He was addressing a conclave of the Comptroller of Auditor General on transforming audit and assurance in a digital world.
"CAG should look for innovative methods to deal with occupational fraud," he said, adding that the auditor can paly a role in improving governance and efficiency.
Modi said the government wants to move to evidence-backed policy making by 2022 and the CAG can play a role by becoming a think tank and focusing on big data analysis.
"Our target is to make evidence-based policy making a part of governance by 2022,"he said, while stressing that India ia gearing to become a 5 trillion economy.
He asked the CAG to develop technical tools to root out frauds in departments.