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LATEST NEWS UPDATES | Continuing onslaught on the CAG -Ramaswamy R Iyer </title>
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-The Hindu
The work of India’s supreme auditor cannot be put through an audit unless the institution itself initiates one
The relentless campaign against the Comptroller and Auditor-General, of an unprecedented ferocity, compels me to write again on the subject.
First, has the..."/>
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-The Hindu
The work of India’s supreme auditor cannot be put through an audit unless the institution itself initiates one
The relentless campaign against the Comptroller and Auditor-General, of an unprecedented ferocity, compels me to write again on the subject.
First, has the..." />
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<h1 class="cat-box-title">Continuing onslaught on the CAG -Ramaswamy R Iyer</h1>
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Published on</span><span class="text-date"> Sep 24, 2012</span>
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<div style="text-align: justify">-The Hindu</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>The work of India’s supreme auditor cannot be put through an audit unless the institution itself initiates one</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">The relentless campaign against the Comptroller and Auditor-General, of an unprecedented ferocity, compels me to write again on the subject.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">First, has the CAG caused a political and constitutional crisis, as some have argued? All that the CAG does is to submit audit reports. Any audit report, if it is a good report, is bound to contain elements that can be used for a criticism of the government. Using the report to stall Parliament was a clear, declared political decision of the Opposition. To say that the CAG shares the responsibility for this amounts to saying that the CAG should not have submitted a report at all, or should have submitted a totally bland report from which no party can pick up any point for criticising the government.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">G. Mohan Gopal, a highly respected legal expert, makes two main points (The Indian Express, 10 September 2012): the fallibility of the CAG, and giving illegal advice to the government.</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>Fallibility</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">The fallibility of the CAG is a truism; no one ever denied it. There are two important procedural safeguards against errors in the audit reports. In drafting paragraphs for inclusion in the audit report, substantiation has to be provided for every remark through ‘key documents’. This is a stringent requirement. After such internal procedures, when the first draft of the audit report is ready, it is sent for comments to the Ministry or organisation under audit, and is revised in the light of comments received. If I am not wrong, this process is repeated more than once. At every stage, the executive can draw attention to errors of fact or understanding or law, if any, in the report. In fact, apart from corrections or revisions being made in response to comments, the initial objections themselves are dropped in many cases in the light of explanations by the executive. Not every comment initially formulated finds its way into the final audit report. The fallibility of the CAG is a red herring.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Turning to the charge of ‘illegal advice’, the CAG did not give any legal advice on his own on the choice between administrative instructions and amendment of the Act; he was only citing an advice of the Law Ministry of 2006. It might be Mr. Gopal’s view that the advice was wrong, but I doubt if the Law Ministry would accept that view. The CAG’s point was that in July 2006, on the basis of the Law Ministry’s clear advice at that stage, competitive bidding could have been adopted through administrative instructions. Anyway, that is only a hypothetical point; the final decision was to amend the Act. The CAG did not question that decision. He merely pointed out that the time it took to arrive at that decision (for whatever reasons) meant the continuance of the procedure of selections by a Screening Committee. Further, he did not even criticise that procedure per se, but only the absence of openness, transparency and fairness in that procedure, and the difficulty of determining the basis for the selection of parties. What remains of the illegality charge?</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Mr. Gopal makes another point, namely, that mining licences could be granted only by the State governments, and that the Screening Committee was just that, namely, a Screening Committee, and that it was making no allocations of coal blocks. I am sure the CAG will have something to say on this, but as a layman let me ask Mr. Gopal a few simple or simplistic questions. Why was there a Screening Committee at all? What was it screening for? If it was not making allocations of coal blocks, what exactly was it doing? If there was no such thing as ‘allocation of coal blocks’, why did no one say so when the draft audit report was under discussion between the Ministry and the CAG? Did the Ministry question the term ‘allocation of coal blocks’ at any time?