17. Polity Notes 39

Elaborate Notes

Comptroller and Auditor General (CAG) of India

• Constitutional Mandate and Evolution: The office of the CAG is established by the Constitution of India under Article 148. The provisions related to its duties and powers are detailed from Articles 148 to 151. The institution’s lineage can be traced back to the British era, with the office of the Auditor General being established in 1858. The Government of India Act, 1919, provided the Auditor General with statutory recognition, and the Government of India Act, 1935, further strengthened its position by providing for a Provincial Auditor General. Post-independence, the framers of the Constitution, particularly Dr. B.R. Ambedkar, envisioned the CAG as one of the four bulwarks of the democratic system of India (the others being the Supreme Court, the Election Commission, and the UPSC). Dr. Ambedkar stated in the Constituent Assembly, “I am of the opinion that this dignitary or officer is probably the most important officer in the Constitution of India.”

• Functions and Scope of Audit:

  • The CAG audits all receipts and expenditures of the Government of India and each state and union territory having a Legislative Assembly.
  • It audits the accounts of bodies and authorities substantially financed from the Central or State revenues, including government companies and corporations (Central Public Sector Enterprises - PSEs).
  • At the request of the President or Governor, the CAG can also audit the accounts of local bodies (municipalities and panchayats), although this is not a constitutional mandate.
  • The CAG submits its audit report on the Union’s accounts to the President, who then lays it before both Houses of Parliament (Article 151). Similarly, the audit report on a state’s accounts is submitted to the Governor, who lays it before the state legislature.
  • These reports are then examined by the Public Accounts Committee (PAC) of the Parliament, where the CAG acts as a “friend, philosopher, and guide.”

• Independence of the CAG: The Constitution ensures the independence of the CAG to enable it to perform its functions without fear or favour.

  • Security of Tenure: The CAG is appointed by the President for a term of six years or up to the age of 65 years, whichever is earlier.
  • Removal: The CAG can only be removed from office in the same manner and on the same grounds (proved misbehaviour or incapacity) as a Judge of the Supreme Court. This requires a resolution passed by both Houses of Parliament with a special majority.
  • Post-Retirement Bar: After ceasing to hold office, the CAG is not eligible for any further office under the Government of India or any state government. This prevents any potential for conflict of interest or inducements.
  • Financial Independence: The salary and other service conditions are determined by Parliament and cannot be varied to his/her disadvantage after appointment. The administrative expenses of the office of the CAG, including salaries and pensions, are charged upon the Consolidated Fund of India, making them non-votable.

• Challenges and Suggested Reforms in the Functioning of CAG:

  • Post-mortem Nature of Audit:

    • Weakness: The CAG generally conducts an audit after the expenditure has already been incurred. This “post-mortem” character limits its ability to prevent financial irregularities in real-time. As scholar Paul H. Appleby criticized in his 1953 report, “the function of the CAG in India is in a large measure an inheritance from the colonial rule,” suggesting its approach was more about control than about improving governance.
    • Solution: Implementing concurrent auditing, where audits are conducted as transactions occur. While this could potentially slow down administrative processes, it would significantly enhance accountability and allow for the immediate flagging of irregularities and easier recovery of losses.

  • Advisory Role of Recommendations:

    • Weakness: The CAG’s audit reports and recommendations are not legally binding on the executive. Ministries can and often do ignore the findings. The example of recurring CAG reports on deficiencies in the Indian Railways’ signalling systems and track maintenance, which were not acted upon with urgency, highlights this gap, often with tragic consequences like train accidents.
    • Solution: A legal or procedural framework could be established that mandates ministries to submit an “Action Taken Report” on CAG recommendations within a specified timeframe. The Public Accounts Committee (PAC) plays a crucial role here, but strengthening the follow-up mechanism is essential for ensuring accountability.

