objective can be fu l f i l led only when these techniques are used regular ly in the day to day par l ia­mentary proceedings.

The effectiveness of Parl iament 's control depends, in addi t ion to other factors, upon the scope and nature of the debates of the Houses. Debate is the Parliament 's main weapon. Many factors l i m i t the effectiveness of this weapoti. t o r example, it is a general complaint that the time allotted for discussion is not always adequate. To some extent, the inadequacy of t ime al­lotted for debates is inherent in the Par l iamentary system. As D u r r e l l savs : " O f al l the restrictions on effective Par l iamentary Cont ro l which are imposed by Parl iamen­tary practice and procedure, perhaps the greatest is the lack of t ime for due de l ibera t ion ." 1

Party Affiliations Other factors also l i m i t the

effectiveness of debates. There is, first, the par ty system. It is the general practice that any measure introduced by the Government re ceivec support f r o m its members of the r u l i n g par ty in the House. This part isan at t i tude on general issues?

1 A J V Durrell. " The Principle and Practice of the System of Control over Parlimentary Grants".

and in general debates can be jus t i ­f ied, but i t is questionable whether these attitudes should be extended to cut motions, etc, wh ich are intended not so much to cri t icise a policy as to comment on the wastefulness of a par t icu la r expenditure. In India , pa r ty affiliations are stretched even to cut motions. As Professor M o r r i s Jones says, " T h e cut motions are almost invar iab ly moved only by opposi t ion members, the Congress Pa r ty having effectively discouraged cut motions f rom its own suppor­ters. '" Instead, a procedure has been devised by which Congress Members submit to the Minis ter ten-line memoranda containing local and specific pleas. More reliance is thus placed on the Par ty approaches than on debate in the House.

Secondly, the technical j a rgon in which the demands for grants are couched dissuades a ma jo r i t y of members despite their interests in f inancia l matters, f rom par t i c ipa t ing in the debates. As Ear l Atlee said, " I t was an unsatisfactory system that they should have to dismiss pages and pages in figures in a debate on the floor of the House." This difficulty is not peculiar to the Ind ian system3 This difficulty

2 " Parliamentary Reform, " Hansard Society

3 Professor Arthur Smithies observes thus on the American experience : u Public comprehension of the Bud­get is greatly hampered by Us bewildering terminology. On the expenditure side, the terms of ap­propriation, obligation and expen­diture cannot be avoided and are confusing enough. " Further "This incredible complexity results large-ly from attempts at concealment". " The Budgetary Process in the United States," 1955; p 197.

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wi th the terminology often re suits in financial matters becom­ing the forte of a few specialist Members, To that extent, the dis­cission tends to become a talk be-tween specialists while the other Members confine themselves to the venti lat ion of local grievances w i t ! l i t t le or no realisation of the impact of their acceptance on the overall finances of the Government. Thus innumerable cut motions are moved, Generally to demand a ra i lway line here or a fertiliser p lant there. In the process national interests yield place to parochial and local in­terests.

The Trivial and the Sensational Further, the debate in Parliament

is often devoted to a discussion of the t r i v i a l and the sensational e g. the expenditure on the Br i t i sh Queen's visit in January last. A good many hours are spent on dis­cussion of details of a par t icular expenditure where the amount in ­volved is small while relat ively much less t ime is devoted to bigger items of expenditure. Needless to say, this does anything but strengthen Parl iamentary control over expendi­ture. As the speaker of Lok Sahha said once, " i n the field of Finance the House should discuss question-of principles rather than details'".

Again , the discussion on the Bud-get and the demands for grants are more devoted to pol i t ica l aspects and to taxat ion measures proposed than to assessment of governmental efficiency. A substantial por t ion of the debate Generally, revolves round the ' po l i cy ' of Government and its adminis t ra t ion and l i t t l e or no time

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is devoted to consideration of dif­ferent aspects of the Government's expenditure, in this respect, we are no worse of, than, say the House of Commons. thus the Third report on Pa r l i amen ta ry Procedure in U. K ' (1946) said that "the passing of estimates in the Committee of Supply is the fo rma l procedure by which the expenditure of Depart­ments is authorised, but as is well known, this procedure has almost ceased to serve the purpose of financial scrut iny and is used al-most exclusively for the c r i t i c i sm of po l icy and adminis t ra t ion."

