Comptroller and Auditor General of India

Published on 21 Jan 2025

Comptroller and Auditor General (CAG)Article 148 of the constitution provides for an independent officer of the Comptroller and Auditor General of India who is the guardian of the public purse and audits the financial system at the central and state level. Ambedkar has referred to CAG as the most important officer under the Constitution of India. 

Powers and Functions of CAG

• Auditing the government expenditure: The CAG audits all the accounts related to expenditure made from Consolidated  Fund of India, Contingency Fund of India and Public Account of India. Similar audit is also made for state expenditures.

• Certify net proceeds of any tax: Under Article 279, the certification of the CAG is required for ascertaining the net proceeds of any tax or duty.

• Submission of reports: The CAG submits three audit reports to the President - Report on appropriation account, Report on finance account and and Report on public undertakings.

• Association with Public Accounts Committee: The committee works based on the reports submitted by the CAG. The office is hence called the guide, friend and philosopher to the Public Account Committee.

• Other audits: Audits profit loss accounts, balance sheet of government departments. Audits transactions related to debt, sinking funds, deposits etc of the government.

Significance of the office of CAG

• Financial accountability: Monitoring the expenditure made by the government ensures that they can be held accountable for mismanagement of public money.

• Example: Recently CAG flagged diversion of funds from the National Social Assistance Programme by MoRD.

• Fiscal discipline: The periodic auditing of CAG compels the government to limit populist spending and  show some degree of fiscal prudence.

• Example: Recently the CAG exposed the money splashed for Dwarka Expressway where expenditure exceeded the approved amount by 14 times.

• Reduce corruption: The CAG audit has unveiled events of corruption in the past and hence this fear factor can reduce the diversion of funds.

• Strengthen Parliamentary oversight over executive: The Parliament can hold the government accountable based on CAG reports, thus making debates more legit.

• Example: The Report of appropriation account gives a valid base for the Public Account Committee to scrutinize the government policies and spending.

• Ensure transparency: The reports of CAG being released to the public makes governance more transparent.

• Facilitate public analysis: Citizens analysing the fiscal performance of the government enhances the accountability provision and makes democracy more vibrant. 

• Example: The CAG report on the 2G scam was so popular among the public that it inculcated a sense of curiosity in the public to look into government finance.

Issues associated with the office of CAG

• Political appointment: There exists no institutional mechanism to select the CAG which brings allegations regarding the political nature of appointment and bias towards the ruling government.

• Example: Recently, the government transferred CAG officials which has been criticized by the opposition as an attempt to intimidate the office.

• Obstructionist: The excessive involvement of CAG into matters of government can inhibit them from pursuing new projects, leading to policy paralysis.

• Example: The 2G scam brought out by CAG created a storm against the UPA government that hindered functioning of the government.

• No control over expenditure: The CAG only audits the expenditure hence has no control over the expenditure. This post facto audit is less effective in nature.

• Example: None of the three reports by CAG has a direct impact on the expenditure made. It only scrutinizes once the expenditure is being made.

• Upper age limit: This reduces the experience of the officer. Absence of long-term appointments makes the office more dependent on the government.

• Secret service expenditure: The CAG cannot look into expenditures which are categorized as secret service expenditure by the designated authority.

• Other restrictions: CAG has restricted powers to look into the expenditure of PPP projects, expenditure by urban local bodies and expenditure by NGO’s.

• Example: During 2020-21, the government approved 125 PPP projects costing 1.72 lakh crore. These are not fully audited by CAG.

Way forward

• Vinod Rai committee recommendations

• Neutrality in appointment: A committee to be formed for choosing the CAG, on lines of committee for selecting CVC.

• Vesting more powers: Bring PPP projects and local bodies under the ambit of CAG audit.

• Access to records: Proper management of records to ensure there is timely flow of necessary data from the government department to the office of CAG.

• Seizing power: Following the Thailand model, where the CAG has power to enter and seize any document.

Some of these measures must be implemented to make the body more powerful and politically neutral. The institution has a hefty task of balancing the fiscal discipline of the nation and hence must be made more powerful so as to exercise its function in a credible manner.

Tags:
Polity

Keywords:
Constitutional bodies CAG Article 148

Syllabus:
General Studies Paper 2

Topics:
Indian Constitution