  • Limited Scope of Audit (Legal and Regulatory):

    • Weakness: Traditionally, the CAG’s audit has been a legal and regulatory audit, verifying if expenditure was authorized (legality) and conformed to rules (regularity). It cannot effectively conduct a performance audit (evaluating economy, efficiency, and effectiveness) because India primarily uses a line-item budget. This type of budget details allocations for specific items (e.g., salaries, equipment) but does not link expenditure to outputs or outcomes. For instance, an ₹80,000 crore allocation for MGNREGA in the budget does not specify the quantum of assets to be created.
    • Solution: A systemic shift towards performance and outcome-based budgeting, as recommended by the Second Administrative Reforms Commission (2nd ARC), is necessary. This would enable the CAG to audit not just the legality of expenditure but also its effectiveness in achieving stated goals.

  • Exclusion of Public-Private Partnerships (PPPs):

    • Weakness: The CAG’s (Duties, Powers and Conditions of Service) Act, 1971 does not explicitly empower the CAG to conduct comprehensive audits of PPP projects where government equity is less than 51% or where there is no direct government funding but significant state concessions (e.g., land). Post-1991, with PPPs becoming a dominant model for infrastructure, this has created a significant accountability vacuum. CAG reports on projects like the Delhi International Airport Ltd (DIAL) and the KG Basin gas exploration have exposed crony capitalism and revenue loss to the exchequer.
    • Solution: Amending the CAG Act of 1971 to grant the CAG clear jurisdiction to audit all PPP projects, irrespective of the level of government funding or equity, is critical for ensuring transparency and value for public money.

  • Lack of Enforcement Powers:

    • Weakness: While the CAG has the power to summon officials and access documents, it lacks punitive powers. If officials fail to appear or provide necessary information, the CAG cannot take direct action against them, which significantly hampers the effectiveness and timeliness of the audit process.
    • Solution: Granting the CAG powers of contempt or the authority to impose penalties for non-compliance, similar to those vested in a civil court, could strengthen its hand in demanding accountability from the executive.

  • Audit of Welfare Schemes:

    • Weakness: The CAG Act, 1971, is often interpreted as limiting the scope of performance audits for developmental and welfare schemes. With government expenditure on such schemes growing exponentially (from ₹9,000 crore in the 1990 budget to over ₹15 lakh crore in recent budgets), a vast amount of public funds remains outside the ambit of effective performance scrutiny.
    • Solution: The CAG Act, 1971, must be explicitly amended to mandate the performance audit of all major welfare and development schemes to ensure that the intended benefits reach the beneficiaries efficiently and effectively.

  • Comptroller vs. Controller Distinction:

    • Weakness: The title “Comptroller and Auditor General” is a misnomer in the Indian context. Unlike the UK’s “Controller and Auditor General,” who must authorize any withdrawal of money from the public exchequer (the ‘controller’ function), India’s CAG has no control over the issue of money. Its role begins only after the money has been spent.
    • Solution: Empowering the CAG with a pre-audit or ‘comptroller’ function would be a fundamental shift. This would involve the CAG’s approval before funds are released from the Consolidated Fund of India. This could also involve providing expert financial advice to parliamentary committees like the Estimates Committee to curb unproductive expenditure before it is sanctioned.

  • Obstruction via Official Secrets Act (OSA):

    • Weakness: Government departments often deny access to crucial documents and information by citing the colonial-era Official Secrets Act, 1923. This lack of transparency severely impedes the CAG’s ability to conduct a thorough and effective audit.
    • Solution: The Second ARC in its report on “Right to Information” (2006) recommended that the OSA be repealed and replaced with a chapter in the National Security Act. A more transparent regime would significantly improve the functioning of oversight bodies like the CAG.

