Mirror or Microscope: Weighing CAG’s State Finances 2023–24
CAG Office India (Image official website)
State Finances 2023–24 is a polished mirror, while the CAG should be a microscope to shed a floodlight on governance.
By P. SESH KUMAR
New Delhi, January 1, 2026 — CAG’s State Finances 2023–24 is an intellectually tidy, nationally consolidated, audited panorama of how India’s States look on the fiscal balance sheet-deficits, debt, revenue effort, spending patterns, and stress points-over a decade. Its strongest claim to relevance is comparability with audit credibility: one template, one analytical grammar, one dataset that carries the CAG stamp.
But that “national dashboard” pitch collides with three hard realities: first, the report is not a constitutional/statutory obligation; second, the State and Union finance ecosystem already runs on real-time digital rails (PFMS/IFMIS/treasury systems) that can generate far sharper and more current analytics; and third, the report arrives with an inevitable time-lag, reducing its utility as management information and pushing it toward being a historical compendium.
The real question is not whether the report is good—it largely is—but whether it is the best use of CAG bandwidth, and what design changes would convert a handsome annual from a “two-year-late yearbook” into a citizen friendly high-impact fiscal accountability instrument.
The rationale: why this report exists at all
The report’s stated logic is seductive: public financial management is not merely budgeting and spending, but a full pipeline-budgeting, accounting, audit, and reporting to legislatures-so the institution that sits at the audit-and-accounts junction is uniquely placed to offer a consolidated view. The Foreword positions the publication as a lever to “enhance fiscal transparency” and “support evidence-based policymaking,” while the Preface frames it as a response to stakeholder interest and a way of “democratising” comparable audited State finance data through an annual series and online dashboards.
As a narrative, this is coherent. In a country where State fiscal debates often become a shouting match of selective numbers one State flaunting revenue effort, another pleading “special circumstances,” a third blaming the Union for transfers-an audited, harmonised, inter-State comparable baseline is valuable. A single national frame can discipline public discourse.
But coherence is not the same as necessity.
How Prasar Bharati’s Governance Drift Silenced Accountability
The awkward truth: this is not a constitutional or statutory requirement
CAG’s constitutional core is auditing and reporting to legislatures and performing duties “in relation to the accounts of the Union and of the States” as prescribed by law. What the Constitution does not do is order CAG to publish an annual “consolidated fiscal survey” of States in the manner of a finance ministry, a fiscal council, or a research institute. That makes State Finances an institutional choice—an “additional service”—not a mandated product.
That distinction matters, because every “extra” publication has an opportunity cost inside an audit institution: staff time, data validation cycles, editorial production, coordination across A&E offices, and the inevitable pressure to publish on schedule even when upstream accounting delays exist. The report may be useful, but it must still justify itself against CAG’s primary mission: fearless, timely all India performance audits and faster closure of compliance backlogs (ATNs, IR paras, and systemic follow-up).
Who is this really for: Legislature, executives, researchers-or everyone (which means no one)?
The report appears to speak to everybody at once: policymakers, “public financial managers,” academia, researchers, universities, and capacity-building institutions. That wide embrace is also its identity problem.
If the intended audience is State Finance Departments and treasuries, they already live inside granular dashboards of their own making and can drill down to DDO, scheme, object head, vendor, and geo-tagged expenditure in near real time. If the audience is the Union-Finance Ministry, line ministries, and Finance Commission machinery-they already have transfer data, GST settlement data, borrowing permissions, FRBM-linked compliance information, and high-frequency cash and debt signals.
If the audience is legislatures, what they need most is not a decade-long comparative atlas; they need sharp, State-specific, politically actionable insights tied to accountability mechanisms: budget credibility gaps, off-budget risks, guarantees, arrears, fund parking, and outcomes.
If the audience is universities and students, the report can indeed be a goldmine-but only if it becomes easier to use, quicker to access, and more methodologically explicit. This, in fact, is the Achilles heal of the report. The average citizen- a significant stakeholder of CAG reports- is left high and dry as the report is not such user-friendly.
So yes, it has an audience. But it needs to pick its primary customer and design ruthlessly around that customer, instead of trying to be a coffee-table book for the entire Republic.
“But the data already exists”: what value can CAG add when States and the Union have PFMS/IFMIS?
Here is the most damaging question, and one could ask it squarely: if governments already have the data, what exactly is CAG adding?
The honest answer is: three things—one strong, two shaky.
The strong one is audit credibility plus comparability. Governments have data; what they often lack is a trusted, uniform, independently validated presentation that allows citizens, researchers, and even other States to compare without getting lost in definitional fog. CAG can reduce the classic Indian fiscal trick: changing labels while claiming reform-reclassifying, netting off, pushing liabilities into “public account” corners, or describing a financing move as “receipts.”
But the two shaky value-adds are where the report starts looking like an earnest but expensive habit. First, if the goal is policy support, timeliness beats elegance. A beautiful consolidated picture that lands two years after the fact cannot compete with live fiscal telemetry for management decisions. Second, if “democratising data” is the mission, then the report must behave like a modern data product-clean datasets, transparent methods, reproducible indicators-not like a PDF narrative with tables that researchers must manually scrape. The Preface mentions interactive dashboards. Good-yet the intellectual centre of gravity still feels PDF-first, data-second.
