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29-September-2023

Q1) Discuss the key function of the Public Accounts Committee (PAC). What steps should be taken to revamp the Public Accounts Committee (PAC) in order to enhance its effectiveness as a true guardian of public funds?

Answer:

Discuss the key function of the Public Accounts Committee (PAC). What steps should be taken to revamp the Public Accounts Committee (PAC) in order to enhance its effectiveness as a true guardian of public funds?

The Public Accounts Committee (PAC) is one of the 3 Financial Standing Committees of the Parliament tasked with upholding the financial accountability of the executive. The PAC was first constituted in 1921 under the Government of India Act 1919. There are 22 members in the committee (15 from Lok Sabha and 7 from Rajya Sabha) elected according to the principle of proportional representation by means of a single transferable vote.

KEY FUNCTIONS OF THE COMMITTEE

  1. Examination of Accounts: PAC is responsible for the examination of accounts showing the appropriation of sums granted by Parliament for the expenditure of the Government of India, the annual finance accounts of the Government, and such other accounts laid before the House as the Committee may think fit.
  2. Examination of Reports: PAC also examines the reports of the Comptroller & Auditor General (CAG) with respect to the appropriation of funds to the Government of India, its authorities, and corporations.
  3. Scrutiny of Validity of Expenditure: PAC also looks into the fact that whether the monies shown in the accounts as having been disbursed were legally available for the service or purpose to which they have been charged and whether the expenditure conforms to the authority which governs it.
  4. State Corporations: PAC also examines the statement of accounts showing the income and expenditure of state corporations, trading and manufacturing schemes, concerns, and projects together with the balance sheets and statements of profit and loss accounts as the President requires.
  5. Excess Expenditure: If any money has been spent on any service during a financial year in excess of the amount granted by the House for that purpose, the Committee also examines the circumstances leading to such an excess and makes such a recommendation.
  6. Accountability: The functions of the PAC extend “beyond the formality of expenditure to its wisdom, faithfulness and economy”. The Committee thus examines cases involving losses, nugatory expenditure, and financial irregularities.

FUNCTIONING OF PAC IS INHIBITED AND HINDERED BY THE FOLLOWING ISSUES

  1. Post-Facto Analysis: The report of PAC is based on a post-facto analysis of accounts, finances, and expenditures. Thus no remedy is available in case of ambiguities and irregularities in such accounts.
  2. No Prescribed Time Limit: The Constitution or even Lok Sabha Rules does not provide any time period for PAC to present its report to the House. This results in laxity on the part of the Committee. For e.g., since 2019, only 15 reports have been submitted by PAC against 140 in 2014-2019.
  3. No Technical Expertise: With the increasing complexity of finance, the committee lacks sectoral expertise to function effectively.
  4. Dependence on CAG Reports: The work of PAC is completely dependent on the reports of CAG and in case of oversight by CAG, there is no way PAC can do a proper corrective analysis.
  5. No Power to Limit Expenses: There is no power available to the PAC to limit the finances of any ministry.
  6. No Discussion on Floor of the House: Despite Rule 308 providing a six-month time limit for the Government to intimate actions taken on any report as placed by the PAC, there is seldom any action taken and poor follow-up.
  7. Politicization and Lack of Consensus: The lack of consensus between the ruling and opposition party makes PAC a ground for political score-settling. For e.g., in 2017, PAC Chairman was criticized for calling the Prime Minister to explain the demonetization.

WAY FORWARD

  1. PAC in its report in 2009 prescribed that the CAG should be made accountable to the Parliament and its committees.
  2. There should be a prescribed time limit for the Committee to submit its report to the Parliament and there should be mandatory discussion on its reports.
  3. There should be establishment of PBO (Parliamentary Budgetary Office) as an independent, non-partisan body to support and assist legislators in their work with Budgets, Reports of CAG, and Accounts.
  4. The Committee must regularly invite financial and other sectoral experts in order to effectively analyze and scrutinize government spending.

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