Discuss how the CAG's audit of power distribution companies can strengthen fiscal accountability. What are the legal limits of its mandate over privatised utilities?

The CAG is the constitutional auditor of public money under Articles 148–151. In February 2026 it began a horizontal performance audit of discoms and the PM Surya Ghar scheme [1]. This takes its scrutiny from checking compliance to judging outcomes, though its reach over private discoms is still unsettled.

How the audit strengthens fiscal accountability

• Comparison across states: one theme is checked across many discoms. This exposes repeated billing and collection failures, the main causes of discom losses [1][2].
• Testing the turnaround: discoms posted a ₹2,701 crore profit in FY25, and AT&C losses fell to about 15% [3]. An audit can test whether this came from real efficiency or from costs pushed into later years.
• Finding hidden liabilities: regulatory assets are costs held back from tariffs now and recovered from consumers later. The Supreme Court ordered existing ones cleared by 1 April 2028 [4]. The audit can show which states built them up.
• Scheme delivery: it tests how well a flagship rooftop-solar scheme is delivered at the discom level [1].
• Legislative follow-up: reports on state discoms go to state legislatures (Art. 151(2)), where the PAC and COPU can question the government.

Legal limits over privatised utilities

• Mandate follows ownership: the CAG audits state-owned discoms as government companies under the Companies Act, 2013. Private discoms, as in Delhi and Odisha, fall outside this. They can be audited only on request, under Section 20 of the CAG (DPC) Act, 1971.
• Judicial check: the Supreme Court stayed the Delhi government's order for a CAG audit of BRPL, BYPL and TPDDL [5].
• Regulatory overlap: under the Electricity Act, 2003, the SERCs check costs and fix tariffs. The CAG cannot change a tariff, and a second audit can delay dues the courts have ordered paid.
• Growing gap: the draft Electricity (Amendment) Bill, 2025 would allow several discoms to supply one area [6]. More private players would widen the area the CAG cannot audit.

Overall, the CAG can turn discom finances from opaque balance sheets into figures legislatures can act on, but only where public ownership exists. The amendment Bill could settle this by making subsidies and regulatory assets auditable wherever public money goes, whoever owns the discom. That would serve accountability under Article 151 and SDG 7 (affordable, reliable energy).