Context:
The Comptroller and Auditor General of India (CAG) has revealed that the use of Artificial Intelligence (AI) and Machine Learning (ML) in audits has led to the detection of widespread fraud in state-level beneficiary schemes. This marks a significant shift towards technology-driven governance, forensic auditing, and digitised public financial management.
Key Highlights:
Use of AI/ML in Auditing
- AI and ML tools were deployed to identify irregularities and fraudulent beneficiaries in state welfare schemes.
- Forensic audits enabled by AI/ML can potentially save significant public funds lost due to leakages and misuse.
Digitisation & Remote Audits
- Digitisation of audit processes is a top priority for the CAG.
- Enables remote audits, ensuring:
- Timely assessments
- Wider audit coverage
- Reduced dependence on physical records
- Remote audits successfully conducted in:
- GST systems
- e-Procurement platforms
- Direct Benefit Transfer (DBT) schemes
Public Financial Management Reforms
- States are increasingly adopting technology-driven systems to improve:
- Transparency
- Accountability
- Efficiency in fund utilisation
- SNA SPARSH introduced for better cash and fund flow management.
- Special Assistance to States for Capital Investment supports:
- Creation of public finance IT infrastructure
- Implementation of IFMS across departments
Governance Significance
- Fraud detection highlights the need for stronger monitoring and internal controls in welfare schemes.
- Digital audits improve stakeholder confidence and reduce scope for discretion-based leakages.
Scientific / Technical Concepts Involved:
- Artificial Intelligence (AI):
- Simulation of human intelligence by machines
- Used for pattern recognition and anomaly detection
- Machine Learning (ML):
- Subset of AI enabling systems to learn from data
- Helps identify suspicious trends without explicit programming
- IFMS (Integrated Financial Management Information System):
- Integrates budgeting, accounting, treasury, and reporting
- Enhances fiscal discipline and real-time monitoring
Relevant Prelims Points:
- Issue & Causes
- Fraud and leakages in beneficiary schemes
- Manual audits with limited coverage
- Weak data integration across departments
- Government Initiatives
- AI/ML-based forensic audits by CAG
- Digitisation of records
- Remote audit framework
- SNA SPARSH
- Special Assistance to States for Capital Investment
- Benefits
- Early fraud detection
- Savings of public money
- Enhanced transparency
- Evidence-based auditing
- Challenges
- Data quality issues
- Cybersecurity risks
- Capacity gaps in states
- Impact
- Strengthened public trust
- Improved welfare delivery outcomes
- Better fiscal governance
Relevant Mains Points:
- Facts & Institutional Role
- CAG is a constitutional authority under Article 148
- Plays a key role in financial accountability
- Conceptual Linkages
- Digital governance
- Outcome-based public expenditure
- Technology in public administration
- Keywords
- Forensic audit, DBT leakages, digital public finance, AI governance
- Way Forward
- Universal digitisation of beneficiary databases
- Capacity building for audit institutions
- Robust data protection and cybersecurity frameworks
- Integration of AI audits with policy feedback loops
- Strengthening cooperative federalism through tech-enabled oversight
UPSC Relevance (GS-wise):
- GS Paper 2: Governance, transparency, role of constitutional bodies
- GS Paper 3: Public finance, digital economy, science & technology in governance
- Prelims: AI, ML, IFMS, CAG, DBT, SNA SPARSH