CAG Reforms~I

CAG Reforms~II


No appointment to a Constitutional Office has evoked as much criticism, controversy, and anger as the appointment of the Comptroller and Auditor General of India (CAG). All the appointments of the CAG made by the Union Government during the last four decades (1978- 2022) were in total secrecy, in hurried manner and with complete surprise sending shock waves to the Audit fraternity. The importance of the CAG in the country’s political system can be judged by the fact that a whole Section (Part V, Section V, Articles 148, 149, 150 and 151 in 10 Clauses) of the Constitution of India is devoted to the institution of the CAG. During the debates in the Constituent Assembly, India being a Federation, the question of having a separate Auditor General for each State was considered but it was finally decided to have a single Auditor General for the Union as well as for the States making him an undisputed, independent ‘king’ of a vast empire. B R Ambedkar who piloted these Provisions of the Constitution in the Constituent Assembly commented that the CAG is perhaps the most important Officer of the Constitution. Being a Constitutional dignitary, he is administered the oath of office by the President of India. Over the years, the CAG has become an integral part of the Parliament’s most powerful Public Accounts Committee (PAC) as its principal guiding force.

Today, the CAG produces more than one hundred Audit Reports annually (including Performance audit, Value for Money audit and Audit Reviews) on the Civil departments, Defence, Railways, Receipts, Public Sector Undertakings and Autonomous Bodies and Institutions of the Union Government and separate reports for each State. Audit reports on the Union Government are submitted to the President of India who causes them to be laid on the tables of the Parliament and they are automatically transmitted to the Public Accounts Committee (PAC) for their consideration. Similar procedure is followed for each State; the respective Audit Reports are placed in the State Legislature through the Governor. Some of the Audit Reports question the credibility of government actions and programmes, and some of them have the potentiality of even toppling the government as it happened in the case of Bofors report and the 2-G Spectrum report.

The Constitution equates the CAG with a Judge of the Supreme Court and shall only be removed from office in like manner and on the like ground as a Judge of the Supreme Court. This ensures his complete independence from the Executive. The Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971, which confers wide powers further strengthens the CAG’s Organisation. But the Act suffers from one lacuna; it remains silent on the vital issue of the requirements of the post ~ qualifications for the incumbent and a transparent procedure for appointment to this technical post. A Judge or the Chief justice of the Supreme Court requires to be a legal luminary or a top leader in the legal profession. Similarly, it is axiomatic that the CAG who is equivalent to the Judge of the Supreme Court must be a professional and a leader having wide experience in public auditing and accounting, which only the Indian Audit and Accounts Service can provide. To install a non-professional generalist (and a person convenient to the government) to the august office of CAG goes against the very spirit of the Constitution; it is also a disregard for Ambedkar’s hopes and expectations. In a way, it can be construed as a subversion of the Constitution. India’s first Prime Minister, Jawaharlal Nehru who was a great upholder of the Constitution, never tried to deviate from the true spirit of the Constitution and oversaw issues of appointments to sensitive positions with great care. He was responsible for the selection of three CAGs during his tenure, who were all professionals and could never think of a generalist for the post. The first three CAGs of independent India ~ Narahari Rao (1948-1954), A K Chanda (1954-1960) and A K Roy (1960-1966), regarded as brilliant officers with impeccable records had been the instinctive choices of Nehru during his regime and they got anointed as CAGs by virtue of their own charisma. The last professional to be appointed as CAG (chosen by Indira Gandhi) had been Ardhendu Baksi (1972-1978), who took the CAG’s position to new heights by producing a number of outstanding Performance Audit Reports.

The subsequent CAGs were apparently elevated to the position mostly because of their closeness to the PMO or owing to incidental or circumstantial advantages rather than because of their intrinsic proven merit to hold the prestigious post. Surprisingly, this is the only Constitutional post which the Prime Minister could appoint at his own will without following any established procedure. The Finance Ministry which serves, for certain specific purposes, as the nodal ministry of the Indian Audit and Accounts Department (IAAD), does conduct an initial processing based on certain ad hoc criteria (the informal norms are not transparent) and prepares a panel of persons who could be considered for appointment as the next CAG. The finance minister sends the panel of three names in order of preference to the Prime Minister.

It is not known if the recommendations of the finance minister have ever been accepted; perhaps not. At least on a few occasions, the finance minister had recommended the senior-most Deputy CAG along with a couple of other officers who possessed wide ranging experience in public finance, but the panel simply ‘vanished’ when it reached the Prime Minister’s Office (PMO). By the time a panel reaches the PMO, the Prime Minister or his Principal Secretary would have already made up his mind about who should be appointed as the next CAG, a person enjoying his confidence and who would not upset the apple cart by producing disturbing audit reports. The Principal Secretary to the PM exercises considerable influence in the matter of selection of the CAG and does the basic groundwork appointing himself as the single-member Search Committee. Transparency has always been the casualty after Nehru-era. The PMO has always maintained that a procedure is in place and the selection is made by the Prime Minister after careful consideration of all the prospective candidates for the post. The question naturally arises: why shouldn’t the Government of India make the selection criteria public? More important is the question: why shouldn’t the Government appoint the CAG after vetting by a high-level committee, as is done for posts like the CVC, Information Commissioners etc., considering the CAG’s constitutional status? Why this secrecy?

Why did the Government repeatedly reject the demands made by many senior political leaders including L K Advani, M Karunanidhi and Gurudas Dasgupta for transparent selection through a committee with Leader of the Opposition and Chairman of PAC as members? In 2012, L K Advani, Deputy Prime Minister and former Leader of the Opposition suggested that CAG’s appointment should be made in a bipartisan manner through a Collegium composed of the PM, the Chief Justice of India, and the Leaders of the Opposition of Rajya Sabha and Lok Sabha. He wanted the Government to remove any impression of bias and lack of transparency and fairness because the present system was open to ‘manipulation and partisanship’.

Former Chief Election Commissioners B B Tandon, N Gopalaswamy and S Y Qureishi, in a petition filed in the Supreme Court, proposed a Collegium system. Former CAG V.K. Shunglu in his report on the CWG scam suggested that CAG should be a multimember body. V Narayansamy, former Minister of State in PMO said in an interview with PTI that the Shunglu report was under consideration of the Government. Jay Panda, a prominent MP from Odisha even brought a Constitution Amendment Bill in Parliament in 2015 on the system of appointment of the CAG. But nothing happened and the Government conveniently went into selective amnesia.

The first three CAGs were in the mould of the British ‘steel frame’ ~ persons with honesty, integrity, sincerity, discipline, character, and patriotism. They all had clean images and commanded highest respect from the officers and staff of the Audit Department as well as from the government and the legislature. They created an aura about the CAG’s office. The one institution the Central and the State governments were afraid of was the Audit organisation. They also established a healthy relationship with the Central and State Public Accounts Committees as a friend, philosopher, and guide. They had perfect equations with the Finance Secretary, the finance minister, and the Prime Minister. During the Nehru era, they had direct access to the Prime Minister. Both Nehru and President Rajendra Prasad were fully conscious of the Constitutional position and importance of the CAG and respected him accordingly. It is an irony that leaders like former President Pranab Mukherjee and former Prime Minister Manmohan Singh, while agreeing in private that the CAG should not be from outside the audit organization, did nothing in this regard when they came back to power.