Public Accounts Committee (PAC) of India: Overview, Functions, and Significance

Why in news?

The Public Accounts Committee (PAC), headed by senior Congress leader K.C. Venugopal, in a report tabled during the recently-concluded Winter session of Parliament, revealed that Ministries of Finance, Defence, Railways, and Chemical & Fertilizers spent ₹1,291.14 crore in excess of the 2021-22 Budget sanctioned by Parliament.

About Public Accounts Committee (PAC)

The Public Accounts Committee (PAC) is one of the most critical parliamentary committees in India, entrusted with the responsibility of ensuring the accountability of government expenditures.

Recently, a report by the PAC, chaired by K.C. Venugopal, revealed that four key ministries—Finance, Defence, Railways, and Chemical & Fertilizers—overshot their budget by ₹1,291.14 crore in the 2021-22 fiscal year, triggering parliamentary scrutiny.

Key Features of the PAC

Historical Background

• The PAC was established in 1921 under the Montague-Chelmsford Reforms (Government of India Act, 1919).
• It is one of the oldest committees in the Indian Parliament.
• It is one of the three Financial Parliamentary Committees, along with the Estimates Committee and the Committee on Public Undertakings.
• The committee was set up to scrutinize the Government’s expenditure and ensure that funds are spent according to Parliament’s approval.

Constitution and Membership

• The PAC is an independent body, and Ministers are not eligible to be elected as members.
• It consists of 22 members: 15 from the Lok Sabha and 7 from the Rajya Sabha, with the Chairman appointed by the Speaker of the Lok Sabha.
• The committee is constituted annually under Rule 308 of the Lok Sabha’s Rules of Procedure.

Functions of the PAC

• Examination of Audit Reports: The primary function of the PAC is to examine the audit reports presented by the Comptroller and Auditor General (CAG). These reports are submitted to Parliament and reviewed by the PAC to assess whether the government has adhered to fiscal discipline.
• Scrutiny of Public Expenditure: PAC serves as the watchdog of public expenditure, ensuring that funds allocated by Parliament are spent effectively, legally, and in accordance with approved purposes. This scrutiny includes examining the appropriation accounts and the finance accounts.
• Ensuring Government Accountability: By examining the appropriation accounts, the PAC ensures that expenditures do not exceed the amounts sanctioned by Parliament. If any irregularities are found, the committee holds the government accountable for non-compliance.
• Review of Governmental Expenditure: The PAC evaluates budgetary appropriations, checking for economic prudence, legality, and ethical propriety in spending. It is tasked with ensuring that public funds are used for their intended purposes and that the money spent brings value to the public.
• Collaboration with the CAG: The PAC works closely with the CAG, who plays a crucial role in providing audit reports and assisting the PAC in its scrutiny. The CAG is often referred to as the PAC’s “friend, philosopher, and guide”.

Key Role in Governance

• Scrutiny of Irregularities: The PAC plays a key role in detecting financial irregularities or mismanagement in government expenditure. It helps identify instances where funds have been misused or diverted from their intended purposes.
• Transparency and Accountability: By holding ministries accountable for their budget and expenditure, the PAC promotes transparency in government operations. It ensures that taxpayers' money is used efficiently and according to parliamentary approval.
• Recommendation and Follow-ups: The PAC makes recommendations based on its scrutiny of accounts, and the government is required to report back on whether these recommendations have been accepted and implemented. This ensures that the PAC’s findings lead to concrete actions.