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This article has been written by Shantanu Dhingra.

Introduction

The office of the Comptroller and Auditor General (CAG) of India is established under Article 148[1] of the Constitution of India. Dr. B.R Ambedkar understood the importance of this office and very famously said, “I am of the opinion that this dignitary or officer is probably the most important officer in the Constitution of India.” [2] 

The primary duties of the CAG is to protect the interest of the Indian exchequer and this is done by the role assigned to him/her which is to audit the executive branches of the union and state governments. The entire duty of maintaining the accounts of the central and state government as well as public sector undertaking is assigned to him. This is rarely seen in any other federal democracy system as generally the work of the auditor general is divided at the center and state level.

The importance of CAG has been historically seen time and time again as the report sent to the President, in 2010, under Article 151 of the Indian Constitution, contained the issues of licenses and allocation of 2G Spectrum of the Department of Telecommunications, Ministry of Communication and Information Technology. The report was of paramount importance in uncovering the 2G spectrum scandal[3] of the 2010 Commonwealth games corruption scandal.  

The appointment of the CAG is made by the President of India[4] as per the Indian Constitution. The process of the same is not transparent and there is no accountability as to ensure the independence of the officeholder due to the appointment process.

This paper would attempt to critically analyze the problems with the office of the CAG and suggest some reforms to amend these problems.

Problems with the office Of the Comptroller and Auditor General

There are primarily two main problems with the office of the CAG:

Lack of decentralization of duties

Unlike other federal democracies, India has laid a large amount of duties pertaining to the audits of the government on one individual. As elucidated in the paper  ‘CAG: Watchdog Or Lapdog?’[5] which talks about the problem of centralizing the entire financial audit system of the government to one individual, it also highlights various problems such as audit reports of the state governments being made in regional languages. This creates an added problem of translation and of understanding the original reports.

This overburdens the duties of the office, making the auditory system less efficient and audits hardly being presented on time. The office of the CAG has over 40,000 employees working for it and one individual at the helm of this has led to a very inefficient system of man-power management. The quality of reports presented by the CAG has also been under question such as the CAG report on NREGA was criticized for not checking the veracity of the documentation.[6]

Appointment of the CAG

The Constitution makers understood the importance of the office of the CAG and its independence. Dr B.R Ambhedkar considered the CAG to be even more important than the judiciary.

The appointment procedure of the CAG is dubious to say the least, the involvement of the executive in the CAG’s appointment is hugely problematic as he/she is supposed to audit the executive.

In the article COMBATING CORRUPTION: THE ROLE OF THE CAG IN INDIA [7], the author highlighted how the office of the CAG should have been more active in questioning the illicit financial activities of the government but failed to do so as it was not practically fully autonomous.

There is no transparent and proper selection criteria, no requirement of a particular type of qualification or experience.

India is the only democratic country in which the executive has the power to appoint the CAG[8]. This hampers the autonomy of this important post and deters it to question the government.

Suggested reforms

There are primarily two problems highlighted of the post of the CAG highlighted in this article and the suggested reforms for them are as follows:

Decentralization of duties of the CAG

In a large country like India, which has a complex composition, it is very impractical for one individual to handle the audit mechanism of both the state and central government as well as PSUs.

There should be a separate state auditor for each and every state and also specialized agencies which would maintain their accounts. The head state auditor would be responsible for all the financial audits of their respective state government as well as local municipal governments in that state as well. This was also proposed in the Government of India act of 1935[9] as each state was supposed to have it’s own auditor in chief.

Transparent appointment process

Throughout the history of the nation, the appointment to the post of the CAG happened in secrecy and in an inconsistent manner not known to the public. Reforms to the post of the CAG have been made by the chairman of the Public Accounts Committee Mr. Murli Manohar Joshi which suggested a separate panel to appoint the CAG.

In “CAG of India: Restoring a Diminished Institution”[10], it was suggested to form a selection committee which would make the entire selection process more credible. The suggested composition of this committee is the Prime minister, the leader of the opposition of Lok Sabha, Finance Minister, CJI and any respected Chartered Accountant outside the government.

Such a diverse panel would make the appointment of the CAG more transparent and credible as it not giving the power to appoint the CAG completely to the executive but also not pushing it out of the selection process altogether and also keeping the opposition in the loop, as well as an expert from the field as the post of CAG, also requires highest technical proficiency and knowledge in the field of auditing and accounting. There should also be a requirement for that individual to have experience and qualification in the field of accounting and auditing.

Conclusion

There has been little attention paid to the office of the CAG as compared to other posts and offices, as mentioned under the Constitution, but it is an office of utmost importance and relevance. It is high time to make relevant reforms to make the functioning of the CAG more transparent and efficient.

References

[1] Constitution of India art. 148

[2]  Government, Civil Society And The People At Large Must Work Together To Stamp Out Corruption From India: Vice President’

[3]  Khan U (Ipleaders, 2021) <https://blog.ipleaders.in/case-study-2g-spectrum-case/>

[4] Constitution of India art. 148(1)

[5] Joseph K, ‘CAG: Watchdog Or Lapdog ?’ (1998) 33 Economic and Political Weekly 

[6]Vanaik S, ‘CAG Report On NREGA: Fact And Fiction’ (2008) 43 Economic and Political Weekly

[7] Sen R, Accountable Governance For Developmentsetting An Agenda Beyond 2015 (1st edn, ANSA-SAR 2013)

[8] Kulshreshtha A, ‘It Makes No Sense For The Executive To Have Final Say In Appointing A CAG’ (The Wire, 2020)

[9] Government Of India Act 1931 U/S 167

[10] iyer R, ‘CAG Of India : Restoring A Diminished Institution’ (2021) 40 Economics and Political Weekly


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