New Delhi (ABC Live): Working of CAG in India : The Comptroller and Auditor General of India (CAG) has been the constitutional guardian of public finance since 1950. Over the decades, the working of CAG in India has transformed—from a silent bookkeeper to an institution that exposed mega scams, and now to a tech-savvy auditor monitoring climate finance and digital governance.

Let’s explore how this evolution unfolded.

? From Rule-Checker to Watchdog: The Early Years

India’s first CAG, V. Narahari Rao, laid the foundation in 1950. For decades, the focus remained on financial and compliance audits, ensuring government departments stuck to approved budgets and procedures.

Reports during the 1950s–1970s rarely made headlines. They were technical and procedural—an extension of colonial accounting traditions.

? 1980s–1990s: A Shift Toward Performance Accountability

With leaders like T. N. Chaturvedi and C. G. Somiah, the CAG shifted its focus toward performance audits. These audits didn’t just ask “Was money spent correctly?” but “Was it spent effectively?”

Somiah, known for his integrity, pioneered ethical governance auditing and rejected post-retirement government positions, a gesture that cemented public trust in the CAG’s independence.

? The Game Changer: Vinod Rai (2008–2013)

Under Vinod Rai, the CAG’s office took centre stage in Indian politics.

Audits during his term exposed massive financial irregularities:

• The 2G Spectrum scam (?1.76 lakh crore)
• Coal Block Allocations (?1.86 lakh crore)
• Commonwealth Games scam

These reports led to Supreme Court action, parliamentary uproar, and ministerial resignations.

Rai’s use of “notional loss”—estimating what the exchequer lost due to poor policy—revolutionised audit communication. But it also sparked political backlash, with the UPA alleging he overstepped constitutional limits.

? The Quiet Period: 2014–2020

Following Rai, CAGs like Shashi Kant Sharma and Rajiv Mehrishi adopted a less confrontational tone.

Although the office audited major projects like the GST rollout and Rafale deal, critics pointed to omissions in pricing details and subdued findings.

Meanwhile, the number of reports declined. As reported by Drishti IAS, only 18 audit reports were tabled in 2023—the lowest since 1970.

? Today’s CAG: Digital, Climate, and Data-Driven

Under G. C. Murmu (2020–2024) and now K. Sanjay Murthy, the working of CAG in India is entering the digital era.

Current focus areas include:

• Environmental and climate audits (Namami Gange report)
• Audits of flagship digital schemes like PM-KISAN and Ayushman Bharat
• AI and data analytics tools for fraud detection and real-time monitoring

Still, concerns remain. Key programs like PM-CARES and electoral bonds have not been audited, citing technical exclusions, sparking calls for audit reform.

? How AI Can Perform Audits for the CAG of India

1. Automated Data Extraction and Cleansing

• NLP and OCR extract structured data from invoices, forms, and contracts.
• Helps reduce manual errors in compliance verification.

2. Anomaly Detection and Fraud Red Flags

• Machine learning flags irregular fund transfers or repeated beneficiaries.
• AI models learn from past scams to predict future risk areas.

3. Predictive Risk-Based Auditing

• Prioritise audits by predicting which schemes or departments pose the highest fiscal risk.

4. Real-Time Transaction Monitoring

• Connect AI systems to PFMS, GeM, and TReDS to flag irregular payments.

5. AI-Assisted Performance Audits

• Use public datasets to analyse the effectiveness of schemes.
• Link budget spends to measurable outcomes like school enrollments or health indicators.

6. NLG and Language Translation

• Generate instant audit drafts, summaries, and multilingual versions of audit findings.

7. Satellite & Geospatial Verification

• Verify land use, forestation, and infrastructure claims using satellite image analysis.

Tech Stack

• OCR + NLP + RPA for document audit
• AI/ML for fraud detection and prediction
• NLG for report writing
• GIS and remote sensing for environmental audits

Challenges

• Data fragmentation across ministries
• Statutory constraints on live system access
• Skill and infrastructure gaps

Recommendations

• Amend the CAG Act to allow AI-based real-time audits.
• Build in-house Digital Audit Labs.
• Partner with tech universities and AI think tanks.

? List of India’s CAGs Since 1950

List of CAGs of India (1950–Present)

? What Lies Ahead?

As governance becomes more digital, decentralised, and data-rich, the working of CAG in India must keep pace.

Key reforms needed include:

• Amending the CAG Act, 1971, to cover PPP projects and private contractors using public money
• Creating a transparent appointment process (like the collegium model used for Election Commissioners)
• Leveraging AI tools for real-time red-flagging of financial anomalies

From dusty ledgers to AI dashboards, the working of CAG in India has come a long way. But its independence, transparency, and timeliness remain vital to ensure India’s democracy doesn’t just run, but runs honestly.

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