21st September 2019- The Hindu Editorials Notes – Mains Sure Shot
Note: This is the pending article of 21st September. We are providing it today.
And most of the articles of yesterday’s paper (29th Sep.2019) were a critic.
Question – What is a PBO and why is it vital for a parliamentary democracy like India? Discuss.(250 words)
Context- The economic slowdown.
What is a Parliamentary Budget Office (PBO)?
- A Parliamentary Budgetary Office is a group of people who are ‘experts’ in matters of finance and economics.
- As the name suggests, they are responsible to the parliament as a whole and not to the executive.
- It is supposed to be an independent body which is constituted for a specific purpose i.e. to do independent research and analysis of the budget and other fiscal matters and inform the parliament about it.
- In brief, they specialize in objective and policy 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.
- The concept is not new. It is already existing is many developed countries like U.S.A., Canada, Australia, Korea and so on.
The difference between a PBO and Auditor General:
- The main difference is in the job of PBO and an Auditor General.
- the role of the auditor general is to provide retrospective audits and analysis of the financial accounts and performance of government operations.
- While the role of the PBO is to provide expertise to help forming better fiscal policies (because it gives advice to the executive as well) and facilitate more informational debate in the parliament (it gives facts and analysis to the parliament as a whole too).
- The role of the Auditor General comes later as first policy comes then comes the audit.
What is the need of a PBO?
- As we know in a parliamentary democracy, it is the representatives of the people who are responsible for making laws and they come from several backgrounds like lawyers, doctors, economists, historians and so on.
- So, there may be a lack of expertise among parliamentarians about economics and fiscal matters.
- And also of far-reaching economic impact of government policies. This has grave consequences for a parliamentary democracy where financial oversight is one of the key functions of a legislator.
- So the PBO may prove to be a strength and support provider in the parliamentary debates.
- It can address the parliament about the various aspects of the budget presented, what the economy needs to be and what are the required steps and which sector needs more budgetary allocation and so on.
- This will also facilitate better debates among the members of the parliament who will be guided by facts, figures and expert analysis.
- Data released by PRS Legislative Research since 2000 shows that Lok Sabha has not spent more than 45% of its time discussing the budget. So it will facilitate the MPs in questioning the executive on fiscal matters.
- Most importantly, it strengthens the role of Parliament in financial oversight.
Challenges in establishing a PBO:
- The key challenges faced by any country that establishes a PBO are threefold—guaranteeing independence and viability of the office in the long-run; ability to carry out truly independent analysis; and demonstrating impact.
- So, countries have adopted different models to suit their specific needs. For example, the degree of independence of the PBOs varies across countries—in the US, Korea, Uganda, Kenya, Canada and Australia, PBOs fall within the jurisdiction of the parliament, while in Sweden and the UK, it is under the executive.
How to ensure independence of PBOs in India?
- India will need to ensure the independence and non-partisanship of such a body for it to have credibility with legislators.
- This may best be done if it is established as a statutory body reporting directly to Parliament. Also a clear set of deliverables may be desirable.
- The functions of PBOs, just like the different models, are different in different countries.
- For example, the US Congressional Budget Office (CBO) provides information on economic outlook, cost estimates of specific legislative proposals, long-term budget outlook etc. to both individual MPs and the committees who ask for expert advice. The Canadian PBO too provides independent budget projections, fiscal sustainability report, and financial analysis of Bills to both individual MPs and committees but it ranks its advice to individual MPs lower than Committees.
- In India the PBO should have the function of advising the whole legislature, as well as cater to both individual MPs and committees.
What is the success rate of PBOs in other countries?
- Usually the results of establishing the PBOs are very encouraging. They have shown encouraging results.
- For example, the Canadian PBO contested the true cost of the war in Afghanistan. In the US, the CBO (similar to PBOs) focuses on costing or scoring legislative proposals relative to the baseline. This has helped discourage Congress from making unaffordable proposals. In Australia, the PBO does a costing of different political parties’ electoral manifestos, which can discourage unaffordable election commitments.
- To conclude, India will surely benefit from an institutional mechanism that strengthens the capacity of the legislature to hold the executive responsible in financial matters.
- To generate more awareness about the need of a PBO in a parliamentary democracy among the people and finally bringing about a legislation to establish a PBO in India.