Attorney General of India

• Constitutional Position: Article 76 of the Constitution provides for the office of the Attorney General (AG) for India. The AG is the highest law officer in the country and a part of the Union Executive.
• Appointment and Qualification: The AG is appointed by the President. To be appointed as AG, a person must be qualified to be appointed as a Judge of the Supreme Court (i.e., a citizen of India and has been a judge of a High Court for five years or an advocate of a High Court for ten years or an eminent jurist in the opinion of the President).
• Functions and Powers:
  • Chief Legal Advisor: To provide legal advice to the Government of India upon such legal matters which are referred by the President.
  • Government’s Lawyer: To appear on behalf of the Government of India in all cases in the Supreme Court and in any High Court where the Government of India is a concerned party.
  • Presidential Reference: To represent the Government of India in any reference made by the President to the Supreme Court under Article 143 of the Constitution (Advisory Jurisdiction).
  • Right of Audience: The AG has the right of audience in all courts within the territory of India.
  • Parliamentary Privileges: Under Article 88, the AG has the right to speak and take part in the proceedings of both Houses of Parliament, any joint sitting, and any committee of Parliament of which he/she may be named a member, but without a right to vote.
• Term and Removal:
  • The Constitution does not fix the term of office for the AG. The AG holds office during the pleasure of the President.
  • There is no specific procedure for removal prescribed in the Constitution. The AG can be removed by the President at any time.
  • Conventionally, the AG resigns when the Council of Ministers (which advised the President on his/her appointment) resigns or is replaced.
• Controversies Reflecting the Office’s Nature:
  • ADM Jabalpur v. Shivkant Shukla (1976): During the Emergency, Attorney General Niren De argued before the Supreme Court that during a proclamation of Emergency, the right to life and personal liberty under Article 21 stood suspended. His argument that the state could arbitrarily detain or even take a person’s life without judicial recourse represents a low point for civil liberties in India. The case is remembered for the lone dissent of Justice H.R. Khanna.
  • Ram Jethmalani vs. Soli Sorabjee (1999): This incident highlighted the potential for conflict between a cabinet minister and the AG. Then Law Minister, Ram Jethmalani, publicly contradicted the stance taken by Attorney General Soli Sorabjee in the Supreme Court regarding the Srikrishna Commission Report on the Mumbai riots. This led to Jethmalani’s resignation, underscoring the AG’s critical role in representing the government’s unified legal position.
  • Mukul Rohatgi and the NJAC case (2015): During the hearings on the validity of the National Judicial Appointments Commission (NJAC) Act, Attorney General Mukul Rohatgi made sharp remarks against the judiciary. The Supreme Court expressed its displeasure, leading to a subsequent apology from the AG. This illustrates the delicate balance the AG must maintain between advocating for the government and upholding the dignity of the judiciary.

Central Administrative Tribunal (CAT)

• Rationale for Establishment:
  • Judicial Overload: The Indian judiciary has been grappling with a massive backlog of cases, with pendency running into crores. Service-related matters constituted a significant portion of this backlog in High Courts.
  • Politicisation of Civil Services: Since the late 1960s, a trend of increasing political interference in the administrative machinery became evident. Instruments like arbitrary transfers, postings, and suspensions were used to undermine the neutrality of the civil services.
  • Need for Specialized Adjudication: A specialized body with expertise in service laws and administrative procedures was deemed necessary for speedy and effective grievance redressal for public servants.
• Constitutional and Legal Basis:
  • CAT was established under the Administrative Tribunals Act, 1985.
  • The power for Parliament to create such tribunals flows from Article 323A, which was inserted into the Constitution by the 42nd Amendment Act, 1976, based on the recommendations of the Swaran Singh Committee.
• Jurisdiction and Features:
  • Its jurisdiction extends to all-India services, Central civil services, civil posts under the Centre, and civilian employees of defence services.
  • It adjudicates disputes and complaints with respect to recruitment and conditions of service of persons appointed to public services. This includes matters like promotions, transfers, seniority, dismissals, and pensions.
  • Procedural Simplicity: Tribunals are not bound by the strict rules of evidence and procedure laid down in the Code of Civil Procedure, 1908. They are guided by the principles of natural justice. This allows for faster and less formal adjudication. An aggrieved employee can appear in person before the tribunal without necessarily engaging a lawyer.
• Judicial Review and the Chandra Kumar Case:
  • Initially, the 1985 Act stipulated that appeals against the orders of the CAT could lie only before the Supreme Court through a Special Leave Petition (SLP), bypassing the High Courts.
  • However, in the landmark case of L. Chandra Kumar vs. Union of India (1997), a seven-judge bench of the Supreme Court held that the power of judicial review of the High Courts under Articles 226 and 227 is a part of the basic structure of the Constitution and cannot be taken away.
  • Consequently, an appeal against the order of the CAT now lies before the division bench of the concerned High Court.
• Performance and Composition:
  • CAT has 19 Principal Benches and 19 Circuit Benches across the country.
  • A bench of the CAT is composed of a Judicial Member and an Administrative Member, ensuring a blend of legal and administrative expertise.
  • As per data, CAT has shown a high disposal rate, clearing over 91% of the cases filed. This has been instrumental in reducing the burden on regular courts. The continued effectiveness of CAT, as compared to the abolition of many State Administrative Tribunals (SATs), is partly because higher courts exercise greater restraint in interfering with CAT’s orders due to its specialized nature and robust functioning.

