Comptroller and Auditor General of India
Article 148 of the Indian Constitution establishes the independent office of the Comptroller and Auditor General of India (CAG), who serves as the head of the Indian Audit and Accounts Department. As the guardian of the public purse, the CAG oversees the country's entire financial system, spanning both central and state levels. This pivotal role ensures the upholding of the Constitution and parliamentary laws in all matters of financial administration.
Dr. B.R. Ambedkar, the chief architect of the Constitution, described the CAG as "the most important officer under the Constitution" for this very reason. Indeed, the CAG stands as one of India's key democratic safeguards, alongside institutions like the Supreme Court, the Election Commission, and the Union Public Service Commission. Together, they form the sturdy pillars protecting accountability and integrity in governance.
Appointment, Tenure and Removal of CAG
The Comptroller and Auditor General (CAG) of India owes his appointment to the President, who issues a formal warrant under his own hand and seal. Before assuming office, the CAG must take an oath or affirmation in the President's presence, pledging to bear true faith and allegiance to the Constitution of India; to uphold the nation's sovereignty and integrity; to perform his duties diligently, faithfully, and to the best of his ability, knowledge, and judgment—without fear, favor, affection, or ill will; and to steadfastly uphold the Constitution and the laws of the land.
The CAG serves a fixed term of six years or until reaching the age of 65, whichever comes first. He may resign at any time by submitting a letter directly to the President. Removal from office is exceptionally stringent, mirroring the process for a Supreme Court judge: it requires the President to act on an address passed by both Houses of Parliament with a special majority, substantiated by proof of misbehavior or incapacity. This robust safeguard underscores the CAG's pivotal role as the guardian of public finances.
Safeguarding the Independence of the Comptroller and Auditor General
The Indian Constitution enshrines the Comptroller and Auditor General (CAG) as the guardian of public finances, equipping this vital office with robust safeguards to ensure its autonomy from executive pressures. These provisions collectively shield the CAG from political interference, allowing impartial audits of government accounts.
The CAG's security of tenure forms the bedrock of this independence. Although appointed by the President, the CAG cannot be removed at the President's whim; removal requires the same impeachment-like procedure as for a Supreme Court judge. This tenure protects the officeholder from arbitrary dismissal.
Post-retirement restrictions further reinforce impartiality: the CAG is ineligible for any subsequent position under the Government of India or any state government, eliminating the lure of future favors. Parliament determines the CAG's salary—which matches that of a Supreme Court judge—and other service conditions. Once appointed, neither salary nor entitlements like leave, pension, or retirement age can be altered to the CAG's disadvantage, insulating these from retrospective cuts.
Administrative autonomy extends to the CAG's staff and operations. The President sets service conditions for the Indian Audit and Accounts Department and defines the CAG's administrative powers, but only after consulting the CAG directly. Critically, all office expenses—including salaries, allowances, and pensions—are charged to the Consolidated Fund of India, making them non-votable by Parliament and thus immune to legislative bargaining.
This separation is absolute: no minister can represent the CAG in either House of Parliament, nor take responsibility for the CAG's actions. Through these measures, the Constitution ensures the CAG remains a fearless watchdog, upholding fiscal accountability in India's democratic framework.
Duties and Powers of the Comptroller and Auditor General
The Indian Constitution, through Article 149, empowers Parliament to define the duties and powers of the Comptroller and Auditor General (CAG) concerning the accounts of the Union, states, and other authorities. In exercise of this authority, Parliament enacted the CAG’s (Duties, Powers and Conditions of Service) Act, 1971, which was amended in 1976 to separate accounting from auditing functions in the Central government—a reform known as the departmentalisation of accounts.
The CAG's core responsibilities, as outlined by the Constitution and Parliament, revolve around comprehensive auditing to ensure accountability and fiscal discipline. Primarily, the CAG audits all expenditures from the Consolidated Fund of India, the consolidated funds of each state, and those of union territories with legislative assemblies. This extends to the Contingency Fund of India, the Public Account of India, and their state-level equivalents. Additionally, the CAG examines trading, manufacturing, profit and loss accounts, balance sheets, and other subsidiary records maintained by departments of the Central and state governments.
Beyond these, the CAG scrutinises the receipts and expenditures of the Centre and states to verify that rules and procedures effectively check the assessment, collection, and allocation of revenue. This audit net widens to include bodies and authorities substantially financed by Central or state revenues, government companies, and other corporations or entities as mandated by relevant laws. The CAG also reviews all government transactions involving debt, sinking funds, deposits, advances, suspense accounts, and remittances, along with receipts, stock accounts, and similar items—either with the President's approval or at the President's direction.
On request from the President or a state governor, the CAG audits accounts of other authorities, such as local bodies. Furthermore, under Article 150, the CAG advises the President on the format for maintaining the accounts of the Centre and states. The CAG's audit reports on Central accounts are submitted to the President, who lays them before both Houses of Parliament (Article 151); reports on state accounts go to the governor for tabling in the state legislature. Under Article 279, the CAG certifies the "net proceeds" of any tax or duty—the total collections minus collection costs—with this certificate being final and binding.
In a supportive role, the CAG serves as a guide, friend, and philosopher to Parliament's Public Accounts Committee (PAC). Until the 1976 separation of accounts and audit, the CAG also compiled and maintained Central government accounts; this duty now applies only to state governments.