</div><div style="text-align: justify"><br /></div><div style="text-align: justify">On all these matters, did it not occur to Mr. Gopal that he should take the precaution of checking with the Ministry and the CAG before publishing his rash remarks?</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>Tendentious</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">Mr. Gopal castigates the CAG for calculating “losses arising from obeying the law”. That is a highly tendentious statement. First, what the CAG is talking about is not ‘losses’ to the government, but windfall gains to the recipients of the allocations. Secondly, it is preposterous to say that the CAG is calculating ‘windfall gains’ as arising from the government following a legal course. His point is that the allocation of coal blocks confers windfall gains on the recipient parties, and so the process of selection of parties should be fair, objective and transparent. This would apply, whatever the route followed for the selection of parties.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">As for Kapil Sibal’s criticism of the CAG for making policy (The Times of India, September 15, 2012), the answer is threefold. First, the CAG does not make policy prescriptions. He draws inferences from his audit findings and makes some consequential recommendations for the government’s consideration. It is for the government to consider and accept or reject them. Secondly, the CAG picks up policy decisions or recommendations from the files and tries to find out whether they were acted upon promptly or at all. Thirdly, where there is no recorded and reasoned policy decision behind the executive action, the CAG examines the rationale of the action. If there is a clear record of the reasoned adoption of a policy, the CAG does not and cannot question it.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Mr. Sibal also says that maximising revenues might not always be the government’s objective. True, but this should be a recorded ex ante decision, not an ex post facto rationalisation.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Again, the allocation of coal blocks is of course an executive decision, but would Mr. Sibal argue that the arbitrary and discretionary allocations of scarce natural resources are an executive prerogative that the CAG cannot question?</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>Disingenuous argument</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">Finally, there is the disingenuous argument that the executive is accountable whereas the CAG is not. The executive is of course accountable to Parliament and the people — through the CAG — though every attempt is made to evade it and obfuscate issues, as in the present case. As for the CAG, the argument is presumably that he should be accountable to the people for the quality of his audit. He is our supreme audit institution, and we cannot ask another auditor to second-guess his audit.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Besides, apart from the Ministries and other government organisations and public enterprises, even IITs, IIMs, private companies, etc, can come within the scope of his audit if they receive funds or allocations of natural resources from the state; and the CAG nominates private sector auditors for the audit of public enterprises and test-checks their audit. Which of these agencies or organisations can be asked to undertake an audit of the CAG’s work? In any case, such an imposition on the CAG would be unconstitutional.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">All this agonising is unnecessary because the CAG is not exempt from criticism. (That is perhaps the understatement of the year, considering the campaign that is going on.) As already mentioned, the executive has plenty of opportunity to challenge every statement in the audit report at every stage, including the stage of examination by the PAC. Secondly, there is a discussion of all this in the media, and many commentators analyse the audit reports. Is this not a form of accountability?</div><div style="text-align: justify"><br /></div><div style="text-align: justify">If there is to be a peer review of the work of the institution of the CAG, it has to be initiated by the CAG himself. The CAG has in fact done so. He constituted an international panel consisting of representatives of the SAIs of several countries to conduct a review of his organisation’s work, and the panel is understood to have submitted its report.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">In conclusion, it is sad that persons of such eminence should attack a constitutional functionary either on the basis of inadequate understanding or with the deliberate intention of obfuscating issues.</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>(Ramaswamy R. Iyer is a former Secretary, Water Resources, Government of India.) </em></div>
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<br><a href="http://www.thehindu.com/opinion/lead/continuing-onslaught-on-the-cag/article3929560.ece?homepage=true" class="re" target="_blank">The Hindu, 24 September, 2012, http://www.thehindu.com/opinion/lead/continuing-onslaught-on-the-cag/article3929560.ece?homepage=true</a><div class="clear"></div>
