The CAG’s mandate

As auditor to a nation whose institutions of oversight are weak and underdeveloped, the Comptroller and Auditor General of India is more than just the keeper of our national accounts. It is, in many ways, a conscience-keeper and a watchdog, which may not bite but can bark and warn ordinary citizens that something is amiss in the wider affairs of state. Like the Election Commission and the Supreme Court, the CAG has managed to protect its integrity and independence despite pressure from various arms of the state. If conducted freely and fairly, a robust audit can serve as a catalyst for corrective action. The CAG’s report on Bofors in 1989 had major political consequences. Its explosive 2010 report on the allocation of 2G spectrum led to the filing of criminal charges against politicians, bureaucrats, and businessmen. Other reports may have had a less dramatic political impact but they have been equally useful. The CAG’s observations may be politically embarrassing to the government but they clearly contribute to the public good. Democratic India must ensure that the government takes the work of this constitutionally sanctioned institution very seriously and removes the obstacles placed in the path of a more effective and efficient audit process.

Aware of the limitations of its mandate, the CAG has asked the United Progressive Alliance government to make three broad amendments in the 1971 Audit Act, which governs the functioning of the audit authorities. The first amendment is intended to ensure that government departments reply to audit enquiries in 30 days rather than in the open-ended manner as now. Secondly, the CAG wants the statute to stipulate a clear timeframe for the tabling of completed audit reports on the floor of the relevant legislature. The Act, as it stands today, gives the Central and State governments wide latitude in this regard and it is hardly surprising that this freedom has been abused to delay making public the audit reports that contain embarrassing observations. The third set of proposed amendments is aimed at bringing the CAG’s legal mandate up to speed with the changes that have taken place in the way public money is spent. Since the 1971 Act was passed, the 73rd and 74th amendments to the Constitution have been adopted, adding a layer of decentralised governance — and hence expenditure management — to the institutions of the state. Liberalisation has meant public money is increasingly utilised in joint ventures and public-private partnerships. Because of ambiguities in its mandate, the CAG feels unable adequately to audit this vast area of public economic activity. The government should deal with the call for a modernised Audit Act proactively.