Hyderabad: On Independence Day this year, the Prime Minister Narendra Modi while addressing the nation from the ramparts of the iconic Red Fort on the occasion of 77th Independence Day, affirmed that the country was in the clutches of the demon corruption when they came to power in 2014; but later on his government stopped leakages and created a strong economy.
Redflags-Ironically, the audit reports of the Comptroller and Auditor General of India (CAG) which were presented in Parliament on August 10, raised a red flag against several projects by the Centre, leading to political uproar. Some of the Government initiatives including the country’s public health assurance scheme Ayushman Bharat — Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) and the construction of Dwarka Expressway were flagged by the CAG.
Dwarka Expressway- The main Opposition, Congress Party listed the red flags of the report and alleged that the CAG report has exposed the “sheer corruption and inefficiency of the Modi government.” One of the red flags of the report is the inflated project cost of the Dwarka Expressway undertaken by the NHIA under the Bharatmala programme, which went up 14 times from the sanctioned Rs 18 ) crore per Lid to Rs 250 crore per km.
Ineligible beneficiaries- The performance audit by the CAG found several ineligible beneficiaries, including invalid names. Also, the CAG has raised similar questions on irregularities in the Ayodhya Development Project and the diversion of old age pension funds under National Social Assistance Programme for publicity of the Modi government's schemes instead.
This episode once again triggered a nationwide debate about the role and functioning of the CAG of India in safeguarding public funds to ensure effective execution of various government initiatives. The Opposition parties have gone to the extent of criticising the Modi government for attempting to make the constitutional authority CAG incompetent. The Congress Party, in particular, cannot forget how the audit reports of Vinod Rai as CAG had led to its downfall in the 2014 general elections. How impactful has the national auditor been in recent times?
Delaying the tabling of reports- The common public still would remember the tenure of Vinod Rai (2008-13) as creating considerable impact from this constitutional institution both in terms of volume and quality of audits done. During 2010-11, the CAG prepared 221 audit reports to be tabled in Parliament and State legislatures and during 2011-12, the national auditor prepared 137 audit reports.
However, in recent times, contrary to the well-established convention of finalising the audit report on finance accounts ahead of the budget session, the CAG did not table it in 2020. There were media reports that the current leadership of CAG has failed to show a sense of urgency in finalising and signing the audit reports as per established protocol and convention.
The demoralising aspect-While the general public has great faith in the CAG’s role as a watchdog of the state exchequer, ruling governments frequently delay audit reports from being presented in Parliament and State legislatures. This demoralises the findings of the constitutional audit institution. An analysis of audit reports being tabled in Parliament shows that between 2014 and 2019, a delay of more than 90 days was experienced for the 42 audit reports. For several of the reports, there was a delay of even more than 180 days.
Almost half of these audit reports were performance audits of different government programmes concerning the welfare and development of people. This declining trend became more evident in 2018, the last year of the Modi government's first term, when the executive delayed the presentation of eight of the 17 audit reports by more than 90 days. In 2019 too, the executive delayed seven of the 21 reports by over 90 days.
Proposed amendment- Many experts, including former CAG Vinod Rai, had proposed a draft amendment in 2009 which prescribes a time period of seven days for laying it after it is received from the CAG. Fourteen years passed since then; nothing happened, except the draft amendment kept gathering dust with successive governments.
There has been a widespread criticism that by deliberately delaying the presentation of audit reports, the government avoids the parliamentary and legislative scrutiny on such reports. Meetings of the Public Accounts Committee (PAC) and Committee of Public Undertakings (CPU) can take place only after a specific audit report is presented.
Dwindling numbers-Another worrisome factor is a substantial and continual reduction of output by the CAG in terms of number of audit reports. During the activity year 2018-19, CAG of India prepared only 73 audit reports (for central and State governments); during 2017-18, it had prepared 98 audit reports, and in 2016-17, 150 audit reports were prepared. In 2013-14, 134 audit reports were finalised; in 2014-15, it had prepared 162 audit reports; in 2015-16, it had prepared 188 audit reports.
That means, mainly, there has been a decline in the number of audit reports prepared by the national auditor, especially since 2015-16. Though assessing the CAG’s performance only in quantitative metrics may not be logical, we have to see it in the context of delayed reports, and the concerns voiced by 60 eminent citizens and retired civil servants over the functioning of CAG.
Declining Credibility? In November 2018, the CAG office had received a letter from 60 eminent and retired civil servants, who expressed concern that the auditor reports on demonetisation and the Rafale deal had been “deliberately” delayed so as to not “embarrass” the party in power at the Centre before the 2019 general elections. The CAG’s failure to present the audit reports on the note ban and Rafale deal in time “may be seen as a partisan action” and could create a “crisis of credibility” for the institution, the letter said.