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LATEST NEWS UPDATES | Continuing onslaught on the CAG -Ramaswamy R Iyer </title>
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The work of India’s supreme auditor cannot be put through an audit unless the institution itself initiates one
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The work of India’s supreme auditor cannot be put through an audit unless the institution itself initiates one
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<h1 class="cat-box-title">Continuing onslaught on the CAG -Ramaswamy R Iyer</h1>
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Published on</span><span class="text-date"> Sep 24, 2012</span>
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<div style="text-align: justify">-The Hindu</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>The work of India’s supreme auditor cannot be put through an audit unless the institution itself initiates one</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">The relentless campaign against the Comptroller and Auditor-General, of an unprecedented ferocity, compels me to write again on the subject.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">First, has the CAG caused a political and constitutional crisis, as some have argued? All that the CAG does is to submit audit reports. Any audit report, if it is a good report, is bound to contain elements that can be used for a criticism of the government. Using the report to stall Parliament was a clear, declared political decision of the Opposition. To say that the CAG shares the responsibility for this amounts to saying that the CAG should not have submitted a report at all, or should have submitted a totally bland report from which no party can pick up any point for criticising the government.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">G. Mohan Gopal, a highly respected legal expert, makes two main points (The Indian Express, 10 September 2012): the fallibility of the CAG, and giving illegal advice to the government.</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>Fallibility</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">The fallibility of the CAG is a truism; no one ever denied it. There are two important procedural safeguards against errors in the audit reports. In drafting paragraphs for inclusion in the audit report, substantiation has to be provided for every remark through ‘key documents’. This is a stringent requirement. After such internal procedures, when the first draft of the audit report is ready, it is sent for comments to the Ministry or organisation under audit, and is revised in the light of comments received. If I am not wrong, this process is repeated more than once. At every stage, the executive can draw attention to errors of fact or understanding or law, if any, in the report. In fact, apart from corrections or revisions being made in response to comments, the initial objections themselves are dropped in many cases in the light of explanations by the executive. Not every comment initially formulated finds its way into the final audit report. The fallibility of the CAG is a red herring.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Turning to the charge of ‘illegal advice’, the CAG did not give any legal advice on his own on the choice between administrative instructions and amendment of the Act; he was only citing an advice of the Law Ministry of 2006. It might be Mr. Gopal’s view that the advice was wrong, but I doubt if the Law Ministry would accept that view. The CAG’s point was that in July 2006, on the basis of the Law Ministry’s clear advice at that stage, competitive bidding could have been adopted through administrative instructions. Anyway, that is only a hypothetical point; the final decision was to amend the Act. The CAG did not question that decision. He merely pointed out that the time it took to arrive at that decision (for whatever reasons) meant the continuance of the procedure of selections by a Screening Committee. Further, he did not even criticise that procedure per se, but only the absence of openness, transparency and fairness in that procedure, and the difficulty of determining the basis for the selection of parties. What remains of the illegality charge?</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Mr. Gopal makes another point, namely, that mining licences could be granted only by the State governments, and that the Screening Committee was just that, namely, a Screening Committee, and that it was making no allocations of coal blocks. I am sure the CAG will have something to say on this, but as a layman let me ask Mr. Gopal a few simple or simplistic questions. Why was there a Screening Committee at all? What was it screening for? If it was not making allocations of coal blocks, what exactly was it doing? If there was no such thing as ‘allocation of coal blocks’, why did no one say so when the draft audit report was under discussion between the Ministry and the CAG? Did the Ministry question the term ‘allocation of coal blocks’ at any time?</div><div style="text-align: justify"><br /></div><div style="text-align: justify">On all these matters, did it not occur to Mr. Gopal that he should take the precaution of checking with the Ministry and the CAG before publishing his rash remarks?