COGITO ERGO SUM

MAGNA CARTA
MAINS 2023
PAPER II CRASH COURSE

POLITY & GOVERNANCE : LEC 8A

GOOD GOVERNANCE
THEMATIC + SECTORAL BODIES

ATISH MATHUR OFFICIAL

 OFFICIAL SYLLABUS GOVERNANCE LECTURE PLAN

Constitutional Bodies Appointment to various COMMON SYLLABUS

Constitutional posts, Powers, Functions and
responsibilities of various Constitutional Bodies
Probity in Governance: Concept of public Lecture 6 : Development Policy
Statutory, regulatory and various quasi-judicial
service; Philosophical basis of governance
bodies,
and probity; Information sharing and
Salient features of the Representation of People’s
transparency in government, Right to Lecture 7 : Non State Actors
Act. (Integrated with ECI + Elections sub-theme)
Information, Codes of Ethics, Codes of
Important aspects of governance, transparency and
Conduct, Citizen’s Charters, Work culture,
accountability, e-governance- applications, models,
Quality of service delivery, Utilisation of
successes, limitations, and potential; citizens Lecture 8 : Good Governance &
public funds, Challenges of corruption
charters, transparency & accountability and Thematic Bodies
institutional and other measures.
Role of civil services in a democracy.
BODIES PYQs : 2013-2022
BODIES PYQs : 2013-2022
ELECTIONS & ROPA PYQs : 2013-2022
Good Governance PYQs : 2013-2022
 Rights & Vulnerable Sections

NHRC Anti Corruption

Transparency & Accountability

NCW
CAG CBI, NIA, CID

NCPCR
CVC Lokpal & Lokayuktas
NCST, NCST, NCBC

CIC, SIC (RTI) Enforcement Directorate

Linguistic & Religious Minorities

Bodies
Federalism & Finance Democracy & Elections

Constitutional Bodies

GST Council Delimitation Commission

Statutory Bodies

Niti Aayog Election Commission

Regulatory Bodies

Quasi Judicial Bodies

Statutory Bodies
 India : The Regulatory State

1. Context : With the economic liberalisation of the 1990s, the state has
gradually retreated from its functions making space for private
enterprise to deliver public services. As a result of this shift there
have also emerged bodies which are to provide a non partisan check
on the growth of such private players in the arena which was earlier
dominated by the public sector.
2. Meaning : “controlling human or societal behaviour by rules or
regulations or alternatively a rule or order issued by an executive
authority or regulatory agency of a government and having the force
of law” - OECD
3. Rationale for regulation
a. Neoliberalism
b. Issue of trust
c. Market failure:
d. To check anti competitive practices
e. To promote the public interest Regulation
4. Problems
a. Independence
b. Accountability
c. Transparency
d. Absence of a uniform regulatory framework
e. Regulation and Social Objectives
f. Appellate Tribunals
g. Functions of the Regulator
h. Multi-Sectoral regulators
India : The Regulatory State
 India : The Regulatory State

Solutions

Problems

1. The challenge is to strike a balance

between the advantages of governance
through the regulator and the apparent
threat to democratic accountability.
This can be achieved, to some extent,
through parliamentary oversight of
regulators.
a. question hour
b. discussions in Parliament
c. parliamentary committees.
2. The Planning Commission in 2008 and
the Second Administrative Reforms
Commission (ARC) in 2009 have made
recommendations on strengthening
parliamentary oversight of regulators.
Both of them recommended that
regulators should be present before the
standing committees to explain their
actions and be subjected to legislative
questions. They have also suggested
that regulators submit annual reports
periodically which should include the
progress made on achieving their
objectives.
3. Direct accountability of regulatory
bodies to Parliament was
recommended by the Damodaran
Committee in 2013
 CAG

