CAG

The exercise of the Comptroller and Auditor General’s (CAG) powers in scrutinizing the accounts of both the Union and the States in India finds its constitutional basis in Article 149. This pivotal article empowers the CAG to audit all expenditures from the Consolidated Fund of India and the Consolidated Fund of each State. While the primary focus of the CAG is on financial matters, the question arises as to whether its audit mandate extends to evaluating the implementation of government policies. The potential concern revolves around the possibility of the CAG overstepping its jurisdiction, as the constitutional framework primarily envisages a financial audit role.

However, it is imperative to recognize that financial prudence and effective policy implementation are inherently intertwined. A comprehensive audit necessarily involves assessing the efficiency and efficacy of government expenditures, which encompasses the successful execution of policies. Consequently, the CAG, in scrutinizing the financial aspects, indirectly delves into the evaluation of policy implementation. Nevertheless, a nuanced understanding is crucial to ensure that the CAG does not encroach upon policy formulation or evaluation aspects beyond the financial implications. Striking a balance between financial accountability and policy scrutiny is essential to uphold the integrity of the CAG’s constitutional role without transgressing into the realms of policy jurisdiction. This delicate balance ensures that the CAG contributes meaningfully to good governance without overstepping its constitutional boundaries.

Tag: Appointment to various Constitutional posts, powers, functions and responsibilities of various Constitutional Bodies.

Table of Contents

Decoding the Question:

In the Introduction, briefly write about CAG.
In Body,
Discuss various powers and functions of CAG.
Write whether an audit of the Government’s policy implementation could amount to overstepping its own (CAG) jurisdiction.
Can also mention its limitations.
In Conclusion, can write changes in CAG’s role and recent relevant judgments of the Supreme Court.

Answer:

Article 148 of the Constitution provides for an independent office of the Comptroller and Auditor General of India (CAG). The CAG is an official mandated by the Constitution to act as a watchdog on government finances and its functioning. He plays an essential role in making the government more transparent and accountable to the legislature as well as civil society. Dr. B R Ambedkar said that the CAG shall be one of the most important officers under the Constitution of India.

Powers and Functions of CAG:

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.

Whether the Powers of CAG are Overstepping its Jurisdiction:

The CAG was created to audit all government departments and make a report to Parliament to be examined by its Committee of Public Accounts.
The institution of public audit has been evolving all over the world in keeping with the deepening of democracy and the need for accountability of government given its increasing role in a complex technocratic world. The Indian CAG’s role in conducting performance audits should be understood in this background.
As Parliament cannot review the functioning of the executive government on a day-to-day basis, the founding fathers put in place the CAG with the virtues of objectivity and independence close to that of a Supreme Court judge.
Munimji judgment – where the apex court observed that “the CAG’s function to carry out examinations into [the] economy, efficiency and effectiveness with which government has used its resources is inbuilt in the CAG’s (Duties, Powers, and Conditions of Service) Act 1971.
CAG can certainly test the present policy and the way it is being implemented. That is certainly within its mandate. It can certainly go into question whether the government of the day has correctly and in an accountable manner carried out a pure process of execution.
Unlike the financial auditor or a mere bookkeeper, the constitutional auditor deploys three distinct audit frameworks — Financial Audit, Compliance Audit, and Performance Audit – for auditing the entire gamut of receipts and expenditures at the central, state, and union territory levels.
As there is a close relationship between the development of public policy and its implementability and financial implications, it is unrealistic to expect that CAG’s audit findings will not cast any shadow on the policy itself.
Policy formulation may have a political orientation but spending is a common denominator and the accounting of such spending goes hand in hand with public accountability which is the sine qua non for good governance. The audit is to ensure this public interest and public accountability.
CAG’s reports enable the legislators, media, people, etc. to raise questions about the performance of the government.
CAG reports on various issues, including 2G spectrum allocation and the conduct of the Commonwealth Games, have evoked sharp reactions from the government in the recent past.

Limitations in CAG’s Power:

The Secret Service expenditure is a limitation on the auditing role of the CAG,
The CAG has no control over the issue of money from the consolidated fund and many departments are authorized to draw money by issuing cheques without specific authority from the CAG.

In practice, unlike Britain, the CAG is fulfilling the role of an Auditor-General only and not that of a Comptroller. But nowadays, the role of CAG is becoming dynamic from static. In Arvind Gupta Vrs. Union of India (2013) Supreme Court case Supreme Court held that the CAG’s functions to carry out examinations into economy, efficiency, and effectiveness with which the government has used its resources, is built in the 1971 Act. Any attempt to undermine the institution of CAG will seriously dilute Parliament’s ability to hold the government of the day to account and damage our fragile democracy.

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Exercise of CAG’s powers in relation to the accounts of the Union and the States is derived from Article 149 of the Indian Constitution. Discuss whether audit of the Government’s policy implementation could amount to overstepping its own (CAG) jurisdiction. (12.5 marks, 200 words)