</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>Tendentious</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">Mr. Gopal castigates the CAG for calculating “losses arising from obeying the law”. That is a highly tendentious statement. First, what the CAG is talking about is not ‘losses’ to the government, but windfall gains to the recipients of the allocations. Secondly, it is preposterous to say that the CAG is calculating ‘windfall gains’ as arising from the government following a legal course. His point is that the allocation of coal blocks confers windfall gains on the recipient parties, and so the process of selection of parties should be fair, objective and transparent. This would apply, whatever the route followed for the selection of parties.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">As for Kapil Sibal’s criticism of the CAG for making policy (The Times of India, September 15, 2012), the answer is threefold. First, the CAG does not make policy prescriptions. He draws inferences from his audit findings and makes some consequential recommendations for the government’s consideration. It is for the government to consider and accept or reject them. Secondly, the CAG picks up policy decisions or recommendations from the files and tries to find out whether they were acted upon promptly or at all. Thirdly, where there is no recorded and reasoned policy decision behind the executive action, the CAG examines the rationale of the action. If there is a clear record of the reasoned adoption of a policy, the CAG does not and cannot question it.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Mr. Sibal also says that maximising revenues might not always be the government’s objective. True, but this should be a recorded ex ante decision, not an ex post facto rationalisation.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Again, the allocation of coal blocks is of course an executive decision, but would Mr. Sibal argue that the arbitrary and discretionary allocations of scarce natural resources are an executive prerogative that the CAG cannot question?</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>Disingenuous argument</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">Finally, there is the disingenuous argument that the executive is accountable whereas the CAG is not. The executive is of course accountable to Parliament and the people — through the CAG — though every attempt is made to evade it and obfuscate issues, as in the present case. As for the CAG, the argument is presumably that he should be accountable to the people for the quality of his audit. He is our supreme audit institution, and we cannot ask another auditor to second-guess his audit.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Besides, apart from the Ministries and other government organisations and public enterprises, even IITs, IIMs, private companies, etc, can come within the scope of his audit if they receive funds or allocations of natural resources from the state; and the CAG nominates private sector auditors for the audit of public enterprises and test-checks their audit. Which of these agencies or organisations can be asked to undertake an audit of the CAG’s work? In any case, such an imposition on the CAG would be unconstitutional.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">All this agonising is unnecessary because the CAG is not exempt from criticism. (That is perhaps the understatement of the year, considering the campaign that is going on.) As already mentioned, the executive has plenty of opportunity to challenge every statement in the audit report at every stage, including the stage of examination by the PAC. Secondly, there is a discussion of all this in the media, and many commentators analyse the audit reports. Is this not a form of accountability?</div><div style="text-align: justify"><br /></div><div style="text-align: justify">If there is to be a peer review of the work of the institution of the CAG, it has to be initiated by the CAG himself. The CAG has in fact done so. He constituted an international panel consisting of representatives of the SAIs of several countries to conduct a review of his organisation’s work, and the panel is understood to have submitted its report.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">In conclusion, it is sad that persons of such eminence should attack a constitutional functionary either on the basis of inadequate understanding or with the deliberate intention of obfuscating issues.</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>(Ramaswamy R. Iyer is a former Secretary, Water Resources, Government of India.) </em></div>
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<br><a href="http://www.thehindu.com/opinion/lead/continuing-onslaught-on-the-cag/article3929560.ece?homepage=true" class="re" target="_blank">The Hindu, 24 September, 2012, http://www.thehindu.com/opinion/lead/continuing-onslaught-on-the-cag/article3929560.ece?homepage=true</a><div class="clear"></div>
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<meta property="og:title" content="LATEST NEWS UPDATES | Continuing onslaught on the CAG -Ramaswamy R Iyer" />
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-The Hindu
The work of India’s supreme auditor cannot be put through an audit unless the institution itself initiates one
The relentless campaign against the Comptroller and Auditor-General, of an unprecedented ferocity, compels me to write again on the subject.
