How Modi government has trampled over Parliament

The legislature's fiscal power is the cornerstone of constitutional democracy.

 |  5-minute read |   18-03-2018
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On March 13, in just 30 minutes, the Lok Sabha marked its stamp on the expenditure of 99 ministries and departments, passed two bills, including the Finance Bill, and approved 218 amendments without any debate.

This is the height of the undermining of Parliament's authority over economic and financial decisions. However, this is not the first instance of such a practice.

Over the last decade, the control of Parliament and Assemblies over government finances has decreased significantly owing to changes in the structure of government expenditure and revenues.

Parliament didn't take much time in following state assemblies' when it comes to approving financial business taking it to the guillotine without giving a fair chance to people's representatives to raise questions and demand answers on government's fiscal policy.

In both, parliamentary and presidential democracies, the economic and financial functioning is regulated by people's representatives through Parliament and Assemblies.

The legislature's fiscal power is the cornerstone of constitutional democracy. The rules of Parliament and Assemblies regarding regulation of governments' financial businesses are based on two principles: one, no taxation without representation and, two, people's control over government's purse. That is why governments in India (Centre and states) can neither impose any tax without the consent of the House, nor are they free to spend.

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In India, no government can spend from the consolidated fund without Parliament's approval. Even the expenditure from the contingency fund is capped at Rs 500 crore. The size of this fund was increased to Rs 500 crore from Rs 50 crore in 2005.

The government cannot levy any tax without the assent of legislative assemblies. The system of parliamentary regulation on taxes and government's purse comes into force via an elaborate arrangement of legislative bills, parliamentary committees and audit agencies.

The GST saga

The Goods and Services Tax (GST) has come as a prime example of departure of Parliaments' (state assemblies) control over taxation. Before GST, indirect taxes used to be a part of the Finance Bill, which were thoroughly debated and approved by Parliament once a year during the Budget session. The government was not in a position to change the taxes every now and then, making tax structures predictable and transparent.

With the GST, people's elected representatives abdicated their authority over most kinds of indirect taxation handing over the task to the GST Council, an opaque and so far non-transparent body of about two dozen ministers of states assisted by bureaucrats.

The GST Council is no Parliament. Now, the entire domain of tax on consumption is wholly outside the control of legislative bodies. Here, two dozen ministers sit together to change tax rates every month.

The questions the nation must pose to its lawmakers are how does the GST Council do justice with principle of no taxation without representation? Why are GST Council's discussions not being made public? What will be the role of Parliament and the Comptroller and Auditor General of India (CAG) under the GST regime?

The government is ready with the first amendments to the GST Bill having faced a disaster in its implementation. Will major amendments in the GST Bill meet the same fate as the Finance Bill? Won't Parliament question and discuss what has happened with India's second-freedom-at-midnight moment?

Public purse

Reckless expenditure has ensured that revenues never suffice leading to a heavy dependence on borrowing from the banks. The growing dependence on market borrowings has bloated the bill of interest payments, which now accounts for 18 per cent of budgetary expenditure.

There are certain items of expenditure where Parliament's approval is not needed. These are "charged" directly from the consolidated fund of India. The biggest component of expenditure is interest paid by the government on its debt.

Grants given to state governments, panchayati raj institutions and other agencies comprise 28 per cent of expenditure. Several recent reports of the CAG show that Parliament doesn't vote on almost 20 per cent of the expenditure made on these grants.

Thus about 38 per cent (interest and grant) of the government expenditure effectively stays outside Parliament's control. The merger of rail budget in the general budget had no visible effect on Railways. However, Parliament lost direct control over railway budget as well. Railways' expenditure and revenue is also part of Union Budget, like other departments.

Over the last three years, the government has conveniently taken the Money Bill (limited to Lok Sabha) route for financial business to avoid goring through a test in the Rajya Sabha.

Subsequent to India's integration with global economy and liberalisation, Parliament's role should have grown in the interest of transparency in economic decisions. The government was expected to bring in international investment, trade and tax concession agreements for Parliament's scrutiny. However, we are going the other way round. When the role of Parliament in country's economic decisions is increasingly getting curtailed, one can very well guess what is happening in state Assemblies.

Vaclav Havel, former president of Czech Republic, dreaded that in parliamentary democracies people are manipulated in ways that are infinitely more subtle and refined than the brutal methods used in post-totalitarian societies.

Havel was right. In India, we have entered into an era where elected governments are encroaching upon fundamental values of parliamentary democracy.

Also read: 7th Pay Commission: What no one will tell you

Writer

Anshuman Tiwari Anshuman Tiwari @anshuman1tiwari

Editor, economic analyst, columnist, author

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