Is India’s CAG Truly Independent Amid Subtle Govt Pressures?
CAG Office India (Image official website)
From subtle ‘requests’ to overt attempts at influence, the Comptroller and Auditor General (CAG) often faces pressures that test the limits of institutional independence.
By P SESH KUMAR
New Delhi, October 8, 2025 — A question often crops up in public discourse—Is CAG, as a person and an institution, subjected to any pressures while discharging its constitutional responsibilities?
There have been (and will continue to be) interesting experiences (pressures) encountered and ‘requests’ received by CAG from audited entities, including surprisingly, high levels of Government.
These could be to co-opt its nominee as part of the decision-making process within the government, seeking its opinion before implementation of a scheme or policy, expecting it to discuss even its preliminary findings first with the government functionaries before writing these down, not audit sensitive matters of national security/defence matters and so on.
Let me discuss one such instance encountered by CAG not long ago. I have discussed this and some other matters of similar nature in my book ‘CAG- WHAT IT OUGHT TO BE AUDITING? (White Falcon Publishing)
Should CAG Allow an Informal Extension for Finalizing Government Accounts- A Critical Analysis
In early 2020, as the financial year 2019-20 came to a close, a discreet but significant request was made by very senior officers in the government directly to CAG especially as the former were once colleagues of CAG in the latter’s earlier avatar. They suggested that the finalization of accounts should remain open until April 15, 2020—beyond the normal March 31st deadline—to allow for the inclusion of belated deposits and remittances of GST and income tax.
The rationale? This would boost government revenues on paper and help meet fiscal deficit targets, which had already been stretched due to economic uncertainties, including the initial effects of the COVID-19 pandemic. But there was a catch—the Comptroller and Auditor General (CAG) was informally asked not to raise queries or make any observations about this irregular extension of the financial year’s closure. This request, while seemingly practical in the face of revenue shortfalls, raises serious concerns about the correctness of government accounting, financial transparency, and the fundamental role of CAG as an independent auditor. Let’s critically examine the merits, acceptability, and the impact of such a move—and why the CAG agreeing to it would have set a dangerous precedent of impropriety.
The Technical and Ethical Issues with the Request
At its core, this request was an attempt to artificially adjust government revenue figures, creating an illusion of higher tax collections for 2019-20 than what was actually received within the financial year. By allowing an extra 15 days for tax remittances and including them in the previous financial year’s accounts, the government was trying to improve its reported fiscal deficit numbers—at least on paper. This raises two fundamental problems. One, violation of the core principles of Government Accounting and two, setting a dangerous precedent for fiscal manipulation.
Government accounts follow the cash accounting system, meaning that only revenue and expenditures that actually occur within a financial year (April 1 – March 31) should be recorded in that year’s books. Extending the closure of accounts beyond March 31st to accommodate delayed tax payments directly violates this principle. Any taxes received after March 31st should belong to the next financial year (2020-21), not be forcefully included in 2019-20 to paint a better fiscal picture.
By agreeing to this informal extension, CAG would be endorsing financial misreporting—which is exactly the kind of manipulation auditors are supposed to prevent. If CAG were to allow this kind of accounting adjustment once, what would stop the government from doing it again in future years? In 2020-21, they could extend the accounts to April 30 to include late tax collections. In 2021-22, they might keep accounts open until May 15 under another justification. Over time, financial reporting would lose all credibility, as numbers would no longer reflect actual transactions within the correct financial year. Once an independent auditor allows an exceptional, informal practice to occur without objections, it becomes the norm rather than the exception.
The Impact of Such a Move on Government Financial Credibility
If the CAG had agreed to remain silent on this informal extension, the consequences would have been severe. Besides erosion of public trust in Government Financial Statements, it would have resulted in weakening of CAG’s authority and independence. The credibility of India’s financial accounts depends on their accuracy and adherence to established accounting principles. Any manipulation or adjustment—even under economic pressure—can lead to domestic and international investors, credit rating agencies, and financial institutions losing trust in government data. This could have a ripple effect, causing: Credit rating downgrades, making government borrowing costlier.
Investor concerns, leading to volatility in stock markets.
Mistrust in government revenue figures, making economic forecasting unreliable.
If a government starts altering the definition of a financial year for short-term fiscal gains, it risks losing long-term economic credibility. Could CAG have afforded to be a party to this? Had CAG informally agreed not to raise queries, it would have severely weakened its standing as an independent constitutional auditor.
Tomorrow, ministries could request: “Don’t question our procurement contracts—we were under economic stress.”
“Ignore our tax write-offs—it was a political decision.”
“Allow us to book expected revenue as actual revenue—it will help deficit numbers.”
Once the national auditor starts overlooking financial manipulations, it ceases to be an auditor. It becomes a silent participant in governance mismanagement.
Could there have been a justifiable middle ground?
Some might argue that given the extraordinary circumstances in 2020, an extension could have been justified. However, there was a legally sound way to handle this without violating accounting principles. The government could have transparently disclosed in budget documents that some revenue shortfalls were due to delayed GST and tax payments. Any tax collections made after March 31, 2020, could have been recorded under “April Collections” and acknowledged as part of the next year’s revenue. Instead of extending accounts informally, the government could have sought a one-time approval from Parliament and the Finance Commission for a special adjustment, fully disclosed to the public. This would have preserved accounting integrity while acknowledging economic realities—without forcing CAG into an ethically compromising position.
CAG Was Right to Reject the Request
The informal request to keep the accounts open beyond March 31, 2020, to accommodate delayed tax remittances was in direct violation of financial accounting principles and would have set a dangerous precedent. Had the CAG agreed to remain silent, it would have:
- Compromised the correctness of government accounts.
- Eroded its own credibility as an independent auditor.
- Encouraged future financial misreporting for political or fiscal convenience.
Instead, CAG had to hold firm and insist that government accounts reflect actual revenues and expenditures as per established norms. If governments need flexibility in deficit management, they must do so through transparent legislative processes, not through behind-the-scenes adjustments that distort public financial records. In public finance, credibility is everything. And the moment an auditor allows numbers to be artificially tweaked, the entire financial system starts losing integrity. That is why CAG must always be the last line of defence against financial misreporting-no matter how pressing the government’s short-term fiscal concerns may be.
(This is an opinion piece, and views expressed are solely those of the author only)
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