For a country to be successful, the government needs to be responsible for how it spends public money. If the government asks for ₹ 700 crore in Parliament for a welfare scheme, we deserve to know if that money was actually used for that scheme or diverted elsewhere. After all, the government uses our money—we are the ones paying taxes.
This is where the CAG steps in; it audits government accounts to check whether the money intended for specific purposes was indeed used for those purposes.
Dr B.R. Ambedkar told the Constituent Assembly that he saw the CAG as "probably the most important officer in the Constitution of India" and entrusted the role of watchdog. This blog will help you understand what the CAG is, its roles, functions, hierarchy, and its constitutional provisions.
What is CAG?
- CAG is an independent authority under the Constitution of India.
- He heads the Indian audit & account department and is the chief guardian of the public purse.
- It is the institution that ensures the government and other public authorities are accountable for spending public funds to Parliament, State Legislatures, and ultimately, the people.
- While a minister swears to work within the Constitution, the CAG's oath is to uphold the Constitution.
- The CAG has the same status and salary as a Supreme Court judge and can only be removed through impeachment.
- The First Comptroller and Auditor General of India was Shri V. Narahari Rao.
From where CAG has been taken?
Just like many other bodies and parts of our Constitution, we have borrowed the office of the CAG from the UK. The British also have a CAG. However, there is a significant difference between the CAG in the UK and the CAG in India.
If you examine the CAG, it has two functions: the Comptroller and the Auditor. These are two distinct roles.
A Comptroller is a person who controls the government exchequer, meaning the government cannot spend any money without their permission.
An Auditor is a person who will audit the accounts of the government.
Difference between the CAG in India and Britain
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CAG in India
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CAG in Britain
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Acts solely as an Auditor General
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Holds the powers of both Comptroller and Auditor General
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Audits account after the money is spent
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No public money can be used without the CAG's approval
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Not a member of Parliament
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Member of the House of Commons
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You should read about Parliamentary Privileges in India.
How Independence of CAG is Ensured?
Because the office of CAG is so important, the Constitution enables the independent and unbiased nature of audit by providing for:-
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Constitutional Status: The CAG is a constitutional authority under Article 148 of the Indian Constitution, which guarantees its independence.
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Appointment: The President of India appoints the CAG based on the advice of the Prime Minister and the Council of Ministers, ensuring the CAG's impartiality and political neutrality.
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Tenure: The CAG has a set term of 6 years or until age 65, whichever comes first. This fixed term provides stability and enables the CAG to fulfil responsibilities without undue influence or pressure.
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No Reappointment: Once the CAG's tenure ends, they cannot be reappointed. This means the CAG cannot favour the government in the hope that they will be reappointed.
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Removal: The CAG can only be removed from office through a process similar to that of a Supreme Court judge- on the grounds of proven misbehaviour or incapacity, by a resolution passed by both Houses of Parliament with a special majority. This provision safeguards the CAG's independence.
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Salary: The CAG's salary and other conditions of service cannot be reduced to their disadvantage after appointment. Moreover, the salary for the CAG is charged to the Consolidated Fund of India, making it non-votable by Parliament.
The conditions of the service of the CAG are mentioned in the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971
Read more about Caveat under section 148-A of CPC
Constitutional Provisions for the CAG
Article V of the Constitution outlines the Union's institutions. The initial four chapters cover the President, Vice President, Council of Ministers, Parliament, and Judiciary, while the fifth chapter focuses on the Comptroller and Auditor General (CAG) of India.
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Article 148 - CAG appointment, oath and conditions of service.
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Article 149 - Duties and Powers of the Comptroller and Auditor-General of India.
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Article 150- the President, with advice from the CAG, decides how the accounts of the Union and States should be kept.
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Article 151- The Comptroller and Auditor-General of India submits reports about Union accounts to the President, who then shares them with Parliament. Similarly, reports about State accounts go to the State Governor, who shares them with the State Legislature.
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Article 279 – The final calculation of "net proceeds" is determined and approved by the Comptroller and Auditor-General of India, and their certification is the last word on it.
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III Schedule—Section IV of the Third Schedule of India's Constitution tells the Judges of the Supreme Court and the CAG of India what oath or promise they must take when they start their jobs.
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VI Schedule—The District Council or Regional Council should follow the format set by the CAG with the President's approval. Also, their accounts are checked in a way decided by the CAG, and the reports about these accounts are given to the Governor, who then presents them to the Council.
Functions and Powers of the CAG
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CAG audits the accounts related to all expenditures from the Consolidated Fund of India, the Consolidated Fund of each state, and UTs with a legislative assembly.
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He audits all spending from the Contingency Fund of India and the Public Account of India, including each state's.
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He audits the trading, manufacturing, profit and loss accounts, balance sheets, and other related records maintained by departments in both the Central Government and state governments.
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When related laws are required, he audits the receipts and expenditures of all bodies and authorities substantially financed from central or state revenues, government companies, and other corporations and bodies.
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He audits the the accounts of other authorities when requested by the President or Governor, such as local bodies.
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He provides guidance to the President on how the accounts of the Center and States should be structured.
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He submits his audit reports on the Centre's accounts to the President, who then presents them to both houses of Parliament.
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He submits his audit reports relating to a State's accounts to the Governor, who in turn places them before the state legislature.
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CAG also acts as a guide, friend and philosopher of the Parliament's Public Accounts Committee.
Structure of the CAG's Office
The Indian Audit and Accounts Department (IAAD) is led by the Comptroller and Auditor General of India (CAG). The CAG is supported by five Deputy Comptrollers and Auditors General, one of whom serves as the Chairman of the Audit Board. Below them are four Additional Deputy Comptrollers and Auditors General. The office hierarchy is as follows:
- CAG
- Deputy CAG
- Additional Deputy CAG
- Directors General
- Principal Directors
- Directors/Deputy Directors
Does CAG audit RBI?
CAG does not audit the Reserve Bank of India in India. It conducts audits of other financial sector regulators, such as SEBI, IRDA and PFRDA, but it does not conduct performance audits.
Conclusion
The CAG of India is very important for accountability and transparency in using public money. Constitutional rules make sure the CAG is independent and can audit government accounts, give financial advice, and send audit reports to the President and Parliament. This helps with good governance and makes people trust how money is managed.