Indian Democracy And The Role Of The CAG Of India

CAG OF INDIA office

 Appropriate use of Public funds is a crucial aspect of democracy. If not effectively used, it can undermine the integrity of political processes and institutions and jeopardise the quality of democracy. Indian Constitution framers also knew this vital issue; therefore, they established an independent Constitutional body Under Article 148 of the Indian Constitution, i.e. the Office of the Comptroller & Auditor General (CAG). The words 'comptroller' and 'auditor general' alone indicate authority, power, and responsibility. When the phrase 'of India' is added, one can imagine the scale, the scope and the importance of this organisation. The CAG is responsible for ensuring the accountability and transparency of the public finances and safeguarding the public interest. In constituent assembly debates, DR. B. R. Ambedkar said that CAG Will be the most important functionary in the Indian Constitution, even more important than Judiciary. CAG takes an oath similar to Chief Justice and Judges of the Supreme Court, including the words "I will uphold the Constitution and the laws", which describes his importance in democracy. The President of India appoints the CAG, and he can be removed only on the same grounds and manner as a Supreme Court judge. This ensures the independence and impartiality of the CAG from the Executive.

The CAG heads the Indian audit & account department and is the chief Guardian of the Public purse. Serving as a conduit of accountability, the CAG is the independent institution that ensures governmental and public bodies' responsibility (those entrusted with the expenditure of public funds) towards the Parliament and State Legislatures, thereby advancing a direct link of accountability to the citizens. The Executive is accountable to both the Parliament and the citizens for its decisions, but this accountability is upheld by the Comptroller and Auditor General (CAG) in matters concerning finances and accounting. The CAG audits expenditures from the Consolidated Fund of India and state Consolidated Funds. It also reviews Contingency Funds and Public Accounts at both central and state levels. The CAG examines the financial records of government departments, including trading and manufacturing accounts. It audits entities financed by central or state revenues, government companies, and other corporations.

Additionally, it offers financial advice to the President, reviews account formats, and submits audit reports to the President or Governor for presentation in Parliament or state legislatures. CAG audit serves as a mechanism to scrutinise the exercise of power, preventing its arbitrary use and ensuring the protection of public interests. This audit protects against financial mismanagement and is the sole means to uphold and enforce accountability. During the 1980s, Prime Minister Rajiv Gandhi said that only a small portion, 15 paise, of every rupee allocated for welfare and poverty alleviation reached the public. CAG a vital role in shedding light on the misuse of the remaining 85 paise, exposing the path of funds and discrepancies.

While performing his duties, The CAG has uncovered significant irregularities and scams across various sectors. Notable instances include the 2G spectrum scam, involving undervalued telecom licence allocations causing a staggering estimated loss of Rs 1.75 lakh crore; the Coalgate scam, where coal blocks were allotted without competitive bidding leading to a projected loss of Rs 1.86 lakh crore; the Commonwealth Games scandal marked by corruption and mismanagement; and the Maharashtra RTO evasion, uncovering a Rs 500 crore tax loss due to vehicle-related irregularities. These instances underscore the CAG's pivotal role in ensuring governance transparency and financial accountability. Thus, the CAG plays a vital role in maintaining checks and balances by auditing and reporting on the government's financial affairs and ensuring that public money is spent wisely and effectively.

The Public Accounts Committee (PAC) and the Committee on Public Undertakings (COPU) are two parliamentary committees that examine the audit reports of the CAG and scrutinise the financial performance and accountability of the government and its public undertakings. The CAG assists the PAC and the COPU in their work by providing relevant information, documents, and clarifications. The CAG also attends their meetings and briefs them on important audit findings and recommendations. The CAG acts as a guide, friend, and philosopher of both the committees, as he helps them to hold the Executive accountable for its financial management and ensure transparency, efficiency, and economy in public spending.

The CAG makes an impact on policy-making, legislative oversight, executive action, public awareness and social audit. The CAG's reports provide valuable inputs for the policymakers to improve public expenditure efficiency, effectiveness and economy. The CAG's reports also enable the Parliament and the State Legislatures to exercise their oversight function over the Executive by scrutinising the audit findings and recommendations. The CAG's reports also prompt the Executive to take corrective actions and implement the audit recommendations. The CAG's reports also raise public awareness about the issues related to public finance and governance. The CAG also encourages the participation of civil society organisations and citizens in the audit process through social audits. CAG plays a crucial role in strengthening good governance through its commitment to accountability, transparency, and efficiency in public resource utilisation. The CAG achieves this by offering independent and reliable assurance to stakeholders, including the legislature, Executive, and public, regarding the effective and intended use of public funds. Its impact is further magnified through performance audits that evaluate policy success and value for money. Additionally, the CAG identifies governance system gaps, weaknesses, and risks, while proposing corrective measures. It nurtures a culture of growth among audited entities, sharing best practices and innovations, and participates globally to elevate public sector auditing standards and practices. In essence, the CAG contributes significantly to strengthening a culture of responsible and effective governance.

There are some shortcomings too in the institution of CAG, which may affect its performance and credibility as an independent watchdog of public finances. The CAG's report is post-facto, meaning that it audits the expenditure only after it has been incurred. This limits its preventive and corrective role in ensuring financial discipline and efficiency. The CAG can only suggest improvements in the systems and procedures but cannot enforce them or penalise the violators. The CAG has no control over the secret service expenditure, which is outside its purview. The CAG's reports are not binding on the Executive or the legislature and depend on their willingness to take action on them. The CAG has no power to enforce its recommendations or sanction the defaulters. The appointment process poses a challenge to the CAG's independence as it is determined solely by the President of India on the advice of the Prime Minister and Council of Ministers, without involving opposition parties or state governments. This can lead to doubts about impartiality, especially if appointees have political affiliations. Facing resistance from audited entities adds to the CAG's challenges. Accessing information from the executive and private entities, especially on sensitive matters like natural resources or defence deals, can be difficult. As per data, almost 30% of the documents demanded by CAG officials have been denied to them In the past.

To enhance the effectiveness and efficiency of the CAG institution, several potential reforms could be considered. Firstly, broadening the audit scope to encompass all public-private partnerships (PPPs), Panchayati Raj Institutions and government-funded societies would allow the CAG to ensure the transparent use of public funds and evaluate outcomes. Secondly, strengthening independence and autonomy by having a collegium comprising the Prime Minister, Law Minister, Leader of Opposition, and Chief Justice of India appoint the CAG could mitigate political interference, alongside granting financial autonomy within parliamentary oversight. Thirdly, modernising audit practices through tools like data analytics, artificial intelligence, and blockchain could strengthen fraud detection and error identification. Ensuring timely submission of audit reports to Parliament and State Legislatures facilitates prompt discussion and action. Lastly, an improved follow-up mechanism should be established, enabling the CAG to oversee the implementation of audit recommendations with the authority to impose penalties for non-compliance. A more vigilant approach by the legislative bodies in holding the Executive accountable for their actions based on CAG reports would further contribute to refining the CAG's role.

The CAG plays a vital role in strengthening our democracy by ensuring accountability, transparency, and efficiency in the use of public funds. He upholds the Constitution of India and the laws of Parliament in the field of financial administration. He protects the interests of the taxpayers and promotes good governance. He is often referred to as the Chitragupta of modern India. Its independent stature, utmost commitment to transparency, and vital role in checks and balances ensure that public funds are administered judiciously, reinforcing the foundations of a strong and vibrant democracy. Embracing reforms to address existing challenges will further improve the CAG's crucial role in protecting India's democratic structure.