Brief Context
Context A Parliamentary Standing Committee on Finance report has criticized the Ministry of Planning and NITI Aayog for underutilisation of funds and poor financial management, with spending falling below 36% in FY24 and FY25. What are Parliamentary Standing Committees? Parliamentary Standing Committees (PSCs) are permanent committees of Parliament constituted to examine, scrutinise, and oversee the functioning of the executive.
Source Content
Syllabus: GS2/ Polity and Governance
Context
- A Parliamentary Standing Committee on Finance report has criticized the Ministry of Planning and NITI Aayog for underutilisation of funds and poor financial management, with spending falling below 36% in FY24 and FY25.
What are Parliamentary Standing Committees?
- Parliamentary Standing Committees (PSCs) are permanent committees of Parliament constituted to examine, scrutinise, and oversee the functioning of the executive.
- These committees continue to function throughout the year, unlike ad hoc committees which are temporary.
- Types of Parliamentary Standing Committees:
- Department-Related Standing Committees (DRSCs): It examines demands for Grants of ministries, bills referred to them and policy issues. Example: Parliamentary Standing Committee on Finance
- Financial Committees: Public Accounts Committee (PAC), Estimates Committee and Committee on Public Undertakings.
- Other Standing Committees: Business Advisory Committee, Committee on Privileges and Rules Committee.
Role of Parliamentary Standing Committees
- Detailed Financial Scrutiny Beyond Parliament: Parliamentary debates often lack time for detailed examination of budgetary provisions.
- Standing Committees undertake granular scrutiny of Demands for Grants, expenditure trends, and utilisation patterns.
- Evidence-Based and Non-Partisan Oversight: Committees function in a non-partisan manner, relying on expert inputs and data-driven analysis. Their reports provide objective evaluation of policy implementation and fiscal discipline.
- Monitoring of Executive Functioning: Committees operate throughout the year and ensure continuous oversight over ministries and departments. This enhances transparency and accountability in governance.
Challenges in India’s Budgetary Forecasting and Utilisation
- Unrealistic and Inflated Budgetary Forecasting: Ministries often project expenditure requirements without realistic assessment of implementation capacity.
- The continuous rise in allocations despite poor utilisation reflects weak forecasting mechanisms.
- Underutilisation of Allocated Funds: There exists a significant gap between Budget Estimates (BE) and Actual Expenditure (AE). Underutilisation leads to idle public resources and delayed developmental outcomes.
- Incremental Budgeting without Outcome Orientation: Budget allocations continue to rise annually without linking them to past performance or outcomes.
- This reflects the dominance of input-based budgeting rather than outcome-based budgeting.
- Fiscal Indiscipline: Ministries resort to excessive spending in the final quarter to exhaust allocated funds. Such spending violates Quarterly Expenditure Plan (QEP) norms and fiscal prudence principles.
Way Ahead
- The observations of the Parliamentary Committee reaffirm its critical role in ensuring executive accountability and fiscal prudence.
- Strengthening outcome-based budgeting, adherence to QEP norms, and integration of policy with finance is essential for improving governance outcomes and restoring credibility to India’s fiscal framework.
Source: TH