A case to build a stronger gilded CAG

Dipping numbers of audits reports of GoI accounts revive the debate for a performance evaluation of the Comptroller and Auditor General. CAG has, over the years, faced questions over accountability, technical expertise and resource allocation. These questions regain currency with the apparent statistical evidence of selection bias. The scope of CAG’s oversight, however, is bound to change according to the nature of public spending, where states are now ahead of the Centre, and the gap will only open up with progressive devolution. Yet, there is merit in building institutional capacity that can cope with the necessity of a big government in an economy of the size of India.

The principal area of reform would be auditing digital expenditure. GoI is pushing digital transactions that are inherently more traceable than physical ones, and offer clearer policy solutions through data analytics. GoI is itself processing much more data now, which makes oversight easier. But its auditor needs to build strength in big data to keep pace with the structural transformation of government finance. A case in point would be cash transfers to beneficiary accounts. These can club several government welfare schemes and reduce the need for individual physical audits. But the need for forensic auditing does not go away.

Of course, long-standing issues linger over transparency in the appointment of CAG, conflicts of interest in the selection being skewed in favour of the administrative service, and the lack of technical expertise at the top. Successive governments have upheld the independence of this constitutional authority in manners of their choosing. It would be in their larger interest to invest in institutional strength the Constitution has envisioned for CAG.