Comptroller and Auditor General(CAG)

What is the importance of the office of CAG in the Indian Polity?

Under Article 148, The Constitution of India provides for an independent office of the Comptroller and Auditor General of India (CAG). 

• CAG is the head of the Indian Audit and Accounts Department. 
• He is the guardian of the public purse and controls the entire financial system of the country at both the levels–the Centre and the state. 
• His/Her duty is to uphold the Constitution of India and the laws of Parliament in the field of financial administration. 
• He is one of the bulwarks of the democratic system of government in India.

 

What are the constitutional and legal provisions pertaining to the  office of CAG?

 

Table of Constitutional and legal provisions for CAG                       

 

What are the duties and powers of CAG?

The Constitution (Article 149) authorizes the Parliament to prescribe the duties and powers of the CAG in relation to the accounts of the Union and of the states and of any other authority or body. Accordingly, the Parliament enacted the CAG’s (Duties, Powers, and Conditions of Service) Act, 1971. The duties and functions of the CAG as laid down by the Parliament and the Constitution are as follows:

• He audits the accounts related to all expenditures from the Consolidated Fund of India, the consolidated fund of each state, and the consolidated fund of each union territory having a Legislative Assembly.
• He audits all expenditures from the Contingency Fund of India and the Public Account of India as well as the contingency fund of each state and the public account of each state.
• He audits all trading, manufacturing, profit, and loss accounts, balance sheets, and other subsidiary accounts kept by any department of the Central Government and state governments.
• He audits the receipts and expenditures of the Centre and each state to satisfy himself that the rules and procedures on that behalf are designed to secure an effective check on the assessment, collection, and proper allocation of revenue.
• He audits all transactions of the Central and state governments related to debt, sinking funds, deposits, advances, suspense accounts, and remittance business. He also audits receipts, stock accounts, and others, with the approval of the President or when required by the President.
• He audits the accounts of any other authority when requested by the President or Governor. For example, the Audit of local bodies.
• He advises the President with regard to the prescription of the form in which the accounts of the Centre and the states shall be kept.
• He submits his audit reports relating to the accounts of the Centre to the President, who shall, in turn, place them before both Houses of Parliament.
• He submits his audit reports relating to the accounts of a state to the governor, who shall, in turn, place them before the state legislature.

 

What is the role of CAG in the Public Accounts Committee (PAC)?

The CAG submits three audit reports to the President– on appropriation accounts, on finance accounts, and on public undertakings.

• PAC examines the reports of CAG: The President lays these reports before both houses of Parliament. The PAC examines these reports and submits its findings to the Parliament.
• Ensuring checks and balances: CAG helps PAC to ensure a check on the government, especially with respect to its expenditure bill.
• Ensuring accountability: The CAG assists the PAC in examining these reports. Thus, there is a close working relationship between CAG and PAC to secure the accountability of the executive in the field of financial administration and fiscal federalism.
• CAG as a guide to PAC: CAG acts as a guide, friend, and philosopher of the Public Accounts Committee of the Parliament.
• Corrective action: CAG ensures that the corrective action suggested by him has been taken. In cases where it has not been taken, CAG reports the matter to the PAC, which will take up the matter.
• Interpreter and translator: CAG acts as interpreter and translator, explaining the officials’ views to the politicians and vice-versa.
• Listing the urgent matters: CAG prepares a list of the most urgent matters which deserve the attention of the PAC.

 

How is the office of CAG in India different from that of Britain?

Taking inspiration from the British model, the framers of the Indian Constitution gave great importance to the office of CAG, whose reports must be submitted to Parliament.

 

Difference between the offices of CAG in India and Britain

 

 

What are the challenges and issues of the office of CAG in India?

There are various challenges that inhibit the effective functioning of the CAG. Some of these include

• Limitation on secret service expenditure: The CAG cannot call for particulars of expenditure incurred by the executive agencies but has to accept a certificate from the competent administrative authority. 

• Limited Powers: When CAG asks for information from various departments, there is a considerable delay, and there is no mechanism for CAG to enforce its fiat. 
• Lack of clarity: Considerable debate has taken place on the issue of whether CAG can audit the power distribution companies or Public-Private Partnership projects. 
• Single vs Multi-member body: The debate was regarding whether CAG should be converted to a multi-member body on the lines of the Election Commission and the decision to be taken on a majority basis. 
• Delays and Reduction in CAG Reports: The total number of CAG reports relating to central government ministries and departments decreased from 55 in 2015 to just 14 in 2020, a fall of nearly 75 percent, as per a recent reply to a Right to Information (RTI) application.
• Conflict of interest related to the appointment: The current practice adopted for the appointment of the CAG is that the Cabinet Secretary prepares a shortlist for the Finance Minister, who then submits it before the Prime minister.

 

What reforms could help the CAG function in an effective manner?

Reforms Suggested by Vinod Rai (Former CAG)

• Bring all private-public partnerships (PPPs),Panchayati Raj Institutions, and government-funded societies within the ambit of the CAG.
• CAG Act of 1971 should be amended to keep pace with the changes in governance.
• A collegium-type mechanism to choose a new CAG on the lines of selecting a Chief Vigilance Commissioner (CVC).
• CAG has to prepare itself to audit issues like implementation of the Sustainable Development Goals and the Goods and Services Tax

Other Reforms Needed

• Ensuring independence: Internationally, most countries have enacted laws putting in certain qualifications and also the process of appointment of the head of their Supreme Audit Institution, so that he works independently and is not under the influence of the Executive
• Transparency in appointment: In India, to bring about transparency and objectivity in the selection process of the CAG, an institutional mechanism needs to be put in place
• Curbing delays: Just like the citizen’s right to get the information within a month under RTI Act 2005, auditors should be provided access to records on priority basis within seven days, failing which, heads of departments should be required to explain the circumstances that caused the delay.
• Power for enforcing the orders of CAG: The CAG Act of 1971 should be amended to provide punitive powers to the CAG in case of delay in submitting information by government agencies. 

 

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