The Budget is more than just a financial statement, as it reflects a nation’s priorities, economic vision and governance philosophy. Across democracies, parliaments exercise the power of the purse, which is critical in shaping national budgets, ensuring fiscal discipline, and promoting transparency. However, in India, parliamentary influence over the Budget remains minimal. The executive-driven process side lines legislators, leaving them with little opportunity to effectively shape or scrutinise financial policies. Parliament must evolve from being a mere approver of the government’s financial proposals to actively shaping economic policy. This requires critical institutional reforms, including pre-Budget discussions and establishing a Parliamentary Budget Office (PBO).
The Budget, a pillar of democracy
Budgeting is a fundamental democratic exercise that allocates public resources and defines the government’s social and economic priorities. Historically, the power of the purse has been hard-won, with legislatures across the world asserting their right to oversee public finance. From the British Parliament’s financial control in the 19th century to the fiscal policies of modern democracies, legislative scrutiny has been essential in preventing executive overreach.
Globally, the degree of legislative influence over budgets varies. Some parliaments actively draft and modify budget proposals, while others act as rubber stamps. Certain legislatures hold in-depth committee discussions on budgetary allocations, whereas others rely on centralised finance committees. However, one common thread remains — Budget transparency and parliamentary engagement correlate with better social outcomes and economic stability.
Parliament’s role in Budget formulation and scrutiny in India is mainly ceremonial. The Finance Ministry single-handedly crafts the Budget, keeping even Cabinet Ministers uninformed until its presentation in the Lok Sabha. Unlike other legislative Bills, the Budget proposal is not subjected to thorough cabinet discussions before being introduced in Parliament. The executive monopoly over financial planning results in fragmented debates and limited oversight, weakening the core tenets of representative democracy.
Moreover, the Rajya Sabha, despite its democratic credentials, has no substantive role in Budget discussions. Ironically, while India permits a Finance Minister to be a Rajya Sabha member, they lack the ability to vote on their (own) Budget proposals in the Lok Sabha. This absence of budgetary bicameralism contrasts sharply with the British House of Lords, which wields some influence over financial legislation despite being an unelected body.
The decline of parliamentary authority over budgetary matters is evident in the poor quality and brevity of debates and the ineffective scrutiny by subject committees. Parliamentarians lack the power to amend or significantly influence budget proposals, effectively reducing their role to passive approval. This status quo is neither democratic nor conducive to accountability.
Pre-Budget discussions
Two key reforms must be implemented for Parliament to reclaim its rightful role in Budget-making: introducing pre-budget discussions and creating a Parliamentary Budget Office.
Parliament should institutionalise pre-Budget discussions during the monsoon session to ensure meaningful engagement in the Budget process. A dedicated five to seven-day discussion period would allow legislators to assess the nation’s fiscal health, outline Budget priorities, and present a broad economic framework for the government’s consideration. Such discussions would also encourage better coordination among subject committees, enhancing their ability to provide informed input.
Pre-Budget debates would democratise the Budget-making process, allowing elected representatives to voice public concerns, suggest equitable resource allocation, and engage in policy deliberations. More importantly, they would facilitate greater public involvement, fostering transparency and trust in financial governance.
Scepticism about active legislative involvement in budgeting often stems from concerns over fiscal discipline. Some economists argue that empowering legislatures may lead to populist spending and weakened financial prudence. However, placing unchecked faith in the executive to act in the public interest is naive. Regardless of ideology, no government has ever voluntarily ensured economic justice without oversight. A balanced approach, where the executive retains financial discretion but remains answerable to Parliament, is the hallmark of a healthy democracy.
A crucial aspect of Budget reform is in strengthening Parliament’s analytical and research capabilities. India lacks an institutional mechanism that provides legislators with independent and non-partisan Budget analysis. Establishing a Parliamentary Budget Office (PBO) would bridge this gap as there would be data-driven insights and expert economic forecasts. Modelled on institutions such as the U.S. Congressional Budget Office and similar bodies in Australia, Canada and the United Kingdom, a well-structured PBO in India would play a vital role in analysing government spending, revenue projections, and fiscal policies. It would conduct independent economic forecasts, assess the fiscal impact of proposed policies, and evaluate medium-term and long-term budgetary trends.
Additionally, the PBO would offer policy briefs to parliamentarians, enhancing informed decision-making. Rather than encroaching upon the executive’s role, it would complement it by ensuring legislative scrutiny is backed by objective research. Such an institution would significantly enhance Parliament’s capacity to hold the government accountable and foster evidence-based policy discussions.
Reclaiming parliamentary authority
The current budgetary process diminishes the role of elected representatives, undermining democratic accountability. By integrating pre-Budget discussions and establishing a PBO, Parliament can transition from being a passive recipient of financial proposals to an active budget-influencing institution.
These reforms are procedural adjustments and fundamental steps towards strengthening representative democracy. They would ensure public finance decisions reflect collective deliberation rather than executive fiat. A robust parliamentary engagement in budgeting would ultimately lead to more equitable economic policies, greater transparency, and a financial governance framework that genuinely serves the people’s interests.
Vinod Bhanu is the Director of the Centre for Legislative Research and Advocacy (CLRA), New Delhi
Published – March 22, 2025 12:16 am IST