The debates also reveal the keen interest of the members in "econo­m y " and "retrenchment" . Debates in the I n d i a n Par l iament have been generously interspersed w i t h motions a iming to b r i n g about ie-trenehment and economy. An exa­minat ion of the suggestions made, however, w i l l give the impression that their implementat ion w i l l cost more to the Exchequer than the resultant economy. Professor Gab brai th says about the U S Congress that " n o t h i n g is ever accomplished of sufficient magnitude to aflect appreciably the to ta l spending ot the economy and indeed the expec­tations of non-accomplishment are such that the Congressional discus­sion of budget-cutt ing each win ter has now assumed the innocent as­pect of a folk r i te . It begins as the budget t ime approaches. It reaches f u l l p i tch a few days after the bud­get is submit ted. The gods are appeased bv stern denunciations of public profl igacy and inspired pro­mises of vast economies. The cere­mony is solemnly described to the people by press and radio. There­after the seemingly indispensable outlays are voted, and the result is more often to increase the budget than to reduce i t . 4 This is true of the Ind ian Parl iament also.

Clamour for More Control Further , the debates also indicate

that the Houses are not satisfied w i t h the control that they exercise and c lamour for more controls. Not infrequent ly , statements are made that "Today I must say. having the experience I have, that the control of publ ic expenditure by this Parl ia­ment is n i l " , or that " I t i s the in-

4 " The Affluent Society", 1958; p 188. Llyod George said in a simi­lar vein a long time ago. " It generally ends in a demand that you should spend more money for some­thing or other".

herent r i g h t , i t is the fundamental responsibi l i ty , of this House to be the watch-dog of the finances of the State. We cannot abidicate this power to government" . To remedy this apparent inadequacy of con­t ro l , various measures, like setting up committees on investments, on contracts and on expenditure, etc, are suggested, Quite often the 'de­monstration effect' of other systems proves too at tractive and members do not hesitate to suggest the im­plementat ion of every new device that is adopted by other countries in their legislative business.

Aga in , experience of the last ten years shows that the op in ion ex­pressed by the House is not always shared by its committees.5 The re­ports of the committees of the House are based on detailed study, whi le the op in ion expressed by a member is usually his own personal estima­t ion of a scheme. But where the view represents a general consensus of op in ion in the House, the committees may have to take cognizance of i t ; otherwise, the debates lose their im­portance. F inal ly , a basic weakness of par l iamentary debates is that the demands of some Minis t r ies are voted wi thout any discussion. This na tura l ly weakens the control of Par l iament over the Governments expenditures.

I I To overcome these shortcomings

and to strengthen Parl iamentary control , three suggestions have been made by the Estimates Committee. The Committee's suggestions a im to : ( i ) make par l iamentary discussion more effective; ( i i ) to introduce performance budget ing; and, ( i i i ) to revive the standing Finance Com mittee. These suggestions may now be considered in detai l .

F rom its own experience, the Estimates Committee felt that it "was not in a posi t ion to examine all the Minis t r ies even over a f a i r l y long period."8 I t , therefore sug­gested that this could be made up by p rov id ing addi t ional oppor tu­n i ty for debates in the House. It

5 For example, at a time when a number of suggestions were made in course of the debates to increase the control exercised by the Minis­try 'of Finance, the Estimates Com­mittee (See the second report, 1951) recommended a diminution of the. control of the Finance Ministry.

6 20th Report on " Budgetary Reform"; p 26.

also suggested that various financial aspects of the budget cou ld be studied by a number of committees set up for the purpose by the House. These committees wou ld sub­m i t their findings to the House to enable systematic discussion. This was done in the case of the Second Five Year P lan . This procedure could perhaps be adopted wi th ad­vantage for discission of the Budget also since it would enable Members of Parliament, to concentrate on certain Ministr ies . They can then main ta in close contact w i t h the Minis ters and the officials and get a l l their doubts cleared. This would make for enlightened cr i t ic ism of the Budget.

