The growing tendency on the part of State governments to incur expenditure in excess of budgetary grants and leave it unregularised for years on end, constitutes financial anarchy and a repudiation of the executive's accountability to the legislature.
THE essential feature of the parliamentary system as we have it in India is that the legislature has complete control over the public purse. Taxes cannot be levied or money spent without the specific sanction of the legislature.
Regarding expenditures, the government submits in the Budget the estimates of expenses for the financial year in the form of demands for grants. On approval of the demands, the government presents the Appropriation Bill, which when passed by the legislature, authorises the government to withdraw amounts from the government fund to meet the expenses of the respective services.
Whenever the government feels that the grant given for a particular service is not sufficient for the purposes in the given financial year or when it proposes to undertake a service that is not contemplated in the Budget, the government presents demands for supplementary grants for the approval of the legislature.
However, upon scrutiny of the accounts at the end of the financial year, the audit may find that some expenditure has been incurred in excess of the grant. In such cases, the Constitution provides for their regularisation by the legislature.
In fact, the Draft Constitution prepared by the constitutional adviser B.N. Rau did not contain a provision with regard to excess expenditure. However, on the recommendation of the expert committee on financial matters, the drafting committee included in the Draft Constitution this provision for regularisation of excesses. When the Constituent Assembly discussed the provision on June 10, 1949, some members felt that `excess' regularisation would make the executive disregard the decision of the House and that it would constitute a breach of the mandatory provision against incurring any expense without the sanction of the legislature.
Dr. B.R. Ambedkar justified this provision as a necessity when the executive in a situation of emergency had to incur an expense. However, he conceded: "In fact, if I may say so, the passing of an excess grant is nothing else but an immunity Act passed by Parliament to exonerate certain officers who have in good faith done something which is contrary to the law for the time being."
Thus, the Constitution-makers themselves were aware that incurring expenditure in excess of a grant would be an anomaly that is contrary to law and a matter of temporary aberration.
The procedure adopted is that the audit report on appropriation accounts brings to the attention of the legislature the cases of excess expenditure. The Public Accounts Committee (PAC) examines the explanatory notes furnished by the government and makes its recommendations to the legislature to regularise the excesses incurred. Then the government presents the demands for excess grants, which are to be passed by the legislature for regularisation.
While legislative sanction is obtained before incurring expenditures under budgetary and supplementary grants, the demand for excess grants is presented to the legislature after the expenditure has been incurred.
A STUDY of the audit civil reports of the States reveals the anarchic conditions caused by the indiscriminate use (or misuse) of the provision with regard to excess expenditure and the dismal failure of the State to regularise them.
The accumulated total of non-regularised excess expenditures for all States came to a whopping Rs.1,26,887 crores as on March 31, 2001.
Some of the State governments failed to regularise excess expenditures continuously over a period of 20 to 30 years. Further, as there has been no discomfort caused by non-regularisation of excesses, there has been a growing tendency on the part of the State governments to resort increasingly to the practice.
The total non-regularised excesses for the States listed in the Table has increased at a rapid pace from Rs.8,073 crores in 1995-96 to Rs.16,377 crores in 1997-98 and further to Rs.39,471 crores in 1999-2000.
Looking at the track record of individual States, Assam, starting with Rs.17 crores in 1983-84 built up arrears in regularisation to a grand total at Rs.16,287 crores.
Bihar was not impressed on the need to regularise any of its excesses since 1971-72, the total coming to Rs.6,244 crores.
Jammu and Kashmir has established an unenviable record of Rs.28,349 crores of non-regularised excesses. The total expenditure of the State in 1999-2000 was Rs.7,108 crores and the arrears of non-regularised expenditure was almost four times that amount.
Starting with the excess of Rs.262 crores in 1984-85, Uttar Pradesh had a huge total of Rs.22,404 crores at the end of 1999-2000.
Three reasons given invariably in the audit reports for non-regularisation were: 1. Explanatory notes not furnished by the Finance Department to the PAC; 2. Explanatory notes submitted after lapse of many years for consideration of the PAC, and 3. Appropriation Bill yet to be passed.
Once there was a delay or inaction relating to one or other of these three stages, there was a tendency on the part of the State to allow the accumulation to a dreadful extent.