First, has the..." />
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<h1 class="cat-box-title">Continuing onslaught on the CAG -Ramaswamy R Iyer</h1>
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Published on</span><span class="text-date"> Sep 24, 2012</span>
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<div style="text-align: justify">-The Hindu</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>The work of India’s supreme auditor cannot be put through an audit unless the institution itself initiates one</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">The relentless campaign against the Comptroller and Auditor-General, of an unprecedented ferocity, compels me to write again on the subject.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">First, has the CAG caused a political and constitutional crisis, as some have argued? All that the CAG does is to submit audit reports. Any audit report, if it is a good report, is bound to contain elements that can be used for a criticism of the government. Using the report to stall Parliament was a clear, declared political decision of the Opposition. To say that the CAG shares the responsibility for this amounts to saying that the CAG should not have submitted a report at all, or should have submitted a totally bland report from which no party can pick up any point for criticising the government.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">G. Mohan Gopal, a highly respected legal expert, makes two main points (The Indian Express, 10 September 2012): the fallibility of the CAG, and giving illegal advice to the government.</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>Fallibility</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">The fallibility of the CAG is a truism; no one ever denied it. There are two important procedural safeguards against errors in the audit reports. In drafting paragraphs for inclusion in the audit report, substantiation has to be provided for every remark through ‘key documents’. This is a stringent requirement. After such internal procedures, when the first draft of the audit report is ready, it is sent for comments to the Ministry or organisation under audit, and is revised in the light of comments received. If I am not wrong, this process is repeated more than once. At every stage, the executive can draw attention to errors of fact or understanding or law, if any, in the report. In fact, apart from corrections or revisions being made in response to comments, the initial objections themselves are dropped in many cases in the light of explanations by the executive. Not every comment initially formulated finds its way into the final audit report. The fallibility of the CAG is a red herring.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Turning to the charge of ‘illegal advice’, the CAG did not give any legal advice on his own on the choice between administrative instructions and amendment of the Act; he was only citing an advice of the Law Ministry of 2006. It might be Mr. Gopal’s view that the advice was wrong, but I doubt if the Law Ministry would accept that view. The CAG’s point was that in July 2006, on the basis of the Law Ministry’s clear advice at that stage, competitive bidding could have been adopted through administrative instructions. Anyway, that is only a hypothetical point; the final decision was to amend the Act. The CAG did not question that decision. He merely pointed out that the time it took to arrive at that decision (for whatever reasons) meant the continuance of the procedure of selections by a Screening Committee. Further, he did not even criticise that procedure per se, but only the absence of openness, transparency and fairness in that procedure, and the difficulty of determining the basis for the selection of parties. What remains of the illegality charge?</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Mr. Gopal makes another point, namely, that mining licences could be granted only by the State governments, and that the Screening Committee was just that, namely, a Screening Committee, and that it was making no allocations of coal blocks. I am sure the CAG will have something to say on this, but as a layman let me ask Mr. Gopal a few simple or simplistic questions. Why was there a Screening Committee at all? What was it screening for? If it was not making allocations of coal blocks, what exactly was it doing? If there was no such thing as ‘allocation of coal blocks’, why did no one say so when the draft audit report was under discussion between the Ministry and the CAG? Did the Ministry question the term ‘allocation of coal blocks’ at any time?</div><div style="text-align: justify"><br /></div><div style="text-align: justify">On all these matters, did it not occur to Mr. Gopal that he should take the precaution of checking with the Ministry and the CAG before publishing his rash remarks?</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>Tendentious</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">Mr. Gopal castigates the CAG for calculating “losses arising from obeying the law”. That is a highly tendentious statement. First, what the CAG is talking about is not ‘losses’ to the government, but windfall gains to the recipients of the allocations. Secondly, it is preposterous to say that the CAG is calculating ‘windfall gains’ as arising from the government following a legal course. His point is that the allocation of coal blocks confers windfall gains on the recipient parties, and so the process of selection of parties should be fair, objective and transparent. This would apply, whatever the route followed for the selection of parties.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">As for Kapil Sibal’s criticism of the CAG for making policy (The Times of India, September 15, 2012), the answer is threefold. First, the CAG does not make policy prescriptions. He draws inferences from his audit findings and makes some consequential recommendations for the government’s consideration. It is for the government to consider and accept or reject them. Secondly, the CAG picks up policy decisions or recommendations from the files and tries to find out whether they were acted upon promptly or at all. Thirdly, where there is no recorded and reasoned policy decision behind the executive action, the CAG examines the rationale of the action. If there is a clear record of the reasoned adoption of a policy, the CAG does not and cannot question it.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Mr. Sibal also says that maximising revenues might not always be the government’s objective. True, but this should be a recorded ex ante decision, not an ex post facto rationalisation.