Model Answer
0 min readIntroduction
The Comptroller and Auditor General (CAG) of India, a constitutional authority established by Article 148, is the head of the Indian Audit and Accounts Department. While traditionally perceived as a watchdog ensuring financial regularity and legality of government expenditure, the CAG’s mandate extends beyond this. The Supreme Court has consistently affirmed that the CAG’s duty encompasses not only ensuring that expenditure conforms to the law but also that it is ‘propriety’ – meaning it is wise, reasonable, and in the public interest. This broader interpretation has significantly shaped the CAG’s role in promoting good governance and accountability.
Constitutional Basis and Evolution of CAG’s Role
Article 148(3) of the Constitution empowers the CAG to audit all expenditures from the Consolidated Fund of India and the Public Accounts of each State. Initially, the focus was primarily on verifying adherence to financial rules and regulations. However, over time, through judicial pronouncements and evolving administrative practices, the scope of audit expanded to include the concept of ‘propriety’.
Understanding ‘Propriety’ in Public Finance
‘Propriety’ in the context of CAG’s audit refers to the examination of whether expenditure was made with due consideration to principles of financial prudence, efficiency, and public benefit. It goes beyond mere legal compliance and delves into the wisdom and reasonableness of decisions. Assessing propriety involves examining:
- Value for Money: Whether the government obtained the best possible outcome for the resources spent.
- Economic Efficiency: Whether resources were utilized in the most cost-effective manner.
- Avoidance of Waste: Whether expenditure was free from extravagance or unnecessary costs.
- Public Interest: Whether the expenditure served a legitimate public purpose.
How CAG Assesses Propriety
The CAG assesses propriety through various methods:
- Performance Audits: Evaluating the efficiency and effectiveness of government programs and schemes.
- Compliance Audits: Checking adherence to laws, rules, and regulations, but also assessing the rationale behind deviations.
- Forensic Audits: Investigating suspected fraud or irregularities.
- Review of Internal Controls: Assessing the effectiveness of systems designed to prevent errors and fraud.
Illustrative Examples & Case Studies
Several CAG reports have highlighted instances where expenditure, though legally permissible, lacked propriety:
- 2G Spectrum Allocation (2010): The CAG report on the 2G spectrum allocation estimated a presumptive loss of ₹1.76 lakh crore to the exchequer due to flawed policy decisions and lack of transparency. While the legal validity of the allocation was debated, the CAG’s report questioned the propriety of the process.
- Coal Block Allocation (2012): The CAG report on coal block allocation estimated a potential loss of ₹1.86 lakh crore due to non-competitive bidding and arbitrary allocation of coal blocks. Again, the focus was on the lack of transparency and fairness, raising questions about propriety.
- Commonwealth Games Scam (2010): The CAG report exposed widespread irregularities and financial mismanagement in the organization of the 2010 Commonwealth Games, highlighting a clear lack of propriety in expenditure.
Challenges and Debates
The CAG’s expanded role has not been without criticism. Some argue that the CAG sometimes oversteps its mandate and engages in ‘policy audit,’ encroaching upon the domain of executive decision-making. However, proponents argue that a robust and independent CAG is essential for ensuring accountability and preventing corruption. The balance between ensuring accountability and respecting the executive’s policy space remains a crucial debate.
Conclusion
In conclusion, the CAG’s duty extends far beyond merely ensuring the legality of expenditure. The concept of ‘propriety’ is central to its mandate, requiring it to assess the wisdom, reasonableness, and public benefit of government spending. While challenges and debates surrounding its scope persist, the CAG remains a vital institution for promoting good governance, transparency, and accountability in India’s public finance system. A continued focus on performance audits and value-for-money assessments will be crucial in strengthening its role in the years to come.
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.