Annually, the CAG submits three key audit reports to the President for presentation in Parliament: the audit report on appropriation accounts, which compares actual spending against amounts sanctioned by Parliament via the Appropriation Act; the audit report on finance accounts, detailing the Union's yearly receipts and disbursements; and the audit report on public undertakings. The PAC then examines these reports and presents its findings to Parliament, closing the accountability loop.
Role and Limitations of the CAG
The Comptroller and Auditor General (CAG) of India plays a pivotal role in safeguarding the Constitution and parliamentary laws within the realm of financial administration. By preparing meticulous audit reports, the CAG ensures the executive—principally the Council of Ministers—remains accountable to Parliament for its financial dealings. Acting as Parliament's trusted agent, the CAG scrutinizes government expenditures on its behalf, rendering reports exclusively to this legislative body.
The CAG enjoys greater autonomy when auditing expenditures compared to receipts, stores, and stocks. For expenditures, the CAG independently determines the audit's scope and develops its own codes and manuals. In contrast, audits of receipts and stores require prior approval from the executive government, limiting the CAG's discretion in those areas.
At its core, the CAG's mandate involves a legal and regulatory audit, verifying that funds disbursed were legally available, appropriately allocated to their intended services or purposes, and compliant with governing authorities. Beyond this obligatory function, the CAG may exercise discretion in conducting a propriety audit, examining the wisdom, fidelity, and economy of expenditures. This allows the CAG to highlight instances of wastefulness or extravagance, promoting fiscal prudence without overstepping into mandatory oversight.
One notable constraint is the handling of secret service expenditures. Here, the CAG cannot demand detailed particulars from executive agencies and must rely on a certificate from the competent administrative authority, confirming that the funds were expended under proper authorization.
Although the Constitution designates the CAG as both Comptroller and Auditor General—implying control over fund releases and post-expenditure audits—practice tells a different story. In reality, the CAG functions primarily as an Auditor General. The executive draws funds directly from the Consolidated Fund, often via departmental cheques without the CAG's prior approval. The CAG intervenes only at the audit stage, after transactions are complete. This marks a stark contrast with the British CAG, who wields dual powers: the executive in the UK can access public funds only with the CAG's explicit sanction, blending pre- and post-expenditure oversight seamlessly.
The Comptroller and Auditor General's Role in Auditing Corporations
The Comptroller and Auditor General (CAG) plays a circumscribed role in auditing public corporations, shaped by their statutory mandates. Broadly, this relationship divides into three distinct categories, reflecting varying degrees of CAG oversight.
In the first category, certain corporations fall under the CAG's complete and direct audit. Organizations such as the Damodar Valley Corporation, Oil and Natural Gas Commission, Air India, and Indian Airlines Corporation exemplify this group, where the CAG conducts the primary scrutiny without external involvement.
The second category involves corporations audited primarily by private professional auditors, appointed by the Central Government in consultation with the CAG. Here, the CAG retains the option to perform supplementary audits if needed, ensuring additional checks on financial propriety. Examples include the Central Warehousing Corporation and the Industrial Finance Corporation.
Finally, some corporations undergo exclusive private audits, with no CAG involvement whatsoever. These entities submit their annual reports and accounts directly to Parliament. Prominent instances are the Life Insurance Corporation of India, Reserve Bank of India, State Bank of India, and Food Corporation of India.
A similar limited framework applies to government companies. These are audited by private professionals appointed by the government on the CAG's advice, with the CAG empowered to conduct supplementary or test audits as required.
To address the growing complexity of auditing specialized enterprises—such as those in engineering, iron and steel, or chemicals—the CAG's office established an Audit Board in 1968. Formed on the recommendations of the Administrative Reforms Commission of India, this body integrates external specialists and experts. It comprises a Chairman and two members, all appointed by the CAG, to tackle the technical nuances of such audits effectively.
Appleby's Critique of the Comptroller and Auditor General
In his influential two reports on Indian administration, Paul H. Appleby delivered a scathing assessment of the Comptroller and Auditor General (CAG), questioning the very significance of the office. He went so far as to advocate relieving the CAG of audit responsibilities altogether—effectively calling for its abolition. Appleby's arguments painted Indian auditing as a relic of colonial governance that stifled effective administration.
At the heart of his critique was the view that the CAG's role was largely an outdated inheritance from British colonial rule, ill-suited to modern needs. More alarmingly, Appleby argued that the CAG fostered a "widespread and paralysing unwillingness to decide and to act," exerting a repressive and negative influence on bureaucratic decision-making. He contended that Parliament harbored an exaggerated faith in auditing's value for oversight, failing to refine the CAG's functions as envisioned by the Constitution.
Appleby further diminished the CAG's stature by asserting that its work was not truly vital. Auditors, he claimed, lacked deep insight into good administration and enjoyed prestige mainly among those equally uninformed about it. Auditing itself, in his eyes, was a pedestrian task—essential yet narrowly focused, far removed from the complexities of administration. A deputy secretary in any department, Appleby emphasized, possessed far greater knowledge of its challenges than the CAG and their entire staff combined. This perspective underscored his belief that the audit apparatus hindered rather than supported India's administrative evolution.