National Commissions for SC/ST/BC

• Evolution of the Commissions:
  • The original Constitution, under Article 338, provided for the appointment of a Special Officer for Scheduled Castes (SCs) and Scheduled Tribes (STs) to investigate all matters relating to the safeguards provided for them and to report to the President.
  • The 65th Constitutional Amendment Act, 1990, replaced the one-man system with a multi-member National Commission for Scheduled Castes and Scheduled Tribes.
  • Recognizing that the issues faced by STs were often distinct from those of SCs, the 89th Constitutional Amendment Act, 2003, bifurcated the combined Commission into two separate bodies, which came into effect in 2004:
    1. National Commission for Scheduled Castes (NCSC) under Article 338.
    2. National Commission for Scheduled Tribes (NCST) under a new Article 338A.
  • Later, the 102nd Constitutional Amendment Act, 2018, conferred constitutional status on the National Commission for Backward Classes (NCBC) by inserting a new Article 338B.
• Composition:
  • Each commission (NCSC, NCST, NCBC) consists of a Chairperson, a Vice-Chairperson, and three other members.
  • They are appointed by the President by warrant under his hand and seal. Their conditions of service and tenure of office are also determined by the President (usually for a term of three years).

Prelims Pointers

• CAG of India:

  • Constitutional provisions: Article 148 (Appointment), Article 149 (Duties and Powers), Article 150 (Form of accounts), Article 151 (Audit Reports).
  • Appointed by the President.
  • Tenure: 6 years or 65 years of age, whichever is earlier.
  • Removal is same as a Supreme Court Judge.
  • Salary and expenses are charged upon the Consolidated Fund of India.
  • Not eligible for further government office after retirement.
  • Submits audit report of the Union to the President, and of the States to the Governor.
  • Acts as the guide, friend, and philosopher of the Public Accounts Committee (PAC).
  • The CAG’s (DPC) Act was enacted in 1971.
  • Famous criticism of CAG’s role was made by Paul H. Appleby.

• Attorney General of India:

  • Constitutional Provision: Article 76.
  • Highest law officer of the country.
  • Appointed by the President. Qualification must be same as a Judge of the Supreme Court.
  • Holds office during the pleasure of the President (no fixed tenure).
  • Has the right to speak and participate in Parliament proceedings but no right to vote (Article 88).
  • Has the right of audience in all courts in India.

• Central Administrative Tribunal (CAT):

  • Constitutional Provision: Article 323A (inserted by 42nd CAA, 1976).
  • Established under the Administrative Tribunals Act, 1985.
  • Guided by principles of natural justice, not the Code of Civil Procedure.
  • L. Chandra Kumar vs. Union of India (1997): SC ruled that appeals from CAT can be made to the High Court, as judicial review is a ‘basic structure’.

• National Commissions (NCSC/NCST/NCBC):

  • NCSC: Established under Article 338.
  • NCST: Established under Article 338A (added by 89th CAA, 2003).
  • NCBC: Given constitutional status under Article 338B (added by 102nd CAA, 2018).
  • Original Constitution provided for a Special Officer for SCs and STs.
  • 65th CAA, 1990: Created the multi-member National Commission for SCs and STs.
  • All three commissions consist of a Chairperson, a Vice-Chairperson, and three other members.
  • Members are appointed by the President.

