Subject: Indian Polity

The Comptroller and Auditor General (CAG) serves as India's supreme audit institution, functioning as a watchdog over public finances and ensuring accountability in governance. The role extends beyond mere financial compliance to encompass comprehensive scrutiny of government expenditure.

CAG's Audit of Expenditure: Type of Audits

Dual Mandate of CAG

• Constitutional Authority: Under Article 148-151, CAG ensures both legality and propriety of public expenditure through:

  • Scrutiny of financial transactions.
  • Examination of rules and procedures.
  • Assessment of value for money in government spending.

• Legality of Expenditure:

  • Verifies compliance with constitutional provisions and legislative authorizations.
  • Ensures adherence to established financial rules and regulations.
  • Checks for proper documentation and authorization of expenditure.

Propriety Dimension

• Performance Auditing:

  • Evaluates economy, efficiency, and effectiveness of government programs.
  • Assesses outcomes and impact of public spending.
  • Reviews policy implementation and achievement of objectives.

• Landmark Cases Illustrating Propriety Audit:

  • In the 2G Spectrum Case (2010), the CAG flagged arbitrary allocation and undervaluation of spectrum licenses, estimating a notional loss of ₹1.76 lakh crore.
  • The Coal Block Allocation Case (2012) exposed non-transparent allocations without competitive bidding.
  • The Commonwealth Games (CWG) Scam (2010) revealed extravagant and wasteful public spending, with the CAG highlighting lapses in event management.

• Accountability Mechanism:

  • Reports are examined by the Public Accounts Committee (PAC) for parliamentary oversight.
  • Recommendations lead to systemic improvements in financial management.
  • Recent Supreme Court notice (March 2025) regarding CAG appointment process highlights the importance of institutional independence.

Way Forward

• Strengthening Audit Impact:
  • Mandatory follow-up mechanism for audit recommendations.
  • Time-bound implementation of corrective actions.
  • Enhanced transparency through public disclosure of audit findings.

In essence, the CAG's role as envisioned by the Constitution goes beyond being a mere accountant to serving as a guardian of public resources, exemplified by recent developments like the PIL challenging appointment processes and the institution's evolving focus on performance auditing alongside financial compliance.