Jul 13, 2025
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The Comptroller and Auditor General of India (CAG) is established under Article 148 of the Indian Constitution. It is the apex audit institution for India, responsible for auditing all receipts and expenditures of the Union and State governments. The CAG is often called the “guardian of the public purse,” ensuring transparency and accountability in managing public funds. Its jurisdiction covers the Consolidated Fund of India, the Contingency Fund, and the Public Accounts of India, as well as government companies and authorities substantially financed by the government. Through meticulous audits, the CAG ensures that money disbursed by the government was legally available and used for its intended purpose.
The office of the Comptroller and Auditor General (CAG) is constitutional and independent. Its reports (audit findings) are submitted to the President (for central government accounts) or Governors (for state accounts) and are laid before Parliament or state legislatures. These reports form the basis for legislative scrutiny: the Public Accounts Committee examines them and holds the executive accountable for financial irregularities. In this way, the CAG supports the system of checks and balances by acting on behalf of Parliament to audit government spending.
K Sanjay Murthy has been appointed as the new Comptroller and Auditor General (CAG) of India, succeeding Girish Chandra Murmu.
The Indian Constitution provides strong safeguards to ensure the CAG’s autonomy. Key provisions include:
Provision | Details |
Article 148 | Article 148 establishes the CAG’s office. CAG is appointed by the President by warrant under his hand and seal. The term is six years or until age 65, whichever is earlier. The CAG takes an oath to uphold the Constitution. Like a Supreme Court judge, the CAG cannot hold any other office under the Centre or State after retirement. |
Article 149 | Parliament may prescribe the CAG’s duties and powers by law. The CAG (Duties, Powers and Conditions of Service) Act, 1971 further outlines these roles (amended in 1976, 1984, 1987). |
Article 150 | The President (with CAG’s advice) prescribes the form of accounts for Union and States. |
Article 151 | CAG must report on Union accounts to the President (for Parliament) and on State accounts to Governors (for State Legislatures). |
Article 279 | CAG certifies the net proceeds of any tax or duty (i.e., tax revenue minus cost of collection); this certificate is final. |
CAG Act, 1971 | Provides for removal and terms: The CAG can be removed only as a Supreme Court judge (special parliamentary majority). Neither salary nor conditions of service can be varied to the CAG’s disadvantage after appointment. |
These provisions ensure independence: the CAG holding office “during pleasure of the President” is explicitly not the case – removal is difficult, mirroring that of Supreme Court judges. The CAG’s salary is charged to the Consolidated Fund of India, making it immune from executive control. All of the CAG’s administrative expenses (salaries, allowances, pensions) are charged to the public exchequer and not subject to parliamentary votes. This constitutional status was designed to make the CAG a pillar of democratic accountability.
Table of content
The Constitution (Article 149) authorizes the Parliament to prescribe the duties and powers of the CAG in relation to the accounts of the Union and of the states and of any other authority or body. Accordingly, the Parliament enacted the CAG’s (Duties, Powers, and Conditions of Service) Act, 1971. By law, the CAG audits:
All expenditure from the Consolidated Fund of India, Consolidated Funds of States, and the consolidated fund of each union territory having a Legislative Assembly.
Contingency Funds and Public Accounts of the Union and States.
Subsidiary accounts of any central or state government department.
Corporations and authorities substantially financed by government revenue (government companies, PSUs, etc.), and any other authority when required by law.
Audits the accounts of any other authority when requested by the President or Governor. For example, the Audit of local bodies.
All transactions relating to debt, sinking funds, deposits, advances, and suspense accounts of governments.
Submits his audit reports relating to the accounts of the Centre to the President, who shall, in turn, place them before both Houses of Parliament.
In performing these duties, the CAG is endowed with key privileges:
Inspection: The CAG (or authorized staff) can inspect any office or records subject to audit. It can examine all transactions and question the persons responsible.
Access to information: The CAG has unrestricted access to financial books, documents, and records. It can call for any information from any person or organization necessary for an audit. This statutory right, dating from the Government of India Act 1935, ensures the CAG’s work is not impeded by bureaucracy.
Selection of audit scope: The CAG decides the extent and manner of audit. Its choices may be guided by risk, significance, media coverage, and judicial or executive direction.
The CAG’s responsibility is not only to detect lapses but also to promote efficient financial administration. Its audits (financial, compliance, performance) check whether public funds were lawfully available and properly applied to their purpose. The CAG reports detailed findings (audit “paras” and irregularities) that help Parliament scrutinize government spending.