They further raised the issue of why so many concessions were granted during the Rafale negotiations in 2016 when India had a near-monopsony (a market situation where there is only one buyer) position when it came to purchasing the jets from Dassault, a French firm by removing all the critical provisions in the Defence Procurement Procedure (DPP) document is the real puzzle which must be unravelled.
Demonetisation- In case of demonetisation case, the then CAG Shashi Kant Sharma had told the media in March 2017 that while demonetisation, per se, was a banking and money supply issue outside the CAG’s audit jurisdiction, but it was well within its rights to seek audit of the fiscal impact of demonetisation, especially its impact on tax revenues. However, there was inordinate delay on the part of CAG to perform its constitutional duty in preparing the audit report in this regard.
How 2G Spectrum became a figment of imagination- Vinod Rai was widely recognised for his audit report that there had been massive irregularities on issue of Licences and Allocation of 2G Spectrum during A. Raja’s reign as Telecom minister in United Progressive Alliance (UPA) government which rocked the nation.
The Union minister was accused of giving licences to telecom operators at throw-away prices without a free and fair bidding process, in exchange for kickbacks. The report estimated that there was a presumptive loss of Rs 1.76 lakh crore to the government. This case came to be known as the “2G scam case” — India’s biggest telecom scandal.
Consequently, A. Raja resigned as Union minister in November 2010; in 2011, he was placed in judicial custody at Tihar Jail for a period of 15 months. Finally, he got acquitted along with 16 others in December 2017 by the special court in Delhi. The court said there was no evidence available against any of the accused.
Thus, the Presumptive Revenue loss calculation has never been established and has at best remained a guesswork. Also, the Supreme Court pronounced that Revenue maximisation may assume secondary consideration of the telecom policy to development consideration (common good). Thus the political analysts opined that the entire issue was prejudged based on bare hunches, incomplete information and corridor rumours.
It was declared a scam on national media, in Parliament and people were led to believe that there was one. To quote the judgement of Special Judge OP Saini, “Thus some people created a scam by artfully arranging a few selected facts and exaggerating things beyond recognition to astronomical levels.” Thus by prejudging the issue, the CAG erred. The opposition Congress Party adversely reacted by labelling the award of Padma Bhushan to Rai, and his appointment as chairman of the Banks Board Bureau as ‘rewards’ received from the NDA government, after his superannuation.
Why CAG Reforms? The Indian Constitution equates the CAG with a Judge of the Supreme Court. This ensures his complete independence from the Executive. The CAG (Duties, Powers and Conditions of Service) Act, 1971 suffers from two lacuna: first, it is silent on the required qualification for the incumbent and a transparent procedure for appointment to this highly technical position. Appointing a non-professional generalist and a person convenient to the government to the august office of CAG goes against the spirit of the Constitution.
Many democratic countries like the US, the UK, Japan, and Germany have been following a system of appointing only an accounting and audit specialist as their national auditor. Second, ethically, it is not proper to appoint a generalist IAS administrator who heads several ministries in the Union and State governments due to inherent conflict of interest.
How a CAG who had worked as Defence Secretary would play the role of an honest auditor while scrutinising his own policies and decisions, taken along with the political bosses, and report to the Parliament?
Is India Ready to Learn from Better Systems of Other Countries? India’s first Prime Minister, Jawaharlal Nehru tried to uphold the true spirit of the Constitution by selecting the three CAGs during his tenure, who were all professionals and could never think of a generalist for the top post. They were: Narahari Rao (1948-54), AK Chanda (1954-60) and A K Roy (1960-66). The fourth and last professional appointed as CAG had been Ardhendu Baksi (1972-78) who was chosen by the then Prime Minister Indira Gandhi.
Surprisingly, this is the only Constitutional post which the Prime Minister could appoint at his own will without following any established procedure. Two questions naturally arise: why should not the Government of India make the selection procedure and criteria public? Why should not the Government appoint the CAG after vetting by a high-level committee, as is done for the apex posts in case of the CBI and CVC?
What Advani suggested? L K Advani in 2012 suggested that CAG’s appointment should be made in a bipartisan manner through a Collegium. The high-powered National Commission to Review the Working of the Constitution (NCRWC) consisting of 11-members and chaired by Justice Venkatachaliah, constituted by the Prime Minister A B Vajpayee, in its report submitted to the Government in 2002 recommended for enactment of an appropriate legislation and establishment of a multi-member Board (similar to the Audit Commission of Japan) for CAG’s organisation for better discharge of the vital function of public audit.
As we have followed the British Parliamentary system, the CAG of India should likewise be made an Officer of Parliament with the right to speak in Parliament and defend his reports. In India, the CAG audits the accounts after the expenditure is committed, that is, ex post facto. In the UK, no money can be withdrawn from the public exchequer without the approval of the CAG.
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