1. Context : CAG released more reports in 2023 than other year in the previous decade; CAG may use AI to conduct Audits
a. The CAG office has revealed many financial misdeeds, ranging from the bungling of the purchase of army jeeps, associated with V K Krishna Menon in the 1950s, and the Bofors gun
scandal in the 1980s, 2G telecom spectrum, Coalgate, and the Commonwealth Games scams.
2. Background :
a. Dates back to the British era :
i. 1753 when the Indian Audit and Accounts Department was created, the office of the Auditor-General made appearance in the year 1857.
ii. GOI Act, 1919 made the Auditor-General independent of the Government of India, GOI Act, 1935 further strengthened the office of the Auditor-General
iii. The Constitution of India continued this legacy and with its enactment in the year 1950, constitutional status was accorded to this office. The designation of the Auditor-General
was changed to the Comptroller and Auditor General of India
3. Appointment
a. The office of the Comptroller and Auditor General of India (CAGI) is the supreme audit institution of the country
b. Article 148 (1) states that there shall be a Comptroller and Auditor General of India who shall be appointed by the President by warrant under his hand and seal.
c. Neither the salary of a Comptroller and Auditor General nor his rights in respect of leave of absence, pension or age of retirement shall be varied to his disadvantage after his
appointment (Article 148(3))
d. Comptroller and Auditor General shall not be eligible for further office either under the Government of India or under the Government of any State after he has ceased to hold his
office (Article 148(4))
e. The conditions of service of the CAGI have been determined by the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971.
i. There shall be paid to the CAG a salary which is equal to the salary of the Judge of the Supreme Court.
ii. 6 years or 65 years of age; resignation to the President
iii. Can be reappointed, but cannot hold any other office post retirement
f. Unfortunately, most of the recent CAG appointees, with some exceptions, do not inspire confidence. They also lack the requisite professional knowledge to hold this office. They are
invariably from the Indian Administrative Service (IAS) and have held the post of secretary to the government and been given a post-retirement reward for “services rendered” while
working for the government.
i. Common Cause (a leading public advocacy organisation) and some other public-spirited persons and organisations have approached the Supreme Court several times by way of
public interest litigations (PILs); unfortunately, their attempts at affecting change have been unsuccessful.
ii. In the United Kingdom (UK), whose parliamentary traditions we follow, the 100-year-old Exchequer and Audit Departments Act (1866) was amended in 1983 to provide that the
CAG will be appointed only after an address is presented in the House of Commons by the Prime Minister, acting in agreement with the chairperson of the Public Accounts
Committee (PAC)
1. In Britain, under the amended law, the CAG is also considered a member of the House of Commons, which enhances his status. Similar provisions exist in other advanced
Commonwealth countries that have modified their auditor general acts in line with British practice
2. The president appoints the comptroller general on the advice and consent of the Senate. The president acts on recommendations made by a commission consisting of the
speaker of the House of Representatives, the president of the Senate, majority and minority leaders of the House of Representatives and the Senate, and certain other
nominated members of the House of Representative and Senate
3. It has been suggested that a Selection Committee be constituted through suitable legislation, consisting of the Prime Minister, the speaker of the Lok Sabha, the leader of the
Opposition of the Lok Sabha, the finance minister, and the chairperson of the PAC.
 CAG

1. Functions
a. The office of the CAG comprises the CAGI; Deputy CAGs in the areas of administration and staff, commercial, defence, communication and railways, central revenue audit, report
central and local bodies, government accounts; and Additional Deputy CAGs in the areas of inspection, professional practices group, northern region, southern region, western
region, central region and north eastern region.
b. There is an Audit Advisory Board which functions under the Chairmanship of the CAGI and comprises internal as well as external members. The board provides suggestions on
matters relating to audit
c. In the states, there are Accountant Generals who have the mandate to perform accounting and auditing functions.
d. There are broadly two types of duties
i. Compilation and keeping of accounts in selected states
1. With the implementation of the Scheme of Departmentalisation of Accounts from April 1976, the CAG has been relieved from the responsibility of compiling the accounts of
the union government.
ii. Audit of public entities of Union and State Governments
1. All receipts into and spending from the coffers (called the Consolidated Fund) of the Union and State Governments.
2. All transactions relating to the Emergency expenses (called Contingency Funds) and relating to the monies of the public held by the Government e.g. Postal savings, Vikas
Patras (called Public Accounts) at Central as well as State levels. All trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept in any
Government department.
3. All stores and stock accounts of all Government offices and departments.
4. Accounts of all Government companies and Corporations e.g. ONGC, SAIL etc
5. Accounts of all autonomous bodies and authorities receiving Government money e.g. municipal bodies, IIM's, IIT's, State Health societies
6. Accounts of any body or authority on request of the President/Governor or on his own initiative.
7. In the recent Regulation on Audit and Accounts issued by the CAG in 2007, NGOs have been included in the expression ‘body’ and ‘authority’ used in the sections of the DPC.
iii. Compliance Audit : transaction audit in which some selected transactions (for e.g. a purchase by a Medical Officer, a contract executed by a Public Works Division for building a
road or a tax assessment order by an Assessment Officer) of an entity for a particular financial year are chosen for examination.
iv. Financial Attest Audit : CAG certifies how far the accounts are “true and fair” i.e. whether the financial statements (accounts) are properly prepared, complete in all respects and
are presented with adequate disclosures
v. Performance Audit :
1. No ‘specific and separate’ provision exists in the CAG’s DPC Act for conducting performance audit.
2. Interestingly, the CAG’s DPC Act defines ‘accounts’, but does not define the word ‘audit’. The term ‘audit’ has been defined for the first time in the Audit Regulations issued in
2007, which clarifies that ‘audit’ includes performance audit or any other type of audit determined by the CAG. Thus, the authority of CAG of India to conduct performance
audit emanates from an administrative order and the Audit Regulations and not clearly from the Audit Act passed by the Parliament.
3. It seeks to establish at what cost and to what degree the policies, programmes and projects are working. Performance Audit, apart from asking whether things are being done
in the right way, goes a step further and analyses whether the right things are being done
 CAG

