Model Answer
0 min readIntroduction
The Comptroller and Auditor General (CAG) of India, a constitutional authority, stands as the guardian of public finances. Derived from Article 149 of the Constitution, the CAG’s powers extend to auditing all receipts and expenditures of the Union and the States. However, the scope of this audit has been a subject of debate, particularly concerning the audit of government policy implementation. While financial regularity is central to the CAG’s mandate, extending its purview to assess the ‘wisdom’ or ‘efficacy’ of policies raises concerns about overstepping its constitutional limits and encroaching upon the executive’s domain. This necessitates a careful examination of the boundaries of the CAG’s jurisdiction.
Basis of CAG’s Powers – Article 149
Article 149 vests the CAG with the duty to audit all accounts related to the Union and State governments. This power is further elaborated in Articles 151 and 152, which detail the CAG’s reporting mechanisms to the President/Governor and Parliament/State Legislatures. The core principle underlying this mandate is to ensure financial accountability and transparency in the use of public funds. The CAG’s audit focuses on verifying whether funds were spent in accordance with the law, rules, and established principles of financial propriety.
The Debate: Auditing Policy Implementation
Traditionally, the CAG’s audit focused on ‘financial audit’ – ensuring funds were spent legally and efficiently. However, in recent decades, there has been a growing trend towards ‘performance audit’ and ‘compliance audit’ which often involve scrutinizing the implementation of government policies. This shift has sparked debate.
Arguments in Favour of Auditing Policy Implementation
- Accountability & Transparency: Auditing policy implementation enhances accountability by assessing whether policies achieve their intended objectives and deliver value for money.
- Identifying Systemic Failures: Performance audits can identify systemic flaws in policy design and implementation, leading to improvements in governance.
- Public Interest: Citizens have a right to know whether public funds are being used effectively to address societal needs.
Arguments Against Auditing Policy Implementation – Overstepping Jurisdiction
- Separation of Powers: Critics argue that evaluating policy effectiveness involves making value judgments, which fall within the executive’s policy-making domain. This encroaches upon the principle of separation of powers.
- Executive Expertise: The executive branch possesses specialized knowledge and expertise in policy formulation and implementation. The CAG, primarily a financial auditor, may lack the necessary expertise to assess policy outcomes effectively.
- Judicial Review: The judiciary is the appropriate forum for reviewing the legality of policy decisions, not the CAG.
Landmark Cases & Judgements
The Supreme Court has addressed this issue in several cases. In State of Orissa v. CAG (1968), the Court held that the CAG’s powers are not limited to merely checking arithmetical accuracy of accounts but extend to verifying the legality of expenditure. However, the Court also cautioned against the CAG venturing into policy matters. More recently, in Centre for Public Interest Litigation v. Union of India (2011) (2G Spectrum case), the CAG’s report played a crucial role in highlighting alleged irregularities, but the Court also emphasized the need for the CAG to exercise its powers judiciously and avoid making conclusive findings on policy matters.
Distinction between Legality and Propriety
A crucial distinction lies between auditing the legality of expenditure and evaluating the propriety or wisdom of a policy. The CAG is constitutionally mandated to ensure the legality of expenditure. However, questioning the ‘wisdom’ of a policy decision is generally considered beyond its purview. For example, the CAG can audit whether funds allocated for a specific scheme were spent according to the rules, but it cannot determine whether the scheme itself was the most effective way to achieve a particular social goal.
| Audit Type | Focus | Acceptability |
|---|---|---|
| Financial Audit | Legality & regularity of expenditure | Universally accepted |
| Compliance Audit | Adherence to rules & regulations | Generally accepted |
| Performance Audit | Efficiency, effectiveness & economy of programs | Controversial; requires careful exercise of jurisdiction |
Conclusion
The CAG’s role is vital for ensuring financial accountability and transparency in governance. While expanding its audit scope to include policy implementation can enhance accountability, it must be exercised with caution. The CAG should focus on verifying the legality and propriety of expenditure, rather than substituting its judgment for that of the executive in matters of policy. Maintaining a clear distinction between auditing financial transactions and evaluating policy outcomes is crucial to uphold the principles of separation of powers and ensure effective governance. A collaborative approach, with constructive dialogue between the CAG and the executive, is essential to optimize the CAG’s contribution to good governance.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.