Q.4. “The duty of the Comptroller and Auditor General is not merely to ensure the legality of expenditure but also its propriety.” Comment. [UPSC 2024 GS P-2]

The statement that “the duty of the Comptroller and Auditor General (CAG) is not merely to ensure the legality of expenditure but also its propriety” reflects the expansive role of the CAG in ensuring not just the lawful use of public funds, but also their proper, efficient, and prudent use in accordance with broader principles of financial integrity.

Role of the CAG:

The CAG of India, as outlined in Article 148 of the Constitution, is the authority responsible for auditing all receipts and expenditures of the Government of India and the states. The CAG’s primary function is to act as a guardian of public finances by auditing government accounts to ensure that public money is used effectively and according to the laws passed by Parliament or the state legislatures.

Legality of Expenditure:

The legality of expenditure refers to ensuring that public money is spent in accordance with the law. The CAG verifies whether government departments and agencies have followed the rules and procedures set by the Parliament, including those governing:

• Proper authorization of funds.
• Adherence to the budget approved by the legislature.
• Correct classification of expenditures under appropriate budgetary heads.

In short, the CAG ensures that no money is spent without proper legislative approval, and all expenditures comply with the laws and regulations in force.

Propriety of Expenditure:

The propriety of expenditure goes beyond mere legality. It encompasses:

• Economy: Ensuring that the government has obtained the best possible value for money.
• Efficiency: Ensuring that resources have been used in the most productive way.
• Effectiveness: Ensuring that the spending has achieved its intended objectives.
• Ethics and Public Interest: Ensuring that expenditure is morally and ethically sound, and is in the public interest.

In assessing propriety, the CAG examines:

1. Necessity of expenditure: Was the expenditure essential for the purpose for which it was incurred?
2. Reasonableness: Was the amount spent reasonable given the circumstances, or was it excessive?
3. Value for money: Did the expenditure lead to the desired outcomes at the lowest possible cost?
4. Waste or extravagance: Was there any wasteful or extravagant use of public money?

Thus, propriety ensures that not only are government funds used in accordance with the law, but they are also used in a justifiable and responsible manner, avoiding extravagance or inefficiency.

Why is Propriety Important?

• Accountability: Public officials should be held accountable not just for the legality of their actions, but also for ensuring that public resources are used in the best possible manner.
• Transparency: Propriety auditing fosters transparency, enabling the public to see how government funds are utilized.
• Preventing Waste: By scrutinizing the propriety of expenditures, the CAG helps in identifying inefficiencies, irregularities, and possible corruption in public spending.
• Improving Governance: The emphasis on propriety promotes good governance, encouraging government departments to be prudent and judicious in their financial decisions.

Examples of Propriety Audits by CAG:

1. Public sector undertakings (PSUs): The CAG often assesses whether PSUs are making investments in a manner that ensures public funds are not wasted on inefficient or poorly planned projects.
2. Flagship government schemes: The CAG audits whether government programs (like welfare schemes, infrastructure projects) achieve their objectives efficiently and without unnecessary cost escalation.
3. Defense procurement: The CAG has pointed out instances where defense equipment procurement has either been delayed or resulted in higher costs, affecting the country’s defense preparedness.

Conclusion:

The duty of the CAG to ensure propriety in addition to legality highlights the critical role the CAG plays in maintaining not only financial accountability but also ethical governance. While ensuring legal compliance is essential, focusing on propriety helps to maximize the utility of public funds, ensuring that they are used efficiently, effectively, and in the best interest of the nation. Thus, the CAG’s role is not just to audit transactions but to ensure that public spending is characterized by good judgment and prudence.