The time-lag problem: why MIS value collapses when the report comes late
A report based on audited accounts inevitably inherits the accounts cycle. That is not a sin; it is physics. But then one cannot simultaneously sell it as an instrument of near-term fiscal steering. The longer the lag, the more it becomes a post-mortem, not a monitor.
If CAG wants this product to matter in-year (or even within the next budget cycle), it needs a two-tier architecture: a high-frequency “flash” monitor (clearly labelled unaudited/provisional, built from treasury/PFMS feeds) and a slower audited consolidation that becomes the definitive historical record. Otherwise, the report will remain what many mat call it-of historical value-and that is not enough reason for an audit institution to run a heavy annual production line.
Is it only of historical value? Not entirely-but it is dangerously close
As it stands, the report’s highest utility is as:
- a) a teaching and research baseline for a decade of State fiscal trends; and
- b) a benchmarking tool for inter-State comparison using one consistent frame.
That is real value. But it is also value that can be achieved with a lighter footprint if the report does not evolve into sharper accountability outcomes-especially legislative usability and policy triggers.
How does this compare globally: what other SAIs do (and don’t) do
Internationally, SAIs do produce “system-level” fiscal products, but usually with one of two features: either they audit a consolidated set of government accounts, or they publish forward-looking fiscal risk and sustainability analysis that forces policy choices into the open.
The UK’s Whole of Government Accounts (WGA) is a classic example of consolidation across thousands of public bodies to present a comprehensive picture of public finances, with the NAO reporting on it. That is not the same as India’s State Finances-but it shows a global pattern: consolidation can be meaningful when it reveals what fragmented accounts hide.
The US GAO, meanwhile, runs long-term fiscal projections and publishes fiscal outlook work that explicitly frames sustainability and future risk, alongside its role in auditing consolidated financial statements. This is not a “States of the Union” atlas; it is a warning system about the future.
INTOSAI standards also nudge SAIs toward impact-insight and improvement-rather than elegant documentation for its own sake.
India’s uniqueness (28 States + UTs, complex transfers, asymmetric capacities) strengthens the case for a consolidated comparative view. But it also raises the bar: if CAG is going to spend scarce expertise on such a product, it should resemble the best global equivalents-less “yearbook,” more “risk radar.”
The classification-uniformity claim and the proposed fix
The Foreword’s key “systems” claim is that comparative fiscal analysis is persistently constrained by lack of uniformity in disaggregated expenditure classification at the object-head level, and that CAG has advised rationalisation and harmonisation across the Union and States, targetted for adoption by FY 2027–28.
This assertion is plausible-but it needs sharper honesty on why the problem persists. Uniformity at object head level is not merely a technical gap; it is also a political-economy choice. States guard classification flexibility because it allows administrative convenience and, at times, narrative convenience. Even within a single State, reclassifications can become a silent tool to manage optics: turning “subsidy” into “grant,” pushing routine costs into “capital,” splitting heads to create the illusion of targeted spending.
Where the Foreword underplays the issue is this: harmonisation is not achieved by advising. It is achieved by enforceable standards, incentives, and architecture. If the adoption target is FY 2027–28, then the report must disclose-State by State-what the current divergences are, how they distort comparisons, and what minimum common taxonomy is being proposed. Otherwise, “lack of uniformity” becomes a perpetual explanatory cushion: every time comparisons look messy, classification is blamed; every time reform is promised, a future year is cited.
In other words, the Foreword is right to flag the constraint, but too gentle about the governance machinery required to fix it-and too optimistic about timelines without specifying levers.
Lessons learnt: how utility can be enhanced-or why discontinuation could be defensible
The report should not be killed merely because it is “extra.” But it should not be protected merely because it is “nice.” Its survival must be earned through redesigned impact.
If CAG continues the report, the way to make it matter is to turn it from an annual anthology into an accountability instrument: integrate a compact “fiscal risk and sustainability” spine, disclose method and data definitions with reproducibility, publish machine-readable datasets, and build legislative-facing state capsules that highlight what needs PAC/CoPU attention now-not two years later. Pair that with a clearly labelled high-frequency monitor so the report stops pretending to be MIS while arriving on a historical timetable. Make it understandable to the average citizen too—if necessary by adding a separate capsule or section.
If CAG cannot (or should not) divert resources to that scale of redesign, discontinuation becomes defensible. In that case, CAG could restrict itself to what only CAG can do uniquely: State-specific audit insights on fiscal risks, classification integrity, off-budget exposures, guarantees, and outcomes-delivered through sharper audit reporting rather than a large annual compilation.
The bottom line is blunt: State Finances 2023–24 is a polished mirror. India does need mirrors. But an audit institution must be a microscope—and sometimes a floodlight. Unless the publication evolves into that sharper instrument, it risks becoming a prestigious side-project that looks busy, reads well, and changes little.
(This is an opinion piece. Views expressed are author’s own)
853 IRS Officers Quit in a Decade: Tax Service Losing Its Soul?
Follow The Raisina Hills on WhatsApp, Instagram, YouTube, Facebook, and LinkedIn
About The Author
