Public Accounts Committee (PAC)

The Public Accounts Committee, or PAC, is a small group of legislators that checks whether the government spent public money the way the legislature allowed, and whether it spent it honestly and sensibly. It does this mainly by studying the audit reports of the Comptroller and Auditor General (CAG). Parliament has a PAC, and every State Legislature has its own PAC too. It is the oldest financial committee of the Indian Parliament.

Why does it exist?

In a democracy, the government can spend money only with the approval of the elected House. Every year, Parliament passes the Budget and grants money for each ministry. But passing the Budget is only half the job. Someone must later check: did the ministry spend the money on what it was meant for? Did it spend more than allowed?

Was money wasted? The full House, with hundreds of members and many other tasks, cannot study thousands of pages of accounts. So it hands this detailed work to a small committee. You can think of the PAC as a family checking the monthly expense diary after the money has been spent, to see if it went where it was supposed to go.

Where did it come from?

• The idea came from Britain, where the House of Commons set up a Public Accounts Committee in 1861.
• In India, the PAC was first set up in 1921 under the Government of India Act, 1919 (the Montagu-Chelmsford Reforms). At that time, the Finance Member of the government chaired it.
• After the Constitution came into force in 1950, the PAC became a committee of Parliament, chaired by an MP.
• Members from the Rajya Sabha were added from 1954-55. Before that, only Lok Sabha members sat on it.
• Since 1967, a convention (an unwritten practice that is regularly followed) has developed that the chairperson is chosen from the Opposition. This makes sense: the people checking the government's spending should not be from the side that did the spending.
• In December 2021, Parliament marked the PAC's 100 years.

What is its legal basis?

The PAC is not mentioned by name in the Constitution. It is set up under the Rules of Procedure and Conduct of Business in Lok Sabha (Rule 308). So it is a body created by the rules of the House, not by the Constitution or a law. Its link to the Constitution comes through Article 151, under which CAG reports on the Union's accounts are laid before Parliament, and the PAC is the committee that studies them. State PACs are set up under the rules of each State Legislature.

Who sits on it?

• 22 members: 15 from the Lok Sabha and 7 from the Rajya Sabha.
• Members are elected every year by each House from among its members, using proportional representation by means of the single transferable vote. This method makes sure different parties get seats roughly in line with their strength in the House.
• The term is one year.
• A minister cannot be a member. If a member becomes a minister, they leave the committee.
• The chairperson is appointed by the Speaker from among the Lok Sabha members of the committee.

What does it examine?

• The Appropriation Accounts of the Union government, which show how much was actually spent against each grant that Parliament approved.
• The Finance Accounts, which show the government's total receipts and spending for the year.
• The CAG's audit reports on these accounts, on government departments, and on many public sector companies and autonomous bodies.
• Cases of excess spending: if a ministry spent more than Parliament allowed, the PAC examines why. Parliament then has to regularise the extra amount through excess grants under Article 115.

How does it work, step by step?

1. The CAG audits government accounts and sends its reports to the President, who has them laid before Parliament (Article 151).
2. The PAC picks paragraphs and cases from these reports for detailed study.
3. It calls the secretaries and senior officers of the ministries concerned to explain. The CAG helps the PAC throughout, which is why the CAG is often called the PAC's "friend, philosopher and guide".
4. The PAC writes a report with its findings and recommendations and presents it to the House.
5. The ministry must reply on what it has done about each recommendation. These are called Action Taken Notes. The PAC then presents an Action Taken Report to the House.

What are its limits?

• It is a "post-mortem" body: it studies spending after it has happened, so it cannot stop wrong spending in advance.
• It does not question policy. It checks whether money was spent properly under a policy, not whether the policy itself was right.
• Its recommendations are advisory. The government is not legally bound to accept them, though it usually responds.
• It does not deal with day-to-day administration.

India's position and Indian examples

The PAC has examined major CAG reports on issues such as the 2G spectrum allocation and coal block allocation, which caused major national debates. Every State Legislature has its own PAC that studies the CAG's reports on that State's accounts. Conferences of PAC chairpersons from Parliament and the States help them share methods and improve financial oversight across the country.

Commonly confused concepts

• PAC vs Estimates Committee: The Estimates Committee has 30 members, all from the Lok Sabha. It studies the Budget estimates and suggests economies (ways to save money) in the way policies are carried out. It is often called a "continuous economy committee". The PAC looks at money already spent, mainly through CAG reports.
• PAC vs Committee on Public Undertakings (COPU): COPU also has 22 members (15 Lok Sabha + 7 Rajya Sabha), like the PAC, but it examines the reports and accounts of public sector undertakings (government companies). The PAC looks at government accounts as a whole.
• PAC vs Departmentally Related Standing Committees (DRSCs): The 24 DRSCs each look after particular ministries and study their Bills, Budget demands and policies before decisions. The PAC is a financial committee that looks back at spending.
• PAC vs Joint Parliamentary Committee (JPC): A JPC is set up for one specific task (such as a scam or a Bill) and ends when that task is done. The PAC is a standing committee that is set up every year.
• Standing vs ad hoc committees: Standing committees are permanent and set up every year (PAC, Estimates, COPU, DRSCs). Ad hoc committees are temporary, for one job (JPCs, select committees on a Bill).

Issues, criticism and the way forward

• Delays: CAG reports often reach the PAC years after the spending, and the PAC can take a long time to examine them. By then, officers may have moved and money may be lost.
• Advisory only: Many recommendations are not acted on in full. Experts suggest a time limit for Action Taken Notes and regular review of pending ones.
• Partisan politics: Since the chair is from the Opposition, important reports sometimes become political battles, and members may split along party lines instead of reaching agreement.
• Huge workload: With limited time and staff, the PAC can study only a small part of the CAG's findings.
• Way forward suggested by experts: Faster audits and real-time data; stronger research support for committees; publishing Action Taken Reports widely; and learning from each other through conferences of PACs across Parliament and the States.

Concepts to Know

• Audit: An independent check of accounts to see whether money was spent correctly, honestly and as allowed.
• Grant (in the Budget): The amount of money the House approves for a ministry or purpose for a year.
• Convention: An unwritten rule that is followed regularly because of practice and respect, even though no law requires it.
• Proportional representation by single transferable vote: A voting method in which members rank candidates by preference, so that seats are shared among groups roughly in proportion to their strength.
• Opposition: The parties in the House that are not part of the government.