Context

• A national budget is far more than a mere financial statement; it is a reflection of a country's economic vision, governance philosophy, and policy priorities.
• In democratic systems, the principle of parliamentary control over public finance is fundamental, ensuring fiscal discipline, transparency, and accountability.
• However, in India, the role of Parliament in shaping the Budget remains minimal, with an executive-driven process that sidelines legislators.
• To rectify this imbalance, critical institutional reforms, such as pre-Budget discussions and the establishment of a Parliamentary Budget Office (PBO), must be implemented to enhance legislative oversight and ensure a more democratic financial governance framework.

The Budget as a Pillar of Democracy

• The Budget serves as the financial blueprint of a nation, determining the allocation of resources and setting the government's economic and social priorities.
• Historically, legislative control over public finance has been a cornerstone of democratic governance, preventing executive overreach.
• Across the world, different democracies have varying degrees of legislative influence over budget-making, some parliaments actively draft and modify budget proposals, while others merely approve government proposals with limited scrutiny.
• Despite these differences, one principle remains consistent: greater parliamentary engagement in budgetary matters correlates with improved economic stability and social outcomes.

An Analysis of Structural Weakness in India’s Budgetary Process

• Executive Monopoly Over Budget Formulation
  • Unlike other legislative proposals, the Budget is drafted almost entirely within the Finance Ministry, with minimal input from Parliament.
  • The executive, particularly the finance minister and senior bureaucrats, play the dominant role in budgetary planning, while even Cabinet Ministers remain largely uninformed until the final presentation.
  • This secrecy stands in contrast to democratic practices in many developed nations where the legislature is actively engaged in budget formulation. For example:
    • In the United States, congressional committees engage in extensive pre-Budget discussions, and the President’s budget proposal is subjected to rigorous debate and scrutiny before approval.
    • In Germany and Sweden, parliamentary committees assess budget proposals well before they are finalised, ensuring that lawmakers have a meaningful role in shaping financial policies.
  • In India, however, the absence of legislative involvement in the early stages of budget-making weakens Parliament’s ability to shape fiscal policies.
  • By the time the Budget is presented, its core framework is already established, leaving little room for meaningful amendments or deliberations.
• Limited Time for Debate and Review
  • Once the Budget is presented in the Lok Sabha, it is expected to be debated, scrutinised, and approved within a limited timeframe.
  • However, parliamentary discussions on budgetary allocations are often rushed and superficial.
  • The government typically presents the Budget in early February, and Parliament is expected to pass it before the end of March.
  • Given the extensive details of financial allocations across various sectors, this short window leaves little opportunity for rigorous analysis.
• Weak Role of Parliamentary Committees
  • While parliamentary standing committees are intended to provide oversight, their influence over the Budget remains limited.
  • The Departmentally Related Standing Committees (DRSCs) do review demands for grants from various ministries, but their recommendations are not binding.
  • The government is free to disregard their suggestions, rendering committee scrutiny largely ineffective.
  • In contrast, legislative committees in countries such as Canada, Australia, and the United Kingdom play a stronger role in budget analysis.
  • These nations have dedicated budget offices that provide legislators with independent economic research, ensuring that parliamentary committees can offer informed recommendations.
• The Marginal Role of Rajya Sabha
  • Another structural weakness in India’s budgetary process is the limited role of the Rajya Sabha (Upper House) in financial matters.
  • While the Rajya Sabha is a key legislative body responsible for reviewing laws and policies, it has little authority over budgetary decisions.
  • According to Article 110 of the Indian Constitution, the Budget is classified as a Money Bill, meaning it is primarily the domain of the Lok Sabha (Lower House).
  • Once the Lok Sabha passes the Budget, the Rajya Sabha can only discuss it but cannot amend or reject it.
• No Power to Modify the Budget
  • Perhaps the most significant limitation on Parliament’s role is the inability to modify or amend the Budget in any meaningful way.
  • While members of Parliament (MPs) can raise objections and suggest changes, they cannot directly alter expenditure or taxation proposals.
    • Unlike in countries such as France and Sweden, where legislators have the authority to propose alternative spending allocations, Indian MPs lack such power.
    • Even within the Lok Sabha, opposition parties often find it difficult to push for budgetary amendments, as the ruling party typically enjoys a majority and can pass the Budget with minimal resistance.

Required Reforms to Address these Structural Weaknesses

• The Need for Pre-Budget Discussions
  • One crucial reform to enhance parliamentary involvement in budgeting is the institutionalisation of pre-Budget discussions.
  • These discussions, held during the monsoon session, would allow legislators to assess the nation’s fiscal health, outline budget priorities, and contribute to economic planning.
  • A dedicated five to seven-day debate period would enable parliamentarians to voice public concerns, advocate for equitable resource allocation, and provide policy recommendations for the government’s consideration.
  • Pre-Budget discussions would also encourage better coordination among subject committees, fostering informed and holistic decision-making.
• Establishing a Parliamentary Budget Office (PBO)
  • Currently, India lacks an institutional mechanism that provides parliamentarians with independent and non-partisan budgetary analysis.
  • A PBO, modelled after institutions such as the U.S. Congressional Budget Office and similar bodies in Australia, Canada, and the United Kingdom, would bridge this gap by offering data-driven insights and expert economic forecasts.
  • A well-structured PBO would play a crucial role in analysing government expenditures, revenue projections, and fiscal policies.
  • It would conduct independent economic assessments, evaluate medium- and long-term budgetary trends, and provide parliamentarians with research-backed policy briefs
• Reclaiming Parliamentary Authority in Budget-Making
  • The current budgetary process in India diminishes the role of elected representatives, undermining democratic principles.
  • By integrating pre-Budget discussions and establishing a PBO, Parliament can transition from being a passive approver of financial proposals to an active participant in economic policy-making.
  • These reforms are not just procedural improvements but fundamental steps toward strengthening representative democracy.
  • They would ensure that budgetary decisions reflect collective deliberation rather than executive fiat, leading to more equitable economic policies and greater public trust in financial governance.

Conclusion

• A truly democratic budgetary process requires more than just executive efficiency; it demands active legislative participation and oversight.
• The current system in India, which marginalises Parliament’s role, needs urgent reforms to restore balance and accountability.
• Institutionalising pre-Budget discussions and establishing a PBO would significantly enhance Parliament’s capacity to shape economic policy, ensuring a more transparent, democratic, and effective governance framework.
• By reclaiming its rightful authority over public finance, Parliament can reinforce its role as the guardian of India’s economic and democratic integrity.