CAG & Good Governance in India | UPSC Mains POLITICAL-SCIENCE-INTERNATIONAL-RELATIONS-PAPER-I 2014

The role of the Comptroller and Auditor General of India in promoting good governance

How to Approach

This question requires a focused answer on the CAG’s role in good governance. The approach should be to first define good governance and the CAG’s constitutional mandate. Then, elaborate on the specific ways the CAG promotes good governance – financial accountability, performance auditing, compliance auditing, and its role in curbing corruption. Illustrate with examples of impactful CAG reports. Structure the answer around these functions, providing specific instances where the CAG’s intervention led to positive change. Conclude by highlighting the evolving role of the CAG and its importance in a dynamic governance landscape.

Good governance, characterized by transparency, accountability, efficiency, and the rule of law, is crucial for socio-economic development. The Comptroller and Auditor General (CAG) of India, a constitutional authority (Article 148), plays a pivotal role in ensuring these principles are upheld. Established in 1950, the CAG acts as an independent watchdog, scrutinizing government expenditure and performance. Recent reports highlighting irregularities in various schemes have underscored the CAG’s continued relevance in promoting accountability and improving governance standards. The CAG’s mandate extends beyond merely detecting financial errors; it encompasses evaluating the effectiveness of public policies and programs.

CAG’s Role in Promoting Good Governance

The CAG promotes good governance through several key functions:

1. Financial Accountability

Constitutional Basis: Article 151 mandates the CAG to audit all expenditures from the Consolidated Fund of India and the Public Accounts of each state.
Mechanism: The CAG audits the accounts of government departments, ensuring funds are spent as per budgetary allocations and established rules.
Impact: This scrutiny prevents wasteful expenditure and ensures financial discipline. For example, the CAG report on the Commonwealth Games (2010) exposed significant financial irregularities and corruption, leading to investigations and corrective measures.

2. Performance Auditing

Focus: Evaluates the efficiency and effectiveness of government programs and policies. It assesses whether the intended outcomes were achieved and whether resources were utilized optimally.
Methodology: Involves detailed examination of program implementation, data analysis, and field verification.
Example: The CAG’s performance audit of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2015 revealed discrepancies in wage payments, implementation delays, and lack of proper monitoring, prompting the government to strengthen the scheme’s oversight mechanisms.

3. Compliance Auditing

Objective: Determines whether government actions comply with relevant laws, rules, and regulations.
Scope: Covers a wide range of areas, including procurement, taxation, and environmental compliance.
Significance: Ensures adherence to legal frameworks and prevents arbitrary decision-making. The CAG’s audit of spectrum allocation (2G scam, 2010) highlighted violations of established procedures and resulted in the cancellation of licenses.

4. Curbing Corruption

Role: The CAG’s reports often expose instances of corruption and irregularities, triggering investigations by law enforcement agencies.
Reporting to Parliament/Legislatures: CAG reports are submitted to the President/Governor, who then causes them to be laid before Parliament/State Legislatures, ensuring public scrutiny.
Public Accounts Committee (PAC): The PAC examines these reports and makes recommendations for corrective action.

5. Evolving Role & Technological Integration

Data Analytics: The CAG is increasingly using data analytics and technology to enhance audit efficiency and identify anomalies.
Real-time Monitoring: Efforts are underway to integrate audit processes with government financial management systems for real-time monitoring of expenditure.
Capacity Building: Continuous training and capacity building of CAG officials are crucial to address emerging challenges in governance.

The CAG’s reports are not merely post-facto assessments; they serve as crucial inputs for policy improvement and contribute to a culture of accountability within the government.

Additional Resources

Key Definitions

Consolidated Fund of India

All revenues of the Government of India, loans raised by it, and any other receipts are credited to the Consolidated Fund of India. Expenditure is made from this fund after approval by Parliament.

Public Accounts Committee (PAC)

A parliamentary committee consisting of members from both houses of Parliament. It examines the reports of the CAG and makes recommendations to the government for corrective action.

Key Statistics

As of 2023, the CAG has conducted audits of over 600 government departments and organizations.

Source: CAG Annual Report 2022-23

The CAG’s reports have led to the recovery of over ₹1.5 lakh crore in revenue to the government exchequer in the last five years.

Source: Based on knowledge cutoff (2024)

Examples

Coal Block Allocation Scam (2012)

The CAG report on coal block allocation between 2005 and 2009 estimated a potential loss of ₹1.86 lakh crore to the exchequer due to non-competitive bidding. This report triggered a major political controversy and led to the cancellation of numerous coal block allocations by the Supreme Court.

Frequently Asked Questions

▶What is the difference between financial audit and performance audit?

Financial audit focuses on verifying the accuracy and legality of financial transactions, while performance audit assesses the efficiency, effectiveness, and economy of government programs and policies.