These powers and duties are laid down by the Constitution (Articles 149–151) and by the CAG (DPC) Act, 1971. Together, they make the CAG a supreme audit authority, mandated to secure an effective check on public finance and to report shortcomings.
Each year the CAG prepares and submits three key audit reports to the President of India, which Parliament then considers:
Audit Report on Appropriation Accounts: This compares actual expenditure to the grants sanctioned by Parliament. It shows if funds granted for specific services or schemes were spent for those purposes. Any unspent amounts or overspending are highlighted.
Audit Report on Finance Accounts: This report presents the government’s annual receipts and expenditures. It consolidates all budgetary transactions of the year.
Audit Report on Public Undertakings: This covers the finances of government companies and public sector undertakings under the Comptroller and Auditor-General’s audit.
The President lays these reports before both Houses of Parliament. The Public Accounts Committee (PAC) then examines them closely. PAC, a Parliamentary committee, uses CAG reports to hold the executive accountable. It may call officials for explanations and recommend remedial action. The CAG assists the PAC by explaining technical audit points and compiling urgent issues for attention. In effect, the CAG acts as the PAC’s “guide, friend and philosopher”, ensuring that corrective steps are taken when the government is at fault.
Major cases uncovered: CAG audits have famously exposed large-scale irregularities. Notable examples include:
2G Spectrum Scam (2008–09): CAG revealed that licenses were allotted at vastly underpriced rates, causing a presumptive loss of ~₹1.76 lakh crore.
Coal Allocation Scam (Coalgate, 2004–09): CAG estimated wrongful gains of about ₹1.85 lakh crore due to non-transparent allocation of coal blocks.
Fodder Scam: CAG findings exposed ₹940 crore of fraudulent withdrawals in Bihar’s animal husbandry department in the 1990s.
These reports led to intense public debate, judicial inquiries, and policy reforms. They illustrate how CAG audits serve as a crucial check against corruption and financial misuse.
Ensures Executive Accountability
Acts as Parliament’s agent, conducting audits to confirm public funds align with legislation and policy.
Provides independent reports that assure citizens and lawmakers about lawful and efficient public expenditures.
Promotes Financial Discipline
Highlights waste and discrepancies, prompting corrective measures by the government.
Influences policy reforms, such as improved transparency in telecom and spectrum licensing following the CAG’s 2G report.
Upholds Institutional Integrity
Constitutionally guaranteed independence (secure tenure, protected service conditions) allows fearless auditing without political bias
Legal authority ensures findings carry weight, backed by law and transparency.
Expands Audit Coverage
Increased audit output: from 73 reports in 2018–19 to 172 reports in 2022–23, reflecting sharper scrutiny.
Covers a wide audit spectrum: financial, compliance, performance audits, and thematic reviews (e.g., PDS, Ayushman Bharat, Bharatmala).
Supports Legislative Mechanisms
Acts as the “friend, philosopher, and guide” to the Public Accounts Committee (PAC), assisting in clause-by-clause review and drawing attention to critical audit findings.
Enables informed parliamentary oversight and corrective action.
Drives Systemic Governance Reforms
Triggered major investigations and judicial decisions (e.g., 2G spectrum, Coalgate, Commonwealth Games).
Prompted administrative reforms and technical enhancements, such as reforms in telecom license auctions.
Advocates Institutional Development
Recommends legislative updates (e.g., to include PPPs, private partners within audit scope) and formation of a collegium-based appointment process.
Emphasizes capacity building (digital audits, domain experts, climate/governance themes) and feedback loops from audited entities.
Identifies Challenges & Drives Reforms
Flags challenges such as:
Delays in tabling reports.
Post facto nature of audits.
Resource constraints and technical limitations.
Suggests improvements: real-time audits, digital tools, and robust follow-up systems
The CAG performs various audit types to ensure comprehensive oversight:
Compliance (Legal/Regulatory) Audit: Verifies that funds disbursed from the budget were legally available and spent for the authorized purpose. This is mandatory and checks adherence to rules and the authority governing expenditure.
Propriety (Value-for-Money) Audit: Examines the wisdom, economy and efficiency of government expenditure. The CAG assesses whether spending was prudent and free of extravagance; this audit is discretionary and focuses on qualitative aspects of spending.
Performance (Efficiency) Audit: Evaluates the outcomes and efficiency of government schemes and programs. It measures whether objectives were met with optimal use of resources. (Such audits have highlighted, for example, the delays and cost overruns in various infrastructure projects.)
