Public Accounts Committee (PAC) – Functioning, Challenges and Suggestions for Improvement – Explained, pointwise

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The Public Accounts Committee (PAC) of the Parliament has completed hundred years of existence. India being a Parliamentary democracy establishes accountability of the government to the people through Parliamentary supervision and control. Public Accounts Committee is considered the most important financial Committee of Parliament in the financial accountability process.

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About the Public Accounts Committee (PAC)

It is one of the three Financial Parliamentary committees, the other two being the Estimates Committee and the Committee on Public Undertakings.

The Public Accounts Committee is the oldest of all House panels. It was introduced in 1921 based on the Government of India Act, 1919 (Montague-Chelmsford Reforms). W M Hailey was its first Chairperson, and Bhupendra Nath Mitra was its first Indian Chairperson.

Members: With the Constitution coming into force on January 26, 1950, the Committee became a Parliamentary Committee functioning under the Speaker. The PAC consists of 22 members of parliament, of which 15 are from Lok Sabha and 7 from Rajya Sabha. A Minister is not eligible to be elected as a member of the Committee.

Term: The term of office of the members is one year. The Public Accounts Committee is constituted every year under Rule 308 of the Rules of Procedure and Conduct of Business in Lok Sabha.

Chairperson: The Chairperson is appointed by the Speaker of the Lok Sabha. Since 1967, the chairperson of the committee is selected from the opposition.

Role of CAG: The Committee is assisted by the Comptroller and Auditor General (CAG) in the examination of Accounts and Audit Reports. CAG has been described as a friend, philosopher, and guide to the PAC.

What are the functions of the Public Accounts Committee?

First, Its chief function is to examine the audit report of the Comptroller and Auditor General (CAG) after it is laid in the Parliament. The PAC reports its finding to the Parliament.

Second, PAC acts as the watchdog of the public purse by examining the audit report on appropriation account and finance account.

Third, It scrutinises the appropriation account to verify: 1) If the funds were legally available, 2) If a competent authority sanctioned its use, 3) If the rules laid by the procedure were followed.

Fourth, It further establishes the accountability of the Government by examining the budgetary appropriations and accounts of the Government, and Reports of Comptroller and Auditor General (under article 151) on the execution of the projects and programmes by the various ministries.

Fifth, The Committee examines public expenditure not only from the legal and formal points of view to discover technical irregularities but also from the point of view of the economy, prudence, wisdom and propriety to bring out the cases of waste, loss, corruption, extravagance, inefficiency and nugatory expenses.

Functions of the PAC

What is the significance of the Public Accounts Committee?

While other Department Related Standing Committees can adopt reports with dissent notes by some members, the PAC must adopt all reports by consensus. This is unique about the PAC, and helps it maintain neutrality.

Customarily, the leader of the largest opposition party in the Lok Sabha is the Chairperson of the PAC. Hence, It plays a crucial role in scrutinizing the use of Government funds.

The PAC at times, through its criticism of the inefficient public expenditure of the Government, creates a strong public opinion against the Government. The incumbent Government to remain in power tries to rectify the inefficiency in its public expenditure and policymaking. Thus, the committee helps in enforcing accountability of the executive to the people.

Read more: The role of Public Accounts Committee in establishing accountability 
What are the challenges faced by the Public Accounts Committee?

PAC in India is not able to enforce the accountability of the Government to the people in the true sense because 1) Even if the PAC brings out the irregularities in the public expenditure there are no mechanisms to enforce the corrective measures, 2) It examines the expenditure which has already been done by the Government. Further, the PAC has no power to limit the expenses. 3) The recommendations of PAC are advisory in nature and are not binding on the Government. 4) The PAC has got no mandate to examine the policy in the broader sense. 5) The PAC cannot issue an order. Only the Parliament can take a final decision on its findings.

Apart from that, the PAC face challenges like,

1) Lack of technical knowledge: Usually, the PAC members are generalists, and CAG’s reports require independent expert evaluation in the simplest of terms. 2) Separate subcommittees of the PAC consider expenditures incurred by the ministries of defence, railways, external affairs, finance and so on. These reports are made available on Parliament’s website. However, these reports lack in-depth scrutiny of the government’s accounts.

What can be done to improve the performance of the Public Accounts Committee?

Implement the recommendations: The report of the “All India Conference of Chairpersons of PACs of Parliament and State/UT Legislatures” suggested few essential reforms. Such as

Amendment to the CAG Act to facilitate a) The Comptroller and Auditor General (CAG) should be made responsible to Parliament, like in the UK and Australia, b) The PAC should be consulted on the appointment of the CAG, c) Public Private Partnership projects should be examined by CAG as public money is spent on them.

PACs should take up suo motu cognisance of public issues and Government’s flagship programmes and examine financial wrong-doings.

The recommendations should be made mandatory.  Also, the PAC should have the powers to examine the retired officials apart from the incumbent ones.

The PAC proceedings should be open to the press except in sensitive matters.

Induct better talent: The PAC chairperson should have a reasonable understanding of accounting principles and practices. Hence, there is a need to choose a professional who can present complex audit reports in simple terms. If CAG reports are complex, it becomes difficult for the PAC to go through the details and unjustified government spending might go undetected.

Conduct an Independent audit: Two independent private sector accounting firms can be selected by the PAC to provide analytical comments about CAG reports confidentially to the PAC. It would help in realizing transparency in government spending.

Improving the effectiveness: The Speaker of the Lok Sabha has suggested that there should be a committee of Chairpersons of PACs (Parliament and State Legislatures) and that committee should have a comprehensive discussion on the working of the PACs and brainstorm on the manner in which the working of such committees can be more effective.

Other required changes: a) At present, huge volumes of funds are allocated repeatedly to recapitalize public sector banks (PSBs). The CAG needs to assess the extent and manner in which taxpayer funds are used to recapitalize PSBs. b) Similarly, the implementation of farm loan waivers is also puzzling. The PAC should check if the net present value of the amounts waived added up to more than the announced total amounts. c) Accounting statements of several State Governments, too, need careful examination by the PAC as they collectively spend more than the Central Government.

Read more: Credibility of govt accounting – On Public Account Committees

The Public Accounts Committee (PAC) plays a crucial role in ensuring the accountability of the government. The committee helps in enforcing accountability of the executive to the people. Hence, it is in the interest of the nation to strengthen the PAC.

Source: Indian Express

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