The CAG report on Fiscal Responsibility and Budget Management has been tabled in the parliament. The important observations made in the report are:
- CAG recommends the government to frame a policy on off-budget financing and sources of such funding in view of its fiscal implication.
- The off-budget financial arrangements defer committed liability (subsidy arrears/bills) or create future liability and increase the cost of subsidy due to interest payment.
- The report states that since the off-budget financing is outside the parliamentary control, it has implications for fiscal indicators as they “understate” the government’s expenditure in the year by keeping them off the budget.
- Hence the CAG recommends the government to put in place a policy framework for off-budget financing which would specify the rationale and objective of off-budget financing, quantum of off-budget financing, sources of the fund among others.
- The CAG also recommends the government to consider disclosing the details of off-budget borrowings through disclosure statements in Budget as well as in accounts.
Comptroller and Auditor General (CAG)
The Comptroller and Auditor General (CAG) of India was is a constitutional body established under Article 148 of the Constitution of India. The CAG is responsible for undertaking audits of all receipts and expenditure of the Government of India and the state governments, including those of bodies and authorities substantially financed by the government. CAG is also the external auditor of Government-owned corporations and conducts the supplementary audit of government companies. CAG also serves as head of the Indian Audit and Accounts Department.
The reports of the CAG is examined by the Public Accounts Committees and Committees on Public Undertakings.