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Again, the allocation of coal blocks is of course an executive decision, but would Mr. Sibal argue that the arbitrary and discretionary allocations of scarce natural resources are an executive prerogative that the CAG cannot question?</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>Disingenuous argument</em></div><div style="text-align: justify"><br /></div><div style="text-align: justify">Finally, there is the disingenuous argument that the executive is accountable whereas the CAG is not. The executive is of course accountable to Parliament and the people — through the CAG — though every attempt is made to evade it and obfuscate issues, as in the present case. As for the CAG, the argument is presumably that he should be accountable to the people for the quality of his audit. He is our supreme audit institution, and we cannot ask another auditor to second-guess his audit.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Besides, apart from the Ministries and other government organisations and public enterprises, even IITs, IIMs, private companies, etc, can come within the scope of his audit if they receive funds or allocations of natural resources from the state; and the CAG nominates private sector auditors for the audit of public enterprises and test-checks their audit. Which of these agencies or organisations can be asked to undertake an audit of the CAG’s work? In any case, such an imposition on the CAG would be unconstitutional.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">All this agonising is unnecessary because the CAG is not exempt from criticism. (That is perhaps the understatement of the year, considering the campaign that is going on.) As already mentioned, the executive has plenty of opportunity to challenge every statement in the audit report at every stage, including the stage of examination by the PAC. Secondly, there is a discussion of all this in the media, and many commentators analyse the audit reports. Is this not a form of accountability?</div><div style="text-align: justify"><br /></div><div style="text-align: justify">If there is to be a peer review of the work of the institution of the CAG, it has to be initiated by the CAG himself. The CAG has in fact done so. He constituted an international panel consisting of representatives of the SAIs of several countries to conduct a review of his organisation’s work, and the panel is understood to have submitted its report.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">In conclusion, it is sad that persons of such eminence should attack a constitutional functionary either on the basis of inadequate understanding or with the deliberate intention of obfuscating issues.</div><div style="text-align: justify"><br /></div><div style="text-align: justify"><em>(Ramaswamy R. Iyer is a former Secretary, Water Resources, Government of India.) </em></div>
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<br><a href="http://www.thehindu.com/opinion/lead/continuing-onslaught-on-the-cag/article3929560.ece?homepage=true" class="re" target="_blank">The Hindu, 24 September, 2012, http://www.thehindu.com/opinion/lead/continuing-onslaught-on-the-cag/article3929560.ece?homepage=true</a><div class="clear"></div>
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LATEST NEWS UPDATES | Continuing onslaught on the CAG -Ramaswamy R Iyer
Published on Sep 24, 2012
Modified on Sep 24, 2012
-The Hindu
The work of India’s supreme auditor cannot be put through an audit unless the institution itself initiates one
The relentless campaign against the Comptroller and Auditor-General, of an unprecedented ferocity, compels me to write again on the subject.
First, has the CAG caused a political and constitutional crisis, as some have argued? All that the CAG does is to submit audit reports. Any audit report, if it is a good report, is bound to contain elements that can be used for a criticism of the government. Using the report to stall Parliament was a clear, declared political decision of the Opposition. To say that the CAG shares the responsibility for this amounts to saying that the CAG should not have submitted a report at all, or should have submitted a totally bland report from which no party can pick up any point for criticising the government.
G. Mohan Gopal, a highly respected legal expert, makes two main points (The Indian Express, 10 September 2012): the fallibility of the CAG, and giving illegal advice to the government.
Fallibility
The fallibility of the CAG is a truism; no one ever denied it. There are two important procedural safeguards against errors in the audit reports. In drafting paragraphs for inclusion in the audit report, substantiation has to be provided for every remark through ‘key documents’. This is a stringent requirement. After such internal procedures, when the first draft of the audit report is ready, it is sent for comments to the Ministry or organisation under audit, and is revised in the light of comments received. If I am not wrong, this process is repeated more than once. At every stage, the executive can draw attention to errors of fact or understanding or law, if any, in the report. In fact, apart from corrections or revisions being made in response to comments, the initial objections themselves are dropped in many cases in the light of explanations by the executive. Not every comment initially formulated finds its way into the final audit report. The fallibility of the CAG is a red herring.
Turning to the charge of ‘illegal advice’, the CAG did not give any legal advice on his own on the choice between administrative instructions and amendment of the Act; he was only citing an advice of the Law Ministry of 2006. It might be Mr. Gopal’s view that the advice was wrong, but I doubt if the Law Ministry would accept that view. The CAG’s point was that in July 2006, on the basis of the Law Ministry’s clear advice at that stage, competitive bidding could have been adopted through administrative instructions. Anyway, that is only a hypothetical point; the final decision was to amend the Act. The CAG did not question that decision. He merely pointed out that the time it took to arrive at that decision (for whatever reasons) meant the continuance of the procedure of selections by a Screening Committee. Further, he did not even criticise that procedure per se, but only the absence of openness, transparency and fairness in that procedure, and the difficulty of determining the basis for the selection of parties. What remains of the illegality charge?
