Comptroller and Auditor General of India (CAG)

15 Apr Comptroller and Auditor General of India (CAG)

This article covers “Daily Current Affairs” and the Topic of  Comptroller and Auditor General of India (CAG)

SYLLABUS MAPPING:

GS-02–Governance, Constitution, Polity : Comptroller and Auditor General of India (CAG)

FOR PRELIMS

What is CAG and role of the CAG in promoting transparency and accountability in public finance.

FOR MAINS

Significance of recent CAG reports and  limitations faced by the CAG, the impact of delayed action on CAG. 

Why in the News? 

The Comptroller and Auditor General (CAG) of India has recently released several audit reports that have garnered significant attention due to their revelations of systemic inefficiencies and financial irregularities across various sectors. Notably, the CAG’s audit of Delhi’s Mohalla Clinics uncovered that 70% of patients received consultations lasting less than a minute, and only 175 out of the required 11,191 inspections were conducted between March 2018 and March 2023, indicating serious lapses in healthcare service delivery . In the realm of infrastructure, the CAG’s compliance audit report highlighted delays and cost overruns in the Mancheswar Carriage Repair Workshop and the CSMT-Kurla rail line doubling project, pointing to inefficiencies in project execution . Furthermore, the audit of Delhi’s excise policy revealed significant revenue losses amounting to ₹2,026 crore due to procedural violations and lack of transparency in license issuance . These findings underscore the critical role of the CAG in promoting accountability and transparency in public administration, prompting calls for timely action and reforms to address the highlighted issues.

What is CAG?

1. Constitutional Authority: The CAG is a constitutional body established under Article 148 of the Indian Constitution. It provides for the appointment, term, and duties of the CAG. CAG is often referred to as the guardian of the public purse. The independence of CAG is ensured by security of tenure and salary, which cannot be altered to their disadvantage during service.
2. Audit Authority: As per Article 149, the CAG’s duties and powers are prescribed by the Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971. The office audits all receipts and expenditures of the Union and State Governments, including bodies substantially financed by the government.
3. Single Integrated Audit Body: CAG is the sole authority for auditing Union and State accounts, including autonomous institutions like IITs, DRDO, and PSUs like ONGC.Example: CAG audit of the Pradhan Mantri Awas Yojana (2025) highlighted cost overruns and fund diversions in five states.
4. Position in Indian Polity: CAG is ranked 9th in order of precedence and cannot be removed except on the grounds and in the manner provided for a Supreme Court judge (Article 148(1)). This assures functional autonomy and impartiality.
5. Reports Submitted to the Legislature: As per Article 151, audit reports of the CAG are submitted to the President (for Union) or Governor (for State), who lays them before the Parliament or State Legislature.Case: In the 2G spectrum case, CAG’s report estimating a loss of ₹1.76 lakh crore led to a major political and judicial upheaval.
6. Not an Executive Auditor: CAG is not involved in the formulation or execution of policies; it only audits performance and compliance post-facto. This reinforces the objective and apolitical nature of the institution.
7. International Standing: India’s CAG is a member of the International Organization of Supreme Audit Institutions (INTOSAI), ensuring global standards in public audit. NTOSAI Lima Declaration (1977) reinforces that CAG should enjoy independence in law, fact, and appearance.

CAG – Powers and Responsibilities

1. Audit of Government Accounts: CAG audits both appropriation and finance accounts of the Government, ensuring legality and efficiency of public spending. As per the 2025 CAG Report on MNREGA, 30% of expenditures in Bihar were without proper vouchers or utilization certificates.
2. Audit of Public Sector Enterprises (PSEs): Under Section 19 and 20 of the 1971 Act, CAG audits central and state PSUs like BHEL, LIC, etc. The 2025 report on Air India’s privatization process pointed out undervaluation of assets and procedural lapses.
3. Compliance and Performance Audits: Compliance audit checks adherence to laws, rules, and policies. Performance audit evaluates efficiency and effectiveness. Example: In 2024, the CAG audit on PM KUSUM Scheme revealed only 18% achievement against targets, leading to a parliamentary discussion.
4. Audit of Autonomous Bodies and NGOs: CAG can audit bodies receiving substantial government grants (above 25%) under Section 14 of the 1971 Act. Example: 2025 audit of NGOs under National Health Mission found discrepancies in fund usage in Rajasthan and Assam.
5. Advisory Role: Though not binding, CAG’s audit reports are used by Public Accounts Committee (PAC) for scrutiny and recommendations. PAC 2025 extensively used the CAG’s audit report on the Defence Capital Budget to flag procedural weaknesses.
6. Audit of Environmental and IT Projects: New age audits include environmental audits (Swachh Bharat), climate finance, and IT system audits (Aadhaar, GSTN). Example: 2025 audit of Smart Cities Mission revealed cost escalations and delays in 27 cities.
7. Support to Legislative Oversight: CAG strengthens parliamentary control over public expenditure, ensuring accountability of the executive. It provides crucial inputs to committees like PAC and Estimates Committee, reinforcing checks and balances in democracy.

