Budget should not be a surprise

In my last two pieces, I had suggested an agenda for tax and expenditure reforms for 2009. This last related piece is about improving budget transparency and parliamentary oversight. The annual budget, containing a comprehensive statement of government's proposed revenue and expenditure, as well as key policy initiatives, is presented to Parliament on the last working day of February. This is followed by a general discussion on the budget and then it goes to the standing committee for in-depth consideration. The report of the standing committees is thereafter considered and both the appropriation and the finance bills are considered and adopted in the Lok Sabha. This is followed by a discussion in the Rajya Sabha.

Budget-making is still shrouded in undue secrecy. After all, except for changes on excise and customs, the rest of the budget is applicable only prospectively. It can be subjected to much wider debate for creating a broader consensus than seems possible in the current calendar of events. Parliamentary engagement and oversight also remain limited mostly in terms of ex post examination. The budgetary appropriations in most other countries are debated for months before consideration by the legislature.

An international symposium of OECD member countries concluded that there was need to assert legislative control over executive expenditure by first, constraining fiscal aggregates, and second, enlarging legislative control over revenue. In their view, good governance implies an active partnership around the budget — the major vehicle of both government policy and democratic control. To be effective, parliaments require timely, coherent and credible information from the executive on resources and performance.

Several parliaments of OECD member countries are re-examining their internal organisation and processes for the discussion on the budgetary process. OECD believes that "Parliamentary budget processes and policies support sound governance when they promote fiscal responsibility, transparency, a future orientation, as well as all the financial commitments which are not included in the budget, and when they demand credible information on the nature, cost and impact of public policies."

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