- Intro – state the emergence & constitution of PAC.
- Briefly state its significance.
- Mention the major challenges faced.
- Conclusion – suggest measures for improvement.
It is one of the three Financial Parliamentary committees. The Public Accounts Committee is the oldest of all, being introduced in 1921 on the basis of Government of India Act, 1919 (Montague-Chelmsford Reforms).
With the Constitution coming into force, it 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 cannot be a member of the Committee. The term of office of the members is one year. The Chairperson is appointed by the Speaker of the Lok Sabha. Since 1967, the chairperson is selected from the opposition.
The Committee is assisted by CAG in the examination of Accounts & Audit Reports. CAG has been described as a friend, philosopher, and guide to the PAC.
Significance : The PAC must adopt all reports by consensus. This is unique about the PAC, which helps maintain neutrality. 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. Thus, the committee helps in enforcing financial accountability of the executive.
PAC in India is not able to enforce the accountability in the true sense because
- Even if the PAC brings out the irregularities in the public expenditure there are no mechanisms to enforce the corrective measures.
- It examines the expenditure which has already been incurred by the Government.
- Further, the PAC has no power to limit expenses.
- The recommendations are advisory in nature and hence not binding on the Government.
- The PAC has got no mandate to examine the policy in the broader sense.
- The PAC cannot issue an order. Only the Parliament can take a final decision on its findings.
- Lack of technical knowledge and CAG’s reports require independent expert evaluation.
- Some reports lack in-depth scrutiny of the government’s accounts.
The report of the “All India Conference of Chairpersons of PACs of Parliament and State/UT Legislatures” suggested few essential reforms. These are –
- Amendment to the CAG Act to facilitate : a) 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 binding.
- Also, PAC should have the powers to examine the retired officials apart from the incumbent ones.
- The PAC proceedings should be open to public except in sensitive matters.
- The chairperson should have a reasonable understanding of accounting principles and practices. Hence, there is a need to choose a professional.
- 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.
- The Speaker had suggested that there should be a committee of Chairpersons of PACs (Parliament and State Legislatures) and that committee should have a comprehensive discussion on its working to make it more effective.