In contrast to the inaction of the States in fulfilling the constitutional obligation, the record of Parliament and its PAC has been better. As one who has had the honour to be associated with the PAC as its Chairman in the Fifth Lok Sabha, I was aware that the committee paid prompt attention to consider the explanations of the government and, wherever necessary, suggest remedial measures for any errors committed. But that did not on any occasion delay the PAC Report for regularisation.
What is to be done if there is delay in the submission of the report by the PAC, due to some reason or other? The question was raised in the Lok Sabha in 1956 in the context of a delay in the presentation of demands for excess grants to Parliament. The Minister concerned relied on Rule No.308 (4) of the Lok Sabha Rules of Procedure, which states that if any money has been spent in excess of the grant, the PAC "shall examine the circumstances leading to such an excess and make such recommendation as it may deem fit.'' The Minister contended that he had to wait for the PAC Report before initiating action for regularisation.
The Speaker gave the following ruling: "The government ought not [to] wait so long. As soon as it comes to the notice of the government, they must ask for regularising it... But not to place it (the demand of excess grant) before the House even in such cases, which are definitely known to the government saying that `the Public Accounts Committee has not sent its report' is not correct. There is no doubt about this matter. I would urge upon the government whenever it comes to notice such Excess Demands, to bring them immediately to the notice of the House and ask for the Excess Grants... "
The 1956 ruling by the Speaker has been followed since then in order to fix the responsibility on the government in the matter of regularisation of excesses, irrespective of any delay or inaction on the part of others. In some States the PAC was not constituted for some years. The non-formation of the PAC should not rule out the constitutional obligation cast on the State government. After all, the rules framed for the functioning of the House and its committees cannot override a constitutional mandate on the State government under Articles 205(1b &2) and 206.
Unfortunately, there is no time limit set in the Indian Constitution or in the Rules, for regularisation of excess expenditures.
In the United Kingdom, the government is required to regularise before the end of a financial year any excess expenditure incurred in the previous financial year.
The Administrative Reforms Commission Report (January 1968) on `Finance, Accounts and Audit' recommended the fixing of dates for the submission of appropriation accounts, finance accounts and audit reports for a given year to Parliament or State legislatures: a few weeks in advance of the presentation of the Budget for the second year. This recommendation is yet to be implemented.
In the Consultation Paper on `Efficacy of Public Audit System in India', the National Commission to Review the Working of the Constitution (NHRWC) observed: "Thus in almost all the States huge amount of public money has been spent in violation of budgetary control envisaged in the Constitution and fraught with the risk of misappropriation of public money. There is no time limit prescribed for placing the Appropriation Accounts certified by the Comptroller and Auditor General in Parliament/ State Legislatures and the regularisation of excess expenditure over the voted by the PAC. There is need for making statutory provision regarding the dates by which the Appropriation Accounts is submitted to Parliament/legislature."
This writer feels that a time-limit should be imposed in the Constitution itself for the regularisation of excesses, in order to ensure the accountability of the executive to the legislature.
Legislatures have the exclusive authority and power in the matter of legislation. However, the Constitution makes an exception under Article123 and Article213 to provide legislative power to the executive in the Centre and in the States to promulgate an Ordinance whenever there is an urgent need and when the legislature is not in session. An ordinance becomes a law as soon as it is issued. As this is a wide power given to the executive beyond the legislature, the government is expected to use it sparingly and with restraint. In order to avoid misuse of this power by the executive, the Constitution has prescribed a time-limit for its approval by the legislature.
So also, in the case of excesses incurred there should be a time-limit set in the Constitution to avoid misuse of this facility.
The accumulation of excesses in thousands of crores of rupees represents financial anarchy and the blatant repudiation of the executive's accountability to the legislature. It is a fraud on the Constitution. Early steps should be taken by the PAC and the legislature in the States concerned to examine cases of excesses in order to cleanse the Aegean stables of misappropriations and abuses. Lethargy in a democracy is more disastrous to a country than the tyranny of a despot.
Era Sezhiyan is Senior Fellow, Institute of Social Sciences, New Delhi and a former Chairman of the Public Accounts Committee of Parliament.