The Public Accounts Committee (PAC) is a key financial committee of Parliament. It examines government accounts and expenditure to ensure that public money authorised by Parliament has been spent legally, properly and for the intended purposes.

Genesis of the Public Accounts Committee

The Public Accounts Committee was first established in 1921, following the Montagu- Chelmsford Reforms.This committee was set up under the provisions of the Government of India Act of 1919
In its initial phase, the Finance Member of the Executive Council served as the Chairperson of the Committee, while secretarial support was provided by the then Finance Department, which is now the Ministry of Finance.This arrangement continued until 1949.
During the period of the Interim Government, the Finance Minister headed the Committee. After Independence in August 1947, the Finance Minister continued to serve as its Chairperson.
Since a member of the executive itself headed the committee responsible for scrutinising government expenditure, the arrangement limited the scope for independent criticism and effective scrutiny of the executive.
A major institutional change took place after the Constitution of India came into force on 26 January 1950. The PAC became a full-fledged Parliamentary Committee functioning under the control of the Speaker of the Lok Sabha with a non-official Chairman appointed by the Speaker from among the Members of Lok Sabha elected to the Committee.

Constitution and Composition of the PAC

The Public Accounts Committee is constituted every year under the Rules of Procedure and Conduct of Business in Lok Sabha.
It consists of a maximum of 22 members:
- 15 members elected by the Lok Sabha
- 7 members elected by the Rajya Sabha
Members are elected annually from among the members of the respective Houses according to the principle of proportional representation by means of the single transferable vote.This system allows different political parties to secure representation in the Committee broadly in proportion to their strength in Parliament.

Evolution of the Composition of PAC

Prior to the year 1954-55, the Committee consisted of 15 members who were elected by Lok Sabha from amongst its Members. But with effect from the year 1954-55, 7 members from the Rajya Sabha are also being associated with the Committee.
Until 1966-67, the Speaker generally appointed a senior member of the ruling party as Chairperson of the PAC.
In 1967, for the first time, a member of the Opposition in the Lok Sabha was appointed as its Chairperson. Since then, it has become an established parliamentary convention to appoint the Chairperson of the PAC from the Opposition.

Term of Office

The term of office of the members of the PAC is not more than one year at a time.

Ministers and Membership

A Minister cannot be elected as a member of the PAC.
If a member of the Committee is subsequently appointed as a Minister, that person ceases to be a member of the Committee from the date of such appointment.
- This provision helps maintain a separation between the executive whose expenditure is being scrutinised and the parliamentary body conducting such scrutiny.

Chairperson

The Chairperson of the PAC is appointed by the Speaker of the Lok Sabha from among the Lok Sabha members of the Committee.
By convention, since 1967, the Chairperson is chosen from the Opposition.

Scope and Functions of the Public Accounts Committee

The PAC primarily examines whether the money granted by Parliament to the government has been spent in accordance with parliamentary authorisation and established financial rules.Its functions are provided under Rule 308 of the Rules of Procedure and Conduct of Business in Lok Sabha.
A major function of the PAC is to examine the audit reports of the Comptroller and Auditor General of India (CAG) that are laid before Parliament.The CAG submits three audit reports to the President, namely, audit report on appropriation accounts, audit report on finance accounts and audit report on public undertakings.

Functions in detail:

To examine the appropriation accounts and the finance accounts of the Union government and any other accounts laid before the Lok Sabha
While scrutinising the Appropriation Accounts and the relevant reports of the Comptroller and Auditor General of India (CAG), the PAC determines whether:
- The money was legally available for the particular service or purpose.
- The expenditure conforms to the authority that governs it
- Any re-appropriation of funds was carried out according to the rules prescribed by the competent authority.
The Public Accounts Committee examines the income and expenditure accounts, balance sheets, and profit and loss statements of state corporations, trading and manufacturing schemes, concerns and projects, along with the relevant CAG audit reports.
The Public Accounts Committee examines the accounts of autonomous and semi-autonomous bodies whose audit is conducted by the CAG either on the directions of the President or under a law made by Parliament.
The PAC considers CAG reports on the audit of government receipts or the examination of accounts of stores and stocks, when such an audit or examination is directed by the President.
If the government spends more on a particular service than the amount approved by the Lok Sabha during a financial year, the PAC examines the circumstances behind such excess expenditure and makes appropriate recommendations.

