How is finance controlled by the Parliament ? Explain.

Introduction: In a parliamentary democracy, the legislature exercises supreme financial custody over the executive under the maxim "No Taxation Without Representation". The Indian Constitution vests absolute authority over public funds in Parliament through Articles 112–117 and Article 265, establishing that not a single rupee can be levied, collected, or spent without prior parliamentary sanction.

1. Constitutional Mechanisms of Parliamentary Financial Control:

• Control Over Taxation (Article 265): "No tax shall be levied or collected except by authority of law." The Executive cannot impose or modify taxes unilaterally without passing a Finance Act in Parliament.
• Control Over Expenditure (Article 266(3)): No money can be withdrawn from the Consolidated Fund of India except under an Appropriation made by law.
• Annual Financial Statement / Budget (Article 112): The President causes to be laid before both Houses the estimated receipts and expenditures for the financial year.

2. Stages of Financial Control During the Budgetary Process:

• General Discussion: Broad scrutiny of the government's fiscal, economic, and taxation policies.
• Scrutiny by Departmentally Related Standing Committees (DRSCs): 24 DRSCs conduct in-depth line-by-line scrutiny of Demands for Grants of various ministries during parliamentary recess, submitting detailed reports.
• Voting on Demands for Grants (Exclusive to Lok Sabha - Art. 113): MPs exercise financial control by moving Cut Motions:
  • Policy Cut: Reduce demand to Re. 1 (disapproval of policy).
  • Economy Cut: Reduce demand by a specific amount (curbing expenditure).
  • Token Cut: Reduce demand by ₹100 (ventilating specific grievance).
• Enactment of Appropriation Bill (Article 114) & Finance Bill (Article 117): Legal authorization for expenditure and revenue mobilization.

3. Post-Expenditure Parliamentary Oversight:

• Role of CAG (Articles 148–151): Independent constitutional supreme auditor auditing accounts and reporting irregularities to Parliament.
• Parliamentary Financial Committees:
  • Public Accounts Committee (PAC): Scrutinizes CAG audit reports, checking financial improprieties and leakages.
  • Estimates Committee: Suggests economies and organizational improvements in budget estimates.
  • Committee on Public Undertakings (COPU): Scrutinizes commercial performance of PSUs.

Conclusion: Parliamentary financial control transforms executive governance from arbitrary feudal expenditure into an accountable, transparent system serving the socio-economic welfare of citizens.