Mains Insights

• Accountability vs. Administrative Efficiency Debate:

  • The demand for greater powers for the CAG (e.g., concurrent audit, pre-audit) brings to the forefront the classic governance debate.
  • Pro-Accountability View: Strengthening the CAG is essential to curb corruption and ensure value for public money, especially with rising government expenditure and complex financial models like PPPs. A powerful, proactive audit is a prerequisite for good governance.
  • Pro-Efficiency View (Appleby’s critique): An overly powerful audit body can lead to “audit-paralysis,” where civil servants become risk-averse and procedural, stifling innovation and delaying decision-making. The argument is that the CAG’s role should be to improve, not to inhibit, administration.
  • Way Forward: The solution lies in a balanced approach: empowering the CAG to conduct performance and systemic audits while ensuring the audit process itself is efficient and focused on material issues rather than procedural trivialities.

• Role of the Attorney General: Political Expediency vs. Constitutional Propriety:

  • Cause-Effect: The AG is appointed on the advice of the Council of Ministers and holds office at the President’s pleasure. This (cause) makes the office inherently political, leading to situations where the AG’s legal advice may align with the ruling party’s political objectives rather than objective constitutional interpretation (effect).
  • Debate: Should the AG be a neutral constitutional functionary or the government’s top lawyer? Cases like ADM Jabalpur show the dangers of the AG acting solely as the government’s mouthpiece. The office demands a fine balance between defending the government’s actions and upholding the rule of law and constitutional morality. A conflict between the two tests the integrity of the person holding the office.

• Tribunalisation of Justice: A Panacea or a Problem?

  • Rationale: Tribunals like CAT were created to reduce the burden on the judiciary and provide speedy, low-cost, and expert justice.
  • Challenges:
    1. Erosion of Judicial Independence: Tribunals are quasi-judicial bodies, and the executive has a significant role in the appointment and service conditions of their members, which can compromise their independence.
    2. Appeals to High Courts: The L. Chandra Kumar judgment, while upholding the basic structure, created an additional layer of litigation, defeating the initial purpose of bypassing the High Courts for speedy justice.
    3. Quality of Adjudication: Concerns are often raised about the quality of members and judgments, leading to a high rate of appeals.
  • Analysis: While tribunals are necessary for specialized domains, their success depends on ensuring their independence, appointing competent members, and streamlining the appellate process. CAT has been relatively more successful than SATs, but the broader “tribunalisation” trend requires critical examination to ensure it doesn’t become a system of “justice on the cheap.”

• Evolution of Constitutional Commissions: From Protection to Empowerment:

  • The journey from a single Special Officer to three distinct constitutional commissions (NCSC, NCST, NCBC) reflects a deepening of India’s commitment to social justice.
  • Significance: Granting constitutional status provides these commissions with greater independence, authority, and financial autonomy. They are vested with the powers of a civil court to investigate matters.
  • Effectiveness Debate: Despite their constitutional status, the effectiveness of these commissions is often questioned. Their recommendations are only advisory, and they often lack the resources and political will to enforce their findings. Their role often becomes reactive (post-facto investigation) rather than proactive (preventing atrocities and ensuring development). Strengthening their powers and ensuring timely action on their reports is a key challenge for inclusive governance.

Previous Year Questions

Prelims Questions

1. (UPSC CSE Prelims 2023) With reference to the Central Administrative Tribunal, which of the following statements is/are correct?

   1. The Central Administrative Tribunal has been set up under Article 323 A of the Constitution of India.
   2. The Members of the Central Administrative Tribunal are drawn from both judicial and administrative streams.
   3. The jurisdiction of the Central Administrative Tribunal extends to the members of the defence forces, officers and servants of the Supreme Court, and the secretarial staff of the Parliament. Select the correct answer using the code given below: (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 Answer: (a) 1 and 2 only (Explanation: Statement 3 is incorrect as the jurisdiction of CAT does not extend to members of defence forces, officers and servants of the Supreme Court, or the secretarial staff of Parliament.)