Mr. Gopal makes another point, namely, that mining licences could be granted only by the State governments, and that the Screening Committee was just that, namely, a Screening Committee, and that it was making no allocations of coal blocks. I am sure the CAG will have something to say on this, but as a layman let me ask Mr. Gopal a few simple or simplistic questions. Why was there a Screening Committee at all? What was it screening for? If it was not making allocations of coal blocks, what exactly was it doing? If there was no such thing as ‘allocation of coal blocks’, why did no one say so when the draft audit report was under discussion between the Ministry and the CAG? Did the Ministry question the term ‘allocation of coal blocks’ at any time?
On all these matters, did it not occur to Mr. Gopal that he should take the precaution of checking with the Ministry and the CAG before publishing his rash remarks?
Tendentious
Mr. Gopal castigates the CAG for calculating “losses arising from obeying the law”. That is a highly tendentious statement. First, what the CAG is talking about is not ‘losses’ to the government, but windfall gains to the recipients of the allocations. Secondly, it is preposterous to say that the CAG is calculating ‘windfall gains’ as arising from the government following a legal course. His point is that the allocation of coal blocks confers windfall gains on the recipient parties, and so the process of selection of parties should be fair, objective and transparent. This would apply, whatever the route followed for the selection of parties.
As for Kapil Sibal’s criticism of the CAG for making policy (The Times of India, September 15, 2012), the answer is threefold. First, the CAG does not make policy prescriptions. He draws inferences from his audit findings and makes some consequential recommendations for the government’s consideration. It is for the government to consider and accept or reject them. Secondly, the CAG picks up policy decisions or recommendations from the files and tries to find out whether they were acted upon promptly or at all. Thirdly, where there is no recorded and reasoned policy decision behind the executive action, the CAG examines the rationale of the action. If there is a clear record of the reasoned adoption of a policy, the CAG does not and cannot question it.
Mr. Sibal also says that maximising revenues might not always be the government’s objective. True, but this should be a recorded ex ante decision, not an ex post facto rationalisation.
Again, the allocation of coal blocks is of course an executive decision, but would Mr. Sibal argue that the arbitrary and discretionary allocations of scarce natural resources are an executive prerogative that the CAG cannot question?
Disingenuous argument
Finally, there is the disingenuous argument that the executive is accountable whereas the CAG is not. The executive is of course accountable to Parliament and the people — through the CAG — though every attempt is made to evade it and obfuscate issues, as in the present case. As for the CAG, the argument is presumably that he should be accountable to the people for the quality of his audit. He is our supreme audit institution, and we cannot ask another auditor to second-guess his audit.
Besides, apart from the Ministries and other government organisations and public enterprises, even IITs, IIMs, private companies, etc, can come within the scope of his audit if they receive funds or allocations of natural resources from the state; and the CAG nominates private sector auditors for the audit of public enterprises and test-checks their audit. Which of these agencies or organisations can be asked to undertake an audit of the CAG’s work? In any case, such an imposition on the CAG would be unconstitutional.
All this agonising is unnecessary because the CAG is not exempt from criticism. (That is perhaps the understatement of the year, considering the campaign that is going on.) As already mentioned, the executive has plenty of opportunity to challenge every statement in the audit report at every stage, including the stage of examination by the PAC. Secondly, there is a discussion of all this in the media, and many commentators analyse the audit reports. Is this not a form of accountability?
If there is to be a peer review of the work of the institution of the CAG, it has to be initiated by the CAG himself. The CAG has in fact done so. He constituted an international panel consisting of representatives of the SAIs of several countries to conduct a review of his organisation’s work, and the panel is understood to have submitted its report.
In conclusion, it is sad that persons of such eminence should attack a constitutional functionary either on the basis of inadequate understanding or with the deliberate intention of obfuscating issues.
(Ramaswamy R. Iyer is a former Secretary, Water Resources, Government of India.)
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