1. Critical Analysis
a. The Constitution (Article 151) prescribes that the reports of CAG relating to accounts of the Union/states shall be submitted to the President/Governor, and is then to be laid before
each House of Parliament/state legislature
i. Quite often, despite the reports being sent to the President/Governor/Central Government well in time before commencement of the Parliament/Assembly session, the reports
are not placed in Parliament/ state legislature immediately. Government takes considerable time in getting necessary approvals for tabling of Audit reports.
ii. In many cases, Government places the reports towards the end of the Parliament/Assembly sessions or on the last day of the session thus denying adequate opportunity to the
legislature to take cognisance of the CAG’s reports and raise relevant issues in the Parliament/Assembly.
iii. Once tabled in the House, the Reports stand permanently referred to the Central and State Standing Committees on Public Accounts (PAC)/ Committees on Public Undertakings
(COPU).
b. Every year, the CAG presents about 20–25 reports for the central government and 75–80 reports for the state governments (three for every state). Each report is 200–250 pages
long; all together, the CAG presents 25,000–30,000 pages of audit reports to Parliament and state legislatures. The CAG is expected to go through all this material personally, as he
must sign every report presented to Parliament and state legislature.
i. It is simply impossible for any individual to go through and do justice to such a large volume of material that is highly technical; it ranges from lapses in defence deals and tax
evasion to poor development scheme outcomes. He has to, therefore, necessarily depend on his deputies; this situation is unsatisfactory.
ii. As the CAG is technically solely responsible for the material in audit reports, he is sometimes accused of partisanship; this situation must be remedied.
iii. Continental countries such as France, Germany, Italy, Belgium, and Austria have audit courts vested with the power to order the recovery of money illegally spent from public
officials. In France, the Cour des Comptes (Court of Audit) always acts as a collegiate body. In Japan, there is an audit commission consisting of three commissioners. All major
decisions pertaining to audits are made by the audit commission, including finalising the audit report.
iv. There is a strong case at the apex level to convert the CAG into a multi-member body in India. Each member may be assigned a specific sphere of responsibility, such as auditing
civil departments, defence services, revenue, and commercial enterprises. The commission may have a minimum of five members (presided over by the CAG) who may enjoy the
same status and condition of service as the CAG, with the CAG acting as primus inter pares. The only time the office of the CAG was reviewed after independence was in 2002, by
the National Commission to Review the Working of the Constitution (NCRWC), headed by Justice Venkatachaliah.. It may be mentioned that the Election Commission was
restructured in 1993, changing from a single-member body to a commission with three members. This has greatly enhanced its efficiency and credibility. In order to enhance the
effectiveness and credibility of the reports of an institution such as the CAG, there is an imperative need for it to be constituted as a multi-member audit commission or audit
board.
c. There is a need to transform the organisation from a babu-oriented culture, to a lean, thin, officer-oriented, professional outfit. Auditors should introduce modern techniques of
auditing and statistical sampling methods. The work of the CAG can be made more professional, if it recruits computer specialists, engineers, scientists, and economists in its senior
cadre, and if it hires domain experts and specialists for short-term consultancy assignments, to perform audit tasks—this is a practice popular in developed countries.
d. In India, the CAGs Act, 1971, does not even mention that the accountant general in states will function on behalf of the CAG. In the absence of a defined legal status, an accountant
general is seriously handicapped in effectively discharging duties, with the result that financial transactions are not effectively audited. There is need for a statutory provision that
the PrAG and accountant general in the state will function on behalf of the CAG. The status of the PrAG should be raised to the equivalent of at least state chief information
commissioner (under the Right to Information (RTI) Act), if not to that of a high court judge.
e. There is a need for the government and the CAG to work together and devise a suitable adjudication machinery, in cases where there is suspicion of deliberate default, negligence,
and unauthorised use of public money and loss to the government. Senior audit officers (at the level of accountant general and directors of audit) should be given adjudication
powers and the authority to summon public officials to appear as witnesses.