W i l l Committee System Suit India ? The Estimates Committee's, re­

commendation has not so far been implemented.7 Its implementat ion would have certain implicat ions-First , i t w i l l change the present procedure of discussion and con­vert the sub-committees of the House almost into the equivalents of the A p p r o p r i a t i o n Committees of the U S Senate. It is a moot poin t whether such a committee system would fit into the Indian Parliamen­tary system which is based on the practice in the U K. Second, it may eventually lead to a s i tuat ion where discreet officials may begin to con-suit the sub-committees in respect of proposals even before they have formula ted the budget w i th a view to ensuring their acceptance easily. This may well lead to stretching of the invis ible hand of Parl iament into the sphere of fo rmula t ion of the Budget proposal. The accept­ance of these suggest ions is l ikely to make the Ind ian systemn more akin to the committee system of U S the efficacy of which h i s often been questioned in that country.

The other suggestion made by the Estimates Committee to streng­then Par l iamentary contro l is the in t roduc t ion of performance bud geting. The Committee recommend­ed that performance budgetting should be introduced gradually The Speaker of the Lok Sabha has also expressed the opinion that. budgetary reform to f a c i l i u t e better presentation so as to indicate the pol icy and objectives which a parti-cular expenditure is intended to

7 The 60th Report of the Estimates Committee which is a follow-up of the 20th Report, avoids mention of this proposal

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further, and to show expenditures connected w i t h the Five Year Plans and developmental activities. He also suggested the adoption of the programme and performance sys­tem of budgeting. This suggestion may be considered in greater de­t a i l here.

Performance Budgeting

Performance budgeting, which was" recommended by the Hoover Commission in 1949, essentially consists in the presentation of a Budget based upon functions, acti­vit ies and projects. The a im was to focus attention on the progress made d u r i n g the past year so that the Congressional committees could know the progress made as a re­sult of the amounts already spent and, on that basis, allocate the funds for the next year. Th i s technique was intended to provide the answer to the two basic ques­tions posed for the Hoover Com­mission: ( i ) W h a t is the desirable magnitude of expenditure on any major government programme and the desirable p ropor t ion of total government expenditures to the grogs, nat ional product ? ( i i ) How efficiently and economically can an approved government programme be executed or can the same amount of work be performed satisfactorily through other arrange­ments or th rough improved proce­dures at less cost ? The implemen­ta t ion of this technique, however, ran into difficulties, e g , ( i ) i t necessitated the treatment of sepa­rate programmes even when there was no clear-cut responsibi l i ty; and ( i i ) i t proved difficult to provide adequate in format ion about the cost etc, of many of the programmes shown i n the Budget. These diffi­culties led to the abandonment of performance budgeting and the in t roduct ion of programme budget-t ing w h i c h is more concerned w i t h the future un l ike performance budgeting which is concerned w i t h a review of the past.8

The in t roduct ion of these techni­ques in the U S has led to the suggestion that s imi lar techniques be adopted in Ind ia . But there

It is doubtful whether performance budgeting can really be effective. While it may indicate efficiency as expressed by input-out-put relations, it may not be able to justify the desirability or otherwise of a parti­cular project.

were also objections, based on ( i ) a strict and, in a way, narrower interpretat ion of the iunct ions of Ind i an Par l i ament ; and, ( i i ) the practical difficulties inherent in the in t roduct ion of programme budge­t ing . It 13 argued that the back­ground against which these techni­ques have come to be used in the U S A i s different f r o m the I n d i a n context. The two questions posed for the Hoover Commission, refer­red to above, are essentially con. cerned w i t h economy and the al lo­cation of resources among alterna­tive heads. This work, in the USA, is one which is w i t h i n the scope of the activit ies of the Congressional Committees. In the Ind ian and B r i ­tish systems the fu l f i lment of these objectives is ensured by the M i n ­is t ry of Finance of the Treasury. I t is a funct ion of the executive. In the U S A there is no counterpart to the M i n i s t r y of Finance, charged w i t h reviewing every i tem of work f rom the financial angle.

