UPSC Mains 2016 GS Paper 2 Q4: model answer

The CAG's reports on 2G spectrum (2010) and coal blocks (2012) put estimated losses of ₹1.76 lakh crore and ₹1.86 lakh crore before the nation. Ministers protested that the auditor had become a policy-maker.

Source of power

• Article 149 lets Parliament prescribe the CAG's duties; the CAG (Duties, Powers and Conditions of Service) Act, 1971 does so.
• Its Auditing Standards cover three types: financial, compliance and performance audit, which checks economy, efficiency and effectiveness.

Why performance audit is legitimate

• Spending is meaningful only if outcomes follow; Parliament needs to know.
• International practice (the UK's NAO, the US GAO) includes value-for-money audit.
• The Supreme Court in Arun Kumar Agrawal (2013) held that the CAG can examine economy, efficiency and effectiveness, while Parliament decides what to make of it.

The overreach argument

• Presumptive loss figures can be politically explosive and contestable.
• Commenting on the choice of policy itself, such as first-come-first-served, is the executive's domain.
• Audit by hindsight can make officers afraid to decide.

Balance

• Audit should test implementation against stated objectives, not substitute its own objectives.
• Clear methodology for loss estimates, and responses from ministries recorded in reports.
• The Public Accounts Committee remains the forum that judges.

Auditing implementation is within the CAG's mandate; auditing the wisdom of policy is not. Most controversy lies in how findings are worded, not in the audit itself.