Performance Analysis of CAG

1. Landmark Investigative Audits: Audits like the 2G spectrum (2010), Coalgate (2012), and CWG scam (2010) proved instrumental in triggering systemic reforms and judicial actions. These audits made CAG a household name and highlighted its institutional relevance.
2. Increased Scope and Methodology: Adoption of data analytics, AI-based risk mapping, and real-time audit in recent years has enhanced efficiency. 2025 audit of the PM Gati Shakti project used satellite mapping and real-time dashboards to track performance.
3. Quality of Recommendations: Reports often lead to course corrections and improved governance. After the 2023 audit of rural electrification, guidelines for village electrification were modified to ensure better targeting.
4. Audit of COVID-19 Expenditures: CAG’s audit of vaccine procurement and health infra spending during COVID-19 showed irregularities in fund allocation and PPE kit procurement. It highlighted lack of transparency in emergency procurement.
5. Audit Responsiveness: With faster submission of reports, CAG’s relevance in policy cycles has increased. The turnaround time of audit reports has reduced from 18 months to 6 months in several ministries, per 2025 performance review.
6. International Recognition: CAG of India was elected to the INTOSAI Governing Board (2024-2030). India’s leadership in IT audit techniques is now being emulated by African and ASEAN nations.
7. Parliamentary Impact: PAC and State legislatures regularly use CAG reports to summon officers and review expenditures. In 2025, West Bengal’s Assembly referred the CAG’s audit of Jal Jeevan Mission to its PAC, leading to administrative reshuffling.

Limitations and Criticism of the Office of CAG

1. Delayed Audit Reports: Delays in report submission reduce relevance. Example: The 2023 audit of the Defence Procurement Policy was tabled after two years, limiting its utility in correcting procurement flaws.
2. Lack of Real-Time Auditing Power:  CAG cannot do pre-audit or real-time auditing, which means misappropriations are caught only after the fact.This limits preventive action.
3. Overburdened Office: With increasing responsibilities—IT audits, environmental audits, cooperative audits—the existing staff is overstretched. The 2025 CAG Staffing Report showed a 22% vacancy in audit cadres.
4. Lack of Enforcing Power: CAG can only recommend, not penalize or enforce its findings. PAC’s reliance on ministries for follow-up leads to weak enforcement of accountability.
5. Political Misuse: Some critics allege selective leaks or misinterpretation of figures for political mileage. Example: The 2G loss estimate controversy led to criticism of exaggeration, although SC later validated procedural flaws.
6. Exclusion of Private-Public Partnerships (PPPs): CAG’s jurisdiction over PPPs and private contractors is ambiguous. Example: Audit of Smart Meters project in Delhi hit a legal roadblock as the private vendor challenged CAG’s jurisdiction.
7. Digital Audit Infrastructure Gaps: Despite progress, state audit wings lag in digital capability. The 2025 Digital Audit Readiness Survey showed only 11 states had fully functional e-audit systems integrated with treasury software.

Recommendations to Strengthen CAG

1. Amend the 1971 CAG Act: Modernize the Act to include real-time auditing powers, explicit coverage of PPPs, and updated audit procedures. Recommendation: Second Administrative Reforms Commission (2009) and CAG Committee on Audit Modernisation (2024).
2. Audit of Regulatory Bodies: Expand CAG’s jurisdiction to include regulatory authorities like SEBI, TRAI, IRDAI which handle significant public interest. This was proposed by the 13th Finance Commission.
3. Institutionalize Real-Time Audit: Establish a system of Continuous Audit Dashboarding (CAD) with ministries to ensure proactive monitoring. PMO’s 2025 Governance Digitization Initiative supports this transition.
4. Strengthening Human Resources: Fill vacancies, recruit IT auditors, and ensure skill upgradation. Example: 2025 CAG Training and Capacity Building Plan includes blockchain auditing and forensic analytics modules.
5. PAC Reforms: PAC should have standing audit cells and tracking systems for recommendations. Subramanian Committee on PAC Reforms (2022) emphasized dedicated research staff and digital monitoring tools.
6. State-Level Empowerment: Equip State AG offices with independent legal and IT teams. Encourage legislatures to act on CAG reports, which often remain under-discussed.
7. Auditing Climate and SDG Expenditures: Make climate finance audits mandatory. Example: In 2025, Kerala began using a Green Audit Matrix with CAG’s technical support.

Conclusion

The Comptroller and Auditor General of India is a cornerstone of India’s democratic accountability mechanism. With roots in the Constitution and wings spread across every level of government, the CAG ensures that public money is used legally, wisely, and effectively. Despite its constitutional independence and wide mandate, it faces challenges like delayed audits, limited enforcement power, and the growing complexity of fiscal arrangements. However, with strategic reforms, digitization, and legislative support, the CAG can transform into a real-time fiscal watchdog of the 21st century. As India embarks on the Amrit Kaal towards 2047, ensuring financial accountability, governance efficiency, and public trust requires a stronger and more agile CAG, backed by legal empowerment, institutional support, and technological augmentation.