Programme Budgeting The practical difficulties in in t ro­

ducing programme budgeting are also numerous. Firs t , the States which receive substantial assistance f rom the Centre and which are res­ponsible for the execution of many Plan schemes have their own bud­gets. Inclusion of these schemes in the Central Programme Budget would be a very difficult and time-consuming job . It would be equally difficult to quant i fy the different aspects of the .schemes. Besides the in t roduct ion of the system assumes the existence of certain pre-requisi-ties: ( i ) it is necessary to have a system of advance programming of Government operations on a long-term basis; ( i i ) the end-results of the programmes must be measur­able, ( i i i ) the outlay shown in the budget should represent the entire costs; ( i v ) the programme should be administered by the budget ing author i ty , and, (v ) the total outlay should be capable of allocation between fixed and variable costs. These pre-requisites cannot be taker for granted in India and therefore performance budgeting does not appear to be immediately possi­ble. However, if the intention of the Estimate? Committee was that Members ' should be supplied w i t h a l l the details of a financial propo­sal the proper th ing to do would be for the Government to supply the m a x i m u m informat ion . I t may be

stated here that w i t h this end in view, the in fo rma t ion suppl ied to the Members has been steadily en­larged in the recent past, and the Members are given the "economic classification of the Budget" and the "explanatory memorandum" w h i c h gives elaborate details includ­i n g a l i s t of a l l new items of ex-penditure w h i c h involve an ex­pendi ture of more than Rs 5 lakhs.

Another 'suggestion made by the Estimates Committee was to revive the Standing Finance Committee. A number of Parliamentarians also suggested this.9 The estimates Com­mittee recommended that " I t might be a dis t inct advantage both to Go­vernment and to Parl iament, i f this committee is revived. I t migh t have the author i ty to scrutinise such new items of expenditure above a cer­tain l i m i t as the Government m i g h t place before i t , before they are in-cluded in the Budget. The Commit­tee may, however, be pure ly advi­sory and Government 'need not be bound to accept a l l its suggestions and c r i t i c i sm,"

The Standing Finance Committee The Committee made this sugges­

t ion w i t h the objective of evoking the enthusiasm of Members of the legislature for financial matters and enabling publ ic pa r t i c ipa t ion in the d rawing up of schemes for i n ­clusion in the Budget. Th i s sugges­t ion , again, is apparent ly inspired by the example of the A p p r o p r i a ­t i on Committees of the Senate and the House in U S, It is, however, a controversial question whether the committee should be revived in Ind ia . The Government has showed itself u n w i l l i n g to revive the Com­mittee. The main reasons for this a rc : ( a ) the Standing Finance Com­mittee was necessary in the past to act as a check on the extravagance of foreign rulers, but does not have a place in the present system; (b ) the responsibilit ies o'f the legislature and the executive are clear under the I n d i a n Const i tu t ion . In i t i a t ion of po l icy is the responsibi l i ty of exe­cutive and a p p r o v i n g i t or rejecting

9 Speaker A Ayyangar observed in an address to the Estimate* Committee, " The Estimates Com­mittee, the Standing Finance Com­mittee and the Public Accounts Committee — all the three put together — discharge all the fun. clions relating the finances of a country as a whole. There is a lacuna now in that the Standing Finance Committee is not there

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it is the duty of the legislature. A preview of the estimates and its acceptance by the Standing Finance Committee would , apart f rom re. ducing the control of the House, may make the Committee a sort of a wheel in the coach. It may also lead to over lapping and a conse­quent b lu r r ing of the distinct res­ponsibi l i t ies of the legislature and the executive. As for the argument that the format ion of a Committee would enable public par t ic ipa t ion , i t is pointed out that there are nume­rous consultative commit lees — whose membership includes mem­bers of the legislatures also — under each department. They are adequate to ensure public par t ic ipa . t ion .