2. (UPSC CSE Prelims 2022) With reference to the Attorney General of India, which of the following statements is/are correct?

   1. He is the only officer of the Government who is allowed to address the Parliament.
   2. He is debarred from private legal practice.
   3. He has the right to speak in both the Houses of Parliament. Select the correct answer using the code given below: (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3 Answer: (b) 3 only (Explanation: Statement 1 is incorrect as Ministers also address Parliament. Statement 2 is incorrect as the AG is not debarred from private legal practice, provided the other party is not the Government of India.)

3. (UPSC CSE Prelims 2019) Consider the following statements about the Comptroller and Auditor General of India:

   1. He can be removed by the President on the same grounds and in the same manner as a judge of the Supreme Court.
   2. He is not eligible for further office, either under the Government of India or of any state, after he ceases to hold his office.
   3. The salaries and administrative expenses of the office of the CAG are charged upon the Consolidated Fund of India. Which of the statements given above is/are correct? (a) 1 only (b) 2 and 3 only (c) 1, 2 and 3 (d) 1 and 3 only Answer: (c) 1, 2 and 3

4. (UPSC CSE Prelims 2022) The Constitution of India provides for which of the following bodies?

   1. National Commission for Backward Classes
   2. National Human Rights Commission
   3. National Law Commission
   4. National Consumer Disputes Redressal Commission Select the correct answer using the code given below: (a) 1 only (b) 1 and 2 only (c) 3 and 4 only (d) 1, 2, 3 and 4 Answer: (a) 1 only (Explanation: Only NCBC is a constitutional body (Art 338B). NHRC and NCDRC are statutory bodies. The Law Commission is an executive body.)

5. (UPSC CSE Prelims 2020) In India, which of the following can be considered as public investment in agriculture?

   1. Fixing Minimum Support Price for agricultural produce of all crops
   2. Computerization of Primary Agricultural Credit Societies
   3. Social Capital development
   4. Free electricity supply to farmers
   5. Waiver of agricultural loans by the banking system
   6. Setting up of cold storage facilities by the governments Select the correct answer using the code given below: (a) 1, 2 and 5 only (b) 1, 3, 4 and 5 only (c) 2, 3 and 6 only (d) 1, 2, 3, 4, 5 and 6 Answer: (c) 2, 3 and 6 only (While not a direct question on CAG, the concept of public investment and expenditure is central to CAG’s audit function, especially in performance audits of schemes related to agriculture.)

Mains Questions

1. (UPSC CSE Mains 2022) “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.
2. (UPSC CSE Mains 2021) “Though the Human Rights Commissions have contributed immensely to the protection of human rights in India, yet they have failed to assert themselves against the mighty and powerful.” Analysing the structural and practical limitations, suggest remedial measures. (This question on NHRC is analogous to the challenges faced by NCSC/NCST/NCBC in terms of their advisory role and lack of enforcement powers.)
3. (UPSC CSE Mains 2019) The need for cooperation among various service sectors has been an inherent component of development discourse. Partnership bridges the gap among the sectors. It also sets in motion a culture of collaboration and team spirit. In the light of the statements above, examine India’s development process. (This question on PPPs is relevant to the debate on expanding CAG’s audit jurisdiction to cover PPP projects to ensure public accountability.)
4. (UPSC CSE Mains 2018) Why is the Comptroller and Auditor General (CAG) of India considered to be one of the most important constitutional functionaries? Discuss his role in ensuring financial accountability of the executive.
5. (UPSC CSE Mains 2020) The judiciary is the last resort for the oppressed and the marginalized. However, its effectiveness is hampered by issues of pendency and accessibility. Discuss the role of Alternative Dispute Redressal mechanisms, like Administrative Tribunals, in strengthening the justice delivery system.