In addition, the CAG conducts financial audits to certify government accounts, and environmental or social audits in recent years. Collectively, these audit types cover every dimension of public expenditure and ensure a 360-degree review of government financial activity.
The Comptroller and Auditor General of India (Article 148) plays a vital role in legislative oversight through close coordination with the Public Accounts Committee (PAC)-Parliament’s principal audit review body. This relationship is crucial for ensuring financial accountability in governance, especially for UPSC aspirants studying the function of CAG.
The CAG submits three key audit reports-Appropriation Accounts, Finance Accounts, and Public Undertakings-to the President, who then places them before Parliament.
The PAC examines these reports in detail and relies on the CAG’s expertise to interpret technical findings and clarify fiscal irregularities.
The CAG assists as a guide, friend, and philosopher of the PAC, ensuring effective scrutiny of government spending.
It identifies urgent financial concerns needing PAC attention and flags instances where departments fail to implement audit recommendations.
The CAG also acts as a bridge between bureaucracy and Parliament, translating complex administrative data into actionable insights for lawmakers.
This structured collaboration ensures that the Comptroller and Auditor General of India upholds transparency, supports fiscal federalism, and strengthens democratic accountability in public finance.
Amend the CAG (DPC) Act, 1971
Update provisions to include Public–Private Partnerships (PPPs), Panchayati Raj Institutions, municipal bodies, and state-funded societies under the CAG’s jurisdiction.
Transparent, Collegium-Based Appointment
Shift from a purely executive appointment to a collegium model involving the President, PM, CJI, and Leader of Opposition to ensure impartiality and transparency.
Empower with Enforcement Mechanisms
Grant the CAG punitive powers or disallowance authority, enabling it to enforce audit findings and compel departmental compliance.
Mandate Timely Access to Records
Require government departments to provide audit information within a fixed timeframe (e.g., seven days), with penalties for non‑compliance.
Time-Bound Tabling of Reports
Introduce statutory deadlines for laying CAG audit reports before Parliament and State Legislatures to prevent indefinite delays.
Increase Staff Capacity & Technical Expertise
Build capabilities in forensic audit, environmental accounting, digital governance, climate finance, and emerging technologies.
Proactive Use of Technology
Leverage AI, Big Data analytics, and blockchain for real-time or near-real-time audits, risk-based monitoring, and faster insights.
Expand External Collaboration
Continue engaging external experts (e.g., chartered accountant firms) and establish dedicated audit wings for state PSUs and urban municipal audits.
Empower the PAC and Oversight Bodies
Strengthen the Public Accounts Committee (PAC) by operationalizing Clause-by-clause examination, enforcing Action-Taken Notes (ATNs), and ensuring timely follow-up and compliance.
Introduce Pre-Audit for High-Value Projects
Enable pre-audit for defence, infrastructure, and other major contracts to prevent misuse before final decisions are taken.
Create Multi-Member or State CAG Offices
Explore a multi-member CAG structure (similar to Election Commission) to diversify decision-making and possibly empower state auditors to High Court status.
Independent Audit of the CAG Itself
Introduce external audits of the CAG’s office (following UK model) to enhance internal accountability and public confidence.
There are various challenges that inhibit the effective functioning of the CAG. Some of these include.
Executive Influence in Appointment
Selection is dominated by the executive (Cabinet Secretary → Finance Minister → PM → President), which can create conflicts of interest and dilute autonomy.
No formal criteria or collegium model by bipartisan consensus leads to potential politicization.
Limited Jurisdiction and Scope
Does not cover PPPs, NGOs, PRIs, ULBs, and expenditures by state-funded societies-leaving significant public funds outside audit scrutiny.
Cannot audit secret service expenditure, relying on administrative certificates—hindering financial transparency.
Post‑Facto Audits Only
Audits are retrospective, limiting preventive impact.
Procedural delays and unfocused observations diminish relevance and problem resolution.
Resource & Capacity Constraints
Staffing shortages: decline in IA&AS officers and audit accountants (e.g., 26,000 to 20,320 staff between 2013–14 and 2021–22).
Inadequate technical expertise and funding restrict audit quality—especially in digital, environment, and performance audits.
Enforcement Power Deficit
The CAG can only recommend, not enforce, and lacks disallowance or punitive authority. Compliance relies on PAC and executive goodwill.
Delayed Reporting & Parliamentary Follow‑Up
No statutory deadline for placing audit reports in legislatures; delays mean less relevance during budget debates.