It is argued, on the other hand, that the abol i t ion of the Standing Finance Committee has resulted in the weakening of the Parliament 's control over expenditure. It is also suggested that consultative commit­tees are not adequate substitutes to the Finance Committee since (a) they do not meet regu la r ly ; (b) they do not have a competent secre­t a r i a t ; and (c) the funct ioning of these committees does not receive the same pub l i c i t y as that of other committees. There is, therefore, g rowing support for the establish­ment of a Standing f inance Com­mittee. But the posi t ion as it is today is that the Government does not favour the creation of too many Parl iamentary Committees and the p ro l i f e ra t ion of Par l iamentary con­t r o l , which, instead of preserving Parl iamentary privileges, may as wel l endanger them. No Longer Keen to Cut Expenditure

The preceding analysis shows that the Parliament 's control over ex penditurc is not as effective or ade­quate as it ought to be. How can it be revitalised w i thou t changing the ins t i tu t ional f ramework ? It is generally suggested that Parl iamen­tary control in a democracy is dila­to ry in nature and that the inf lu­ence of Parliament is so general and broad that i t produces l i t t le i m ­pact on adminis t ra t ion. It is also suggested that Par l iamentary control over expenditure is v i r t ua l l y in -effective. As Paul Einzig says, in tile context of the U K, "The improve­ment of the means for control l ing expenditure was fol lowed du r ing the last decades of the century by a decline in the determinat ion to keep down expenditure. Par l iament having achieved the means to control ex­

pendi ture appears gradual ly to have lost interest in the objective of that cont ro l . " t h i s statement is in a way correct in the I n d i a n context also.

But unwill ingness to reduce ex­penditures cannot be treated as a sign of w a k e n i n g of Parliament 's w i l l to use its powers to prevent an increase of expenditure. The level of expenditure has to be judged w i th reference to the needs. W i t h the changed pol i t ical conditions, the att i tude of the legislatures to Go­vernmental expenditure has changed. As the former f inance Minis ter , Shr i C D Deshmukh, observed, " N o w the Legislatures themselves want the executive to spend more ." The emphasis in future should be not on seeking petty cuts here and there, but on evaluation and con­sideration of the broader economic aspects of expenditure.

How to Make Control Effective A l l .said and done it is the consti­

tut ional right of the legislature to exercise control on expenditure. Two suggestions are offered here to enable the legislature to exercise this r ight more effectively. To en­able par t ic ipat ion of every Member in a more in formal manner in the discussions, it may be expedient to adopt the House Committee system of the U K . As the Speaker of the Lok Sabha himself observed once, "the Budget for each year may be referred to a Commit lee of the whole House." He. however, added that op in ion on this matter had not crys­tallised so far. Meanwhi le the sys­

tem has made r a p i d advances in the U K. Accord ing to an announce­ment made by Mr R A Butler in the House of Commons on July 26, 1960, the strength of the Committee on Estimates has been augmented so that it can examine the p r inc ipa l variations between the estimates for the current year and those fo r the preceding year. This Committee's re. port would provide the House w i t h a start ing-point for the debate on the (Government's expenditure in the autumn session. This procedure is intended to make the debates ex penditure-oriented instead of being tax-oriented as in the past. The need for such a system in Ind ia re­quires no special emphasis. It would greatIy enhance Parl iamentary control on Budget estimates.

Second, in the context of plan-ned development, the core of the expenditure debate should be direct­ed to reviewing the performance of the Government not in terms of its legality or propr ie ty or even the pol i t i ca l pros and cons o f . certain categories of expenditure, but in terms of efficient adminis t ra t ion . As Robert Heller says, "Real expendi­ture control consists not of looking into minor items of executive ex­pense, but of evaluating the admi­nistrators accomplishments." The effectiveness of this change f rom the 'mic ro ' to the 'macro' approach w i l l , no doubt, depend on the at t i ­tude of the Members. But by creat­ing an oppor tun i ty , such a change in atti tude may be facil i tated.

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