CAG could have done better

The Comptroller and Auditor General of India (CAG) is one of the most important institutions of the country to ensure public accountability of the executive. As the CAG’s work necessarily involves pointing out the irregularities, inefficiencies, leakages and corruption in our public financial management system, relations between the governments and the CAG are generally adversarial.

CAG reports are known for their political neutrality, robustness of examination and objectivity of conclusions. They carry such high credibility with the public, that reports critical of the government generate widespread media and public attention and carry the potential to damage or destroy the government’s political capital — CAG reports on the Commonwealth Games, 2G, coal and other scams are still alive in public memory. In general, therefore, governments have reason to be wary about CAG reports.

Appointment of CAG

The only other time the institution attracts media attention is at the time of appointment of the Comptroller and Auditor General. No other constitutional authority has such an arbitrary and opaque procedure for appointment, where the government of the day has the sole prerogative of appointing the CAG, without any prescribed qualifications or established norms.

Every government likes to appoint a person who it considers will be minimally harmful to its image, though most CAGs have worked independently, with integrity and without fear or favour.

However, of late, the CAG has been in the news for a lot of wrong reasons, like allegedly holding up or delaying completed reports, tweaking approved audit plans, suspending filed audits midway which is done only in unusual situations like the pandemic, and even transferring officers who have reportedly been involved with auditing sensitive government schemes.

The issues have created doubts in public minds because of the possible electoral repercussions of a critical report on the 2024 elections. The truths of these allegations are unverified, but statements put forward by the CAG’s office have been less than convincing. The number of reports submitted by the CAG to Parliament has steeply declined over the years, though some of these reports did bring out serious irregularities in the running of certain infrastructure projects as well as centrally sponsored schemes.

The Government usually replies to the CAG’s observations before they are finalised in a report, as the CAG does not take part in public debates on the contents of his reports; they are self-explanatory and complete with all evidences.

But in a departure from established conventions, public authorities are now calling the CAG reports erroneous before the media, and in a queer instance, a Union ministry has rebutted a published news report on CAG’s observations on government accounts, giving elaborate point-wise replies to each observation to the newspaper which should rather have been furnished to the CAG in the first place. These trends that seriously undermine the institution of the CAG are ominous for a democracy, to say the least. One particular point especially demands an answer.

Like all the previous governments, the present government has also launched a series of ambitious centrally sponsored schemes (CSSs).

These schemes have always been controversial because of their potential to promote the electoral prospects of the ruling party, and they have been done so with brazenness by earlier governments as well.

Governments are perfectly within their rights to improves the condition of vulnerable sections through well-delivered social welfare schemes. But there are schemes on which huge expenditure has been made over the years while there is a strong perception of sub-optimality in the attainment of their objectives.

Opportunity cost

Expenditure has an opportunity cost, and money doled out to buy votes can otherwise create much more useful productive capacity in the economy.

A developing country trying to make up for the lost decades need to allocate expenditure carefully to optimise growth objectives, and economic rationality cannot be made completely subservient to political rationality. This is where the CAG’s role becomes important, because only he can independently and objectively evaluate the outcome of schemes and provide feedback to the government.

And in this, the CAG seems to be particularly lacking. CSSs account for more than a tenth of the Budget, and in the current fiscal, about 76 per cent of the total CSS budget of ₹4.76-lakh crore has been allocated only to seven schemes: MGNREGA, PMAY, PMJJM, NEM, NHM, PMKisan and PMGSY. Except PMAY, reports of which are available till 2022, and PMKisan, which are understood to be underway, none else has been audited by the CAG beyond FY 2018. One glaring omission is the MGNREGA that was launched to alleviate rural poverty and simultaneously create durable rural assets.

The last time the CAG had audited it was in 2013, when it was found to have served neither cause. Yet governments have kept on pouring money into this scheme, and more than ₹6-lakh crore has so far been spent on it. CAG’s audit plans are supposed to reflect audit risk, and one wonders why a scheme with such huge expenditure (₹60,000 crore in the current Budget) has been left out of audit for over a decade, despite it being found flawed in the past.

Unless the CAG comes out with cogent explanations, doubts about the credibility and impartiality of the institution will continue to linger in public minds.

The writer is a former Director-General of the CAG of India

COMMENT NOW