Parliamentary Budget Office

What is the issue?

Establishing a Parliamentary Budget Office (PBO) would help MPs provide effective oversight of budgeting.

What is Parliamentary Budget Office?

• A PBO is an independent and impartial body linked directly to Parliament.
• It provides technical and objective analysis of Budgets and public finance to the House and its committees.
• It can generate quality public debate on Budget policy and public finance, enabling parliamentarians to engage meaningfully in the Budget process.
• Traditionally, independent budgetary units are more common in developed countries.

What is the need for such office?

• Multiple indicators suggest that executive-led budgetary governance has not been successful in India.
• The Indian Parliament is a Budget-approving body contributing to budgetary matters in the following notable ways:

1. Presentation of the Budget.
2. Scrutiny of the demands for grants of various ministries.
3. Debate.
4. Consideration and approval of the Budget.

• To carry out these functions effectively, Parliament requires institutional, analytical and technical competence.
• There is a growing trend among legislatures, particularly within the OECD countries to establish specialised Budget research units.

What are the functioning roles of PBO?

• The majority of PBOs have four core functions:

1. Independent and objective economic forecast.

• Budgets generally start with an economic forecast.
• A PBO can present either its own independent forecast or it can validate the government’s, providing an objective analysis on the official forecast.

2. Baseline estimate survey.

• It will provide options for spending cuts, outlining a budgetary framework that reflects priorities of the nation, bespoke policy briefs.

3. Analysing the executive’s Budget proposal.

• A PBO is comprised of independent and specialised staff, such as Budget analysts, economists, and public finance experts.
• These may include general economic analysis, tax analysis, long-term analysis.

4. Providing medium- to long-term analysis.

• Its output, and the methods by which those outputs are prepared, must be transparent, accessible and understandable.

Source: The Hindu