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Accountability and efficiency


With the government readying to introduce a Bill in Parliament to modify the powers of the Comptroller and Auditor General of India (CAG) to include public-private partnership (PPP) projects, many project managers are close to gagging. The main reason behind why the public sector has not performed, they argue along with several in government, is the fear of the 3Cs — the CBI, the CVC and the CAG. Since almost every decision taken is questioned by these bodies, and can result in inquiries and prosecution, the argument goes, this ensures buck-passing instead of decision-making. PPPs were a way out of this since, apart from easing the burden on government as far as financing is concerned, they are out of the purview of the 3Cs. Getting PPPs under the CAG scanner certainly seems a bad idea if the CAG is to focus on minor issues or get stuck in issues like whether a project was even justified or whether it could be executed departmentally — one of the guidelines issued by the CAG on how it would like to audit PPPs some months ago suggests this as an issue worth looking at! Similarly, cost audits have to be done with care since comparing a Mercedes with a Maruti, for instance, is certain to yield the wrong comparisons. Moreover, any audit has to look at the opportunity costs of getting projects ready in time — if PPPs are more expensive than government projects, the shorter time taken by them also needs to be kept in mind.

That said, with the cost of PPP projects such as the Delhi airport or the Reliance KG Basin gas fields rising dramatically in comparison with the original costs, it is obvious that these projects need auditing by neutral parties and that the line ministries/organisations are not always up to the task. In the case of the RIL project, the previous head of the Directorate General of Hydrocarbons, V K Sibal, went on record to say the CAG had audited the costs and found them to be in order — it turned out the CAG had done nothing of the sort and a formal CAG audit was ordered after the CAG formally denied having done an audit. In order to ensure that the projects are properly audited without their efficient functioning getting affected, perhaps the CAG needs to focus on issues like ensuring proper tender guidelines, ensuring there are no related parties in the bidding process, and so on.

Assuming that the CAG is able to ensure this happens, and it is by no means assured that this will happen, the question is what happens next. So far the government’s record, when it comes to implementing CAG reports, has been quite poor. Whether it was the VDIS black money amnesty scheme or the privatisation of the Delhi Vidyut Board, where the CAG made valid observations on the faulty scheme design, the government never really acted upon the CAG reports. Unless the CAG can act in a responsible manner and the government promises to act on its reports, the entire exercise of auditing PPPs will be futile.