Financial Functions of Parliament

The functions of the parliament are divided into the following categories, which are based on its powers. 

Different Functions Of Parliament

• Executive powers

• Legislative powers

• Constituent powers

• Judicial powers

• Financial powers

• Electoral powers

The Financial functions are discharged under its Financial powers as discussed below.

Financial Functions

The major point of focus under financial functions is having control of the finance of our Government. The Union Budget that is announced every year earmarks the amount to be spent for different purposes of the Government, keeping the situation of the country in view. Though the collection of tax from the citizens of India is the responsibility of the cabinet, no tax can be levied unless an act has been passed in the Parliament for it. No expenditure can be incurred unless it is approved by parliament.

Example:  To bring the Gst law into force, the 101ST amendment to the constitution had to be made, for no law can be made effective unless and until it is authorized/approved by Parliament.

Sources of Power to Perform Financial Functions

The key articles through which parliament gets these powers are Article 266 and Article 110. Article 266 says that no amount of money can be withdrawn from the consolidated fund of India without the approval of parliament, which is done through making a law. Article 110 specifies a money bill to safeguard the funds in the consolidated fund of India.

Union List(list I)

This list constitutes the area over which the center (parliament) has exclusive powers.

State List

This list contains the areas over which state Governments(Legislative Assemblies) have the power to enact laws.

Concurrent list

This list contains the areas over which both the Parliament and the state legislative Assemblies have the power to enact laws.

Public Account Committee

It is one of the important limbs of the finance functions of the PARLIAMENT as it acts as a check on the government expenditure and audits it. The CAG (COMPTROLLER AND AUDITOR GENERAL) is the one responsible for the Government Audits. This committee examines the audit report once it is submitted by the CAG.

Composition of Public Account Committee

It comprises 22 members, Maximum of 15 to be selected by the Lok Sabha, maximum of 7 to be selected by the Rajya Sabha.

Estimate Committee

The basic functions of this committee are to examine the estimate, prepare a budget, and give suggestions.

Composition of Estimate Committee

This committee originally had 25 members, but with effect from 1956, it was increased to 30, and all were elected by Lok Sabha.These standing committees constantly dispassionately monitor the financial matter. The tax reforms or other relevant matters r put across these committees before presenting it in parliament in order to ensure that  each and every aspect has been given thorough consideration.

Other Measures

Constituting the GST council is very much part of the financial function, and it is formed under article 279A. This committee is headed by the Union Finance minister, and representatives from every state/UT who are in the respective state finance ministry also form part of this committee. They meet from time to time to decide various matters about implementation of GST LAWS, Tax rate revisions, levy of penalty, an extension of due dates etc

Exercise of Parliamentary control

The parliament exercises control over financial matters through two different stages, such as

Budgetary Control: Control before granting the amount for expenditure

Post Budgetary Control: Control after the grant has been made with regard to the expenditure.

The Union budget follows the concept of annuity. It means the parliament grants money to the government for one year. If the amount allotted remains unspent, then it shall lapse and get credited back to the consolidated fund of India, known as the rule of lapse. This is an effective method of financial control, for it ensures that no reserve fund is created without parliament approval.

Role of Union  Budget in Financial Functions of the Government

The announcement of the budget gives legal credence to the expenditure incurred by the government during the financial year. It also helps as a check on the financial performance of the Government. All the expenditure incurred by the Government is thoroughly examined by the two standing committees, i.e., the public accounts committee and the estimates committee of the parliament. As long as the money has been spent for the purpose approved by parliament and all relevant conditions are fulfilled, the expenditure is said to be in order. This is done to ensure that the infructuous expenditure is not incurred, resulting in revenue loss. It is the endeavor of parliament to ensure that the fiscal policy is not put to inappropriate use.

Conclusion

The financial functions of parliament are one of the major functions of parliament. The standing committees play a crucial role in helping the parliament implement its laws and discharge its functions properly. The more effective the financial policies, the better the GDP and economy of the country.