Parliamentary Budget Office

A PBO is an independent and impartial body linked directly to Parliament that provides technical and objective analysis of Budgets and public finance to the House and its committees.

Why the need for PBO?

Multiple indicators suggest that executive-led budgetary governance has not been successful in India. The unequal distribution of public resources is a prevalent issue. Despite high economic growth, India suffers from inexcusable income inequality, poverty, unemployment, malnourished children, preventable diseases, systemic corruption, and underinvestment in key social services such as health and education. The Indian Parliament is a Budget-approving body contributing to budgetary matters in the following notable ways which include the presentation of the Budget; scrutiny of the demands for grants of various ministries; debate; consideration and approval of the Budget. 

To carry out these functions effectively, Parliament requires institutional, analytical and technical competence.

• It is an instrument for addressing bias towards spending and deficits and, more significantly, for enhancing fiscal discipline and promoting accountability. 
• Further, it can generate quality public debate on Budget policy and public finance, enabling parliamentarians to engage meaningfully in the Budget process.

Role of a PBO

The majority of PBOs have four core functions: 

1. independent and objective economic forecasts; 
2. baseline estimate survey; 
3. analysing the executive’s Budget proposal; and 
4. providing medium- to long-term analysis. 

A PBO can perform other tasks depending on its mandate, resources and requirements of parliamentarians or committees. These may include general economic analysis, tax analysis, long-term analysis, options for spending cuts, outlining a budgetary framework that reflects priorities of the nation, bespoke policy briefs.

How it is different from other bodies?

A PBO is different from general parliamentary research services and information wings. It also differs from finance committees and the Public Accounts Committee. 

• A PBO is comprised of independent and specialised staff, such as Budget analysts, economists, public finance experts. 
• The PBO must be non-partisan, independent and mandated to serve all parliamentarians.
• Furthermore, the core functions of the PBO should be codified in law. 
• Its output, and the methods by which those outputs are prepared, must be transparent, accessible and understandable.

Benifits of PBO

Parliamentary scrutiny of public finance is an important aspect of governmental accountability. There is a legitimate democratic need in this country to strengthen the capacity of Parliament and its members. PBO helps in following manner:

• It sets global standards and best practices to promote financial and budgetary transparency. 
• ensure that parliamentarians are well-informed to perform their budgetary and oversight functions effectively. 
• Positive impact on the House’s ability to carry out budgetary oversight and fiscal decision-making.

Challenges

The key challenges faced by any country that establishes a PBO are threefold—guaranteeing independence and viability of the office in the long-run; ability to carry out truly independent analysis; and demonstrating impact. It is likely to attract opposition from the bureaucracy as any aspect of strengthening Parliament (or State legislatures) has always been unwelcome and met with less consideration from the executive.

Conclusions

The goal of the PBO is to render budgets more transparent and accountable. PBOs can help parliamentarians understand the complex nature of the budgeting process and provide the parliament and its committees with the capacity to contribute to the budget process. Similarly, a PBO can ensure that parliamentarians remain informed well enough to perform their budgetary and oversight responsibilities effectively.Parliament, with its long-standing traditions of non-partisan legislative services to MPs in India, will find more favourable consensus among all parties for the proposal to establish a PBO. However, establishing the PBO in India will require unremitting political will and public support.

Sources

The Hindu

EPW
Livemint