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What is Social Audit (SA)?

  • It is a process in which details of the resources, both financial and non-financial, is used by public agencies for development initiatives and is shared with the people often through public platforms.
  • It includes in-depth scrutiny and analysis of the working of an entity in which the public is involved vis-à-vis. its social relevance.

Origin Of Social Audit In India

  • In India, the initiative of conducting social audits was taken by Tata Iron and Steel Company Limited (TISCO), Jamshedpur in the year 1979.
  • It gained significance after the 73rd amendment. The approach paper to the 9th FYP (2002-07) emphasized upon social audit for effective functioning of Panchayat Raj institutions (PRIs) and empowered gram sabhas to conduct SAs in addition to its other functions.
  • National Rural Employment Guarantee Act, 2005 provides for regular “Social Audits” so as to ensure transparency and accountability in the scheme.
  • The State Government shall identify or establish, under the NREGS, an independent organization, Social Audit Unit (SAU), at the state level, to facilitate conduct of social audit by Gram Sabhas.


  • Creating awareness among beneficiaries and providers of local social and productive services.
  • To assess the physical and financial gaps between needs and resources available for local development.
  • Increasing efficacy and effectiveness of local development programmes.
  • Estimation of the opportunity cost for stakeholders of not getting timely access to public services.
  • Scrutiny of various policy decisions, keeping in view stakeholders interests and priorities, particularly of rural poor.


  • Monitoring and feedback: It monitors social and ethical impact of an organisation’s performance and provides feedback on the work.
  • Reduces corruption:SA uncovers irregularities and malpractices in the public sector and maintains oversight on government functioning, thus reducing leakages and corruption.
  • Participative and democratic: SA promotes participation of people in implementation of programmes and makes people more forthcoming for social development activities.
  • Accountability and transparency:SA ensures accountability and transparency in working of local government bodies and reduces trust gap between people and local governments.
  • Generates demand:Serves as the basis for framing the management’s policies by raising demands in a socially responsible and accountable manner by highlighting the real problems.
  • Strengthens the Gram Sabha:SA gives voice and influencing power to the Gram Sabha, the lynchpin of rural governance structure.
  • Collective platform:SA provides a collective platform such as a social audit Gram Sabha, for people to express their common needs, resulting into social cohesion.
  • Improves professionalism: SA boosts professionalism in public bodies by forcing Panchayats to keep proper records and accounts of the spending made against the grants received from the government and other sources.

Steps in SA in Local Bodies

  • Clarity of purpose and goal of the local elected body.
  • Identify stakeholders with a focus on their specific roles and duties. Social auditing aims to ensure a say for all stakeholders. It is particularly important that marginalized social groups, which are normally excluded, have a say on local development issues and activities and have their views on the actual performance of local elected bodies.
  • Definition of performance indicators which must be understood and accepted by all. Indicator data must be collected by stakeholders on a regular basis.
  • Regular meetings to review and discuss data/information on performance indicators.
  • Follow-up of social audit meeting with the Panchayat body reviewing stakeholders’ actions, activities and viewpoints, making commitments on changes and agreeing on future action as recommended by the stakeholders.
  • Establishment of a group of trusted local people including elderly people, teachers and others who are committed and independent, to be involved in the verification and to judge if the decisions based upon social audit have been implemented.
  • The findings of the social audit should be shared with all local stakeholders. This encourages transparency and accountability. A report of the social audit meeting should be distributed for Gram Panchayat auditing. In addition, key decisions should be written on walls and boards and communicated orally.

Legal Backings To SOCIAL AUDIT (SA)

  • Nationally, institutionalised social audits have begun to make real progress only recently.
  • MGNREGA was the first law to mandate social audit as a statutory requirement.
  • In 2017, Meghalaya became the first State to pass and roll out a social audit law to cover all departments.
  • CAG – The Office of the CAG developed social audit rules for the MGNREGA in 2011.
  • It conducted a performance audit in 2015.
  • A year later, it formulated social audit standards in consultation with the Ministry of Rural Development.
  • The standards could ensure that the social audit process is viable, credible and true to first principles of social accountability.
  • Supreme Court – The SC has recently passed a series of orders, giving social audits the infrastructural framework they need.
  • It has ordered that the CAG-formulated Social Audit Standards be applied.
  • Accordingly, it ordered setting up truly independent state-supported State its units.
  • It has also ordered that social audits be conducted of Building and other Construction Workers Cess.
  • It is also required for the implementation of the Juvenile Justice Act.


  • Not institutionalized: Government has not mandated institutionalization of SA thus making auditors vulnerable to implementing agencies, who face resistance and intimidation and find it difficult to even access primary records for verification.
  • Rules not followed: In many states Social Audit Units (SAUs) don’t seek record from Gram Panchayats regarding execution of works and expenditure (CAG report), social audit reports are either not prepared or not made available to gram sabha in local languages.
  • SAUs lack independence: Some SAUs have to obtain sanction from the project implementation agency before spending funds. Many states don’t follow the open process specified in the standards for the appointment of the SAU’s director. Several SAUs do not have adequate staff to cover all the panchayats even once a year.
  • Apathy of implementing agency:The implementing agency requests for postponement of social audit, fails to provide documents on time, does not send independent observers for the Gram Sabha, and fails to take action on the findings of the social audit.
  • Lack of awareness: Lack of awareness among Gram Sabha members and their rights on social audit
  • Lack of stringent penalty:Flouting of SA principles and norms does not attract any penalty or legal proceeding which makes SA a toothless exercise.
  • No incentive to participate:Lack of interest in people about the village activities due to their livelihood reasons.
  • Absence of a well-conceived information system: Government agencies rely on hazy and incomplete system of referring to government accounts and government methods of reporting to track progress of scheme due to which it becomes difficult for auditor to take stock, speed up, slow down or apply corrective measures.

How to Enhance Local Capacities for SA?

  • Organization of a mass campaign to increase public awareness about the meaning, scope, purpose and objectives of social audit.
  • Establishment of a team of social audit experts in each district who are responsible for training social audit committee members (stakeholders).
  • Implementation of training programmes on social auditing methods conducting and preparing social audit reports, and presentation at Gram Sabha


  • Social audits of the NFSA have failed to take off due to lack of funds.
  • Like the Rural Development Ministry, the Ministry of Consumer Affairs, Food and Public Distribution should give funds to the SAUs and ask them to facilitate the social audits of the NFSA.
  • It’s units should have an independent governing body and adequate staff. Rules must be framed so that implementation agencies are mandated to play a supportive role in the social audit process and take prompt action on the findings.
  • Also, a real time management information system should track the calendar, the social audit findings and the action taken, and reports on these should be made publicly available.
  • Social audit processes need mentoring and support as they expand into newer programmes.



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