Parliamentary time is shrinking; fewer days reduce scope for thorough debate and PAC review
Political Pushback & Undermining Credibility
Findings in high-profile cases sometimes met with accusations of political bias (e.g., 2G, coal), leading to credibility issues.
The invitation to private CA firms for audits was criticized as diluting constitutional independence.
Limited Public Awareness & Engagement
Many citizens remain unaware of CAG’s role and findings, reducing external pressure on the government to act.
Comptroller vs. Auditor Role: The CAG of India functions solely as an Auditor General and does not exercise comptroller functions. In contrast, the British CAG holds both roles-that of the Comptroller and the Auditor General.
Timing of Audit: In India, the CAG audits government accounts after the expenditure is incurred (ex post facto). However, in the UK, the CAG must approve the withdrawal of funds in advance-no money can be drawn from the public exchequer without the CAG’s prior sanction.
Parliamentary Status: The Indian CAG is not a member of Parliament, whereas the British CAG is a member of the House of Commons.
Q. Who appoints and removes the CAG of India?
A. The President appoints the CAG under Article 148 of the Indian Constitution. Removal is only possible through a parliamentary resolution (majority of total members and two-thirds of members present and voting), on grounds of proven misbehavior or incapacity-same procedure as removal of a Supreme Court judge.
Q. Who is the Comptroller and Auditor General of India currently?
A. K Sanjay Murthy has been appointed as the new Comptroller and Auditor General (CAG) of India, succeeding Girish Chandra Murmu.
Q. How is the independence of the CAG ensured?
A. Several constitutional and statutory safeguards include:
Appointment and removal process under Articles 148–151
Salary and service conditions charged to the Consolidated Fund of India (non-votable)
Tenure protection (no office under government post-term)
These measures insulate the CAG from executive pressure
Q. What are the types of audits conducted by the CAG?
A. The CAG conducts:
Financial audits – examine legal and procedural compliance in govt spending
Compliance audits – ensure expenditure conforms to laws and rules
Propriety (value-for-money) audits – assess economy, efficiency, effectiveness
Performance audits – evaluate program outcomes and objectives.
Q. Who examines the CAG’s audit reports?
A. The Public Accounts Committee (PAC) of Parliament reviews all CAG reports. The CAG assists by clarifying technical issues and recommending action .
Q. How does the CAG’s constitutional status empower the office?
A. Established under Articles 148–151:
Article 148: Establishment, appointment, oath, tenure
Article 149: Parliament-prescribed duties and powers
Article 150: Form of accounts
Q. Can the CAG’s audit mandate be extended to PSUs and other bodies?
A. Yes. Under Article 149 and the CAG Act (1971), the CAG audits government companies, authorities, and other entities substantially financed by the government. The CAG can also audit any entity upon request from the President/Governor .
Q. Can the CAG hold any other government position after retirement?
A. No. After tenure, the CAG is ineligible for any other office under the Government of India or any State Government.
Q1: “The Comptroller and Auditor General (CAG) has a very vital role to play.” Explain how this is reflected in the method and terms of his appointment as well as the range of powers he can exercise. (2018)
Q2: Exercise of CAG’s powers in relation to the accounts of the Union and the States is derived from Article 149 of the Indian Constitution. Discuss whether audit of the Government’s policy implementation could amount to overstepping its own (CAG) jurisdiction.(2016)
The Comptroller and Auditor General of India is a cornerstone of financial accountability in India’s democracy. As the supreme audit institution, it ensures that public money is spent in accordance with law and financial propriety. Through its constitutional powers and rigorous audits, the CAG has exposed major scams and inefficiencies, triggering reforms in governance. Its independence – guaranteed by the Constitution and CAG Act – enables it to audit without fear or favor.Nevertheless, timely tabling of reports and extending audit to new domains remain challenges. Experts suggest reforms like amending the CAG Act and enhancing the Audit Advisory Board to keep pace with complex governance.In sum, by auditing government accounts and highlighting irregularities, the CAG strengthens Parliament’s oversight of the executive and upholds the interests of citizens. Its work ensures that India’s finances are managed transparently and accounted for properly – a vital service for any thriving democracy
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External Linking Suggestions
UPSC Official Website – Syllabus & Notification: https://upsc.gov.in/
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NCERT Official Website – Standard Books for UPSC: https://ncert.nic.in
Official list of the CAGs of India : https://cag.gov.in/en/former-cag