Nature and Scope of Examination

An important responsibility of the PAC is to ensure that the money authorised by Parliament is spent within the scope of the grant approved by Parliament.

This means that:

The expenditure should not exceed the amount granted by Parliament.
Expenditure charged to a particular grant should genuinely relate to that grant and should not properly belong to another grant.
Funds should be used only for the purposes specified in the detailed demand for grants and not for any new service that was not originally contemplated.

The PAC’s scrutiny is not limited to checking the technical legality of expenditure. It also examines whether public money has been spent with wisdom, financial propriety and economy.

Accordingly, the Committee examines cases involving:

Financial losses
Wasteful or unproductive expenditure
Financial irregularities
Extravagance
Negligence leading to loss

Where negligence or poor financial control has resulted in loss or unnecessary expenditure, the PAC may ask the concerned Ministry or Department to explain what disciplinary or corrective action has been taken to prevent such lapses from recurring.The Committee may also express its disapproval or make critical observations regarding extravagance, negligence or inadequate financial control by a Ministry or Department.

Another important area of PAC scrutiny relates to financial discipline, systems and principles of public expenditure. It may closely examine broader procedural or systemic weaknesses in financial administration.

However, the PAC does not normally examine the merits of government policy itself. It generally does not express an opinion on whether a particular policy is desirable or undesirable. Nevertheless, it can examine and point out instances of waste, extravagance or inefficiency in the implementation of that policy.

Role of the CAG in the PAC

The Comptroller and Auditor General of India (CAG) assists the PAC in performing its functions by providing audit reports and expert guidance.
Due to this important supporting role, the CAG is often described as the “guide, friend and philosopher” of the Public Accounts Committee.

Financial Committees of Parliament: Quick Comparison

Feature	Public Accounts Committee (PAC)	Estimates Committee	Committee on Public Undertakings (COPU)
Present strength	22	30	22
Lok Sabha	15	30	15
Rajya Sabha	7	No representation	7
Minister can be a member	No	No	No
Chairperson appointed by	Speaker	Speaker	Speaker
Main focus	Scrutiny of government accounts and expenditure	Economy and efficiency in budget estimates	Functioning of Public Undertakings
Nature of scrutiny	Primarily post-expenditure	Examination of estimates	PSU performance and accountability

Public Accounts Committee: Prelims Fact Box

Must Know

NatureFinancial Committee of Parliament

First Established 1921

Established Following Montagu–Chelmsford Reforms

Legal Basis at Origin Government of India Act, 1919

Constituted Under Rules of Procedure and Conduct of Business in Lok Sabha

Present Strength Maximum 22 members

Lok Sabha Members 15

Rajya Sabha Members 7

Rajya Sabha Members Associated Since 1954–55

Method of Election Proportional representation by means of the single transferable vote

Term of Members Not more than one year at a time

Can a Minister Become a Member? No

Chairperson Appointed By Speaker of the Lok Sabha

Chairperson Chosen From Lok Sabha members of the Committee

Chairperson Belongs to Opposition By convention since 1967

FAQs

1. What is the Public Accounts Committee?

The Public Accounts Committee is a Financial Committee of Parliament that examines government accounts and expenditure to determine whether public money has been spent legally, properly and for the purposes authorised by Parliament.

2. When was the Public Accounts Committee established?

The Committee was first established in 1921 following the Montagu–Chelmsford Reforms under the Government of India Act, 1919.

3. What is the present composition of the PAC?

The Committee consists of a maximum of 22 members, including 15 members from the Lok Sabha and 7 members from the Rajya Sabha.

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