After the washed out winter session of Parliament, the big question was whether the budget session would function effectively. The session started out in a promising way as the government agreed to set up a Joint Parliamentary Committee (JPC) to look into the allocation of 2G telecom spectrum. However, hopes of an effective session were soon belied. The session was curtailed to give MPs sufficient time to campaign for assembly elections to four states. This meant that few bills were discussed, and even the examination of the budget proposals were done in a cursory manner. An important announcement was that funds under MPLADS would be increased. We discuss some of these issues here.
First, let us take a quick look at some statistics. The budget session was scheduled to have 29 working days; Parliament met for 23 days. This session is the shortest budget session in a non-election year in at least the last two decades.
The agenda for the session had listed 34 bills for passing, and 32 new bills for introduction. At the time of writing this note (as of noon on Thursday, with a day and a half of the session remaining), 3 bills have been passed, and 7 introduced. In addition to the Finance Bill, the bills passed included a bill with a minor correction in wording, a bill to enable the merger of State Bank of Indore with State Bank of India, and one to extend the moratorium on sealing of unauthorised buildings in Delhi. Among the seven bills that were introduced, three pertain to the financial sector: one to amend the constitution to enable the goods and services tax, one to amend the banking regulation act to permit voting rights in proportion to shareholding, and the third to provide statutory status to the pension regulator. The list of bills not introduced yet is a long one, and includes the following: bills to set up regulators for biotechnology, higher education, medical education, mines and minerals; amendments to the land acquisition act, and a bill to provide for rehabilitation and resettlement of people displaced on account of land acquisition.
The Union Budget
The budget process was short-circuited. Usually, all demand for grants are examined by the respective departmentally related standing committee. The budget session takes a short 2-3 week recess for the committees to meet, scrutinise the proposals, and make their recommendations. This year, the demands were not sent to the committees for examination, and were directly taken up by the full Lok Sabha.
Demands relating to 4 ministries (Rural Development, External Affairs, Mines and Road Transport and Highways) were listed for discussion in Lok Sabha. These ministries account for about 19% of the total budget. This implies that 81% of the budget - including major schemes such as Sarva Shiksha Abhiyan, the Midday Meal Scheme, JNNURM and the National Rural Health Mission etc., were passed without any discussion, either in committee or on the floor of the House.
Furthermore, the government did not provide the required documents in time for even the ministries that were discussed. Indeed, the Speaker's anguish was visible when she admonished the government "… I am of the view that these documents including the detailed Demands for Grants should be made available to the Members sufficiently in advance so that they get enough time to study them. I would, therefore, urge upon the Government to ensure that in future the detailed Demands, the Outcome Budgets and also the Annual Reports of the Ministries whose demands are to be discussed in the House are made available to the Members sufficiently in advance."
One of the important announcements made by the Finance minister was to increase the amount under MP Local Area Development Scheme (MPLADS) to Rs 5 crore per year (from Rs 2 crore per year) for Lok Sabha MPs. Under this scheme, MPs can identify certain development projects in the constituency, and allocate funds. The implementation is carried out by the district administration.
We believe that this scheme is flawed in several ways. First, it detracts from an MP's role of overseeing the work of the central government. The MP is expected to ensure that government policies and schemes are implemented properly so that development benefits accrue to citizens. Instead, under MPLADS, the MP directly recommends specific projects, thus taking an implementation role, that conflict with his oversight role. This issue was raised in the Supreme Court, which ruled that MPLADS was not unconstitutional; however, in our view, its propriety is questionable.
Second, the effectiveness of the scheme is also questionable. Every constituency in the country receives a few hundred crore rupees of taxpayer money for development projects. Various estimates - including the famous 15 paise usage per rupee spent estimate by Rajiv Gandhi - indicate that a significant part of these funds do not reach the intended beneficiaries. It is easy to see that effective oversight that improves the efficiency of these schemes would have a far higher impact than deploying Rs 5 crore through MPLADS.
Third, the fund conflicts with the three tier structure of governance. The MP and the MLA have the role of enacting laws, approving budgets and overseeing the central and state governments. The function of installing tube-wells, erecting bus shelters, and building classrooms are to be performed by municipal councillors and panchayat members; by identifying and financing these activities, the MPLAD scheme interferes with this constitutional arrangement.
The budget session had few silver linings. Much time was spent on grandstanding on various issues, and little time was devoted to examining legislative proposals or the union budget. Even the committee process to scrutinise proposed budgetary expenditure was bypassed. As the 15th Lok Sabha approaches the half-way mark later this year, it is important that Parliament focuses on its core mandate of passing legislation and approving budgets, after due scrutiny.