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September 24., 2012

September 24., 2012

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Published by CHETSUN

Continuing onslaught on the CAG

Continuing onslaught on the CAG

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Published by: CHETSUN on Sep 30, 2012
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 1THE HINDUSeptember 24, 2012Continuing onslaught on the CAGRamaswamy R. Iyer
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 CAGdoes is to submit audit reports. Any audit report, if it is a good report, is bound to contain elements thatcan be used for a criticism of the government. Using the report to stall Parliament was a clear, declaredpolitical decision of the Opposition. To say that the CAG shares the responsibility for this amounts tosaying that the CAG should not have submitted a report at all, or should have submitted a totally blandreport 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, 10September 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 proceduralsafeguards against errors in the audit reports. In drafting paragraphs for inclusion in the audit report,substantiation has to be provided for every remark t
hrough ‘key documents’. This is a stringent
requirement. After such internal procedures, when the first draft of the audit report is ready, it is sentfor comments to the Ministry or organisation under audit, and is revised in the light of commentsreceived. If I am not wrong, this process is repeated more than once. At every stage, the executive candraw attention to errors of fact or understanding or law, if any, in the report. In fact, apart fromcorrections or revisions being made in response to comments, the initial objections themselves aredropped in many cases in the light of explanations by the executive. Not every comment initiallyformulated finds its way into the final audit report. The fallibility of the CAG is a red herring.Turning to the ch
arge 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
 
 2
Ministry of 2006. It might be Mr. Gopal’s view that the advice wa
s 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 notquestion that decision. He merely pointed out that the time it took to arrive at that decision (forwhatever 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, transparencyand 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 Stategovernments, and that the Screening Committee was just that, namely, a Screening Committee, andthat 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 ScreeningCommittee 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 withthe 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 highlytendentious 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 iscalculati
ng ‘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 theselection 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 decisionsor recommendations from the files and tries to find out whether they were acted upon promptly or atall. Thirdly, where there is no recorded and reasoned policy decision behind the executive action, theCAG 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.

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