In a piece for these columns, (‘Give accountability a chance’, IE, December 2) Surjit Bhalla suggested that the RBI governor should testify before Parliament twice a year and raised the issue of parliamentarians asking the right questions to the governor. His column, therefore, raises broader questions about Parliament’s ability to oversee macroeconomic challenges facing the country.
Currently, there is limited debate in Parliament on macroeconomic and monetary policy issues. Parliament uses two mechanisms for monitoring the national economy. The first is a debate in the House, the second is through committees. The first is the most common way of highlighting issues. But there is hardly ever a focussed debate on the economy in Parliament. The last time a discussion reviewed the economic situation was in 2008 and lasted for five hours in Lok Sabha. The subject is usually brought up during the debate on the Union budget, and over the years the duration of budget discussions has been steadily decreasing. During Parliament’s first decade, the debate on the budget lasted for an average of 123 hours. In the last decade, this number has come down to 40 hours.
The other occasion when economic issues come up for discussion is when MPs are locking horns debating rising prices in the country. During the last decade, it is a subject which forms part of Parliament’s agenda almost every year. The debate on it remains inconclusive and follows a familiar pattern of ascribing blame and political rhetoric.
The second forum for discussing the health of the economy is parliamentary committees. These committees focus on holding specific government ministries accountable. They scrutinise the finances, legislation, and working of ministries. Their mandate does not extend to scrutinising cross-cutting macroeconomic issues. For example, in the last 10 years, the governor and the deputy governors of RBI have testified at least 15 times before the committee on finance. Their testimony was always limited in scope since the committee mostly examines policy issues and legislation being dealt with by the finance ministry. It is only on one occasion that their testimony was on the overall economic situation. Parliament has three finance committees — the Public Accounts, Estimates, and Public Undertakings committee.
Therefore, the existing parliamentary mechanisms are limited. They have ensured that Parliament does not have a handle on the economic situation in the country. The institution requires a specialised committee concentrating on the broader economic issues facing the country. Other parliaments have such committees. The US Congress has a committee of both Houses called the Joint Economic Committee. It reviews economic conditions and recommends improvement in policy. The House of Lords in the UK has an Economic Affairs Committee. Its role is to consider economic affairs and it is currently inquiring into the impact of Brexit on Britain’s labour market. The idea of such a committee is not new for our country.
In 2002, the national commission to review the functioning of the constitution highlighted the absence of a parliamentary committee to oversee major economic issues in an integrated manner. The commission recommended the setting up of a Nodal Standing Committee on National Economy supported with adequate resources.
The commission envisioned that the committee would conduct an ongoing analysis of the national economy. It was of the opinion that the findings of this committee “would help both government and parliament in orchestrating opinion on important policy issues for building a national consensus.”
If such a committee is constituted it could invite the RBI Governor and other government functionaries like the chief economic adviser to testify and enrich its proceedings. With a broad mandate of examining the national economy it would be able to connect and comment on a range of interconnected policy issues impacting the economy.