Citizens' Issues
Supreme Court verdict on CAG mandate: A step in the right direction

The Supreme Court has minced no words in clarifying that the CAG is not a mere account-keeper. Now Central and state governments should join hands with the CAG to ensure that the country’s assets, irrespective of the nature of ownership, are not plundered by unscrupulous elements

The observations of the Supreme Court while dismissing the PIL (public interest litigation) which argued that the Comptroller and Auditor General of India’s (CAG) reports on Coalgate, airport privatisation and power sector went beyond the Auditor’s constitutional mandate would not have attracted the attention the ruling did, but for the celebration of the apex court ruling on the Presidential reference on allocation of natural resources.

 

On the Presidential reference as it was duty-bound, given the Court’s view upholding the supremacy of Parliament on policy issues and in fact, it did not give any adverse view against any statutory body including the CAG. While dismissing the PIL, the apex court only reemphasized the statutory mandate of the CAG and explaining the processes which the CAG reports go through, clarified that if the CAG exceeded his brief, Parliament will surely correct him and tell him that the methodology adopted by him for the preparation of the report was not correct.

 

For quite sometime now, the CAG is being harassed and criticized for performing normal duties expected of him, by a government caged by the rich and the powerful. Performance audit has been a tool used by the CAG since the 1960s. What Vinod Rai and his predecessor have done is just to sharpen the tool by infusing expertise into the audit team.  By training and educating cadres down below and bringing professionalism in the performance of audit function, they improved the functional efficiency of the office. If similar initiatives had come from his counterparts heading several government departments and public sector or statutory organizations, the agony the present United Progressive Alliance – II (UPA II) government is now suffering would have been much less.

 

The apex court has now minced no words in clarifying that the CAG is not a mere account-keeper. The critiques who are saying that accountant and auditor should bother only about the accuracy of figures are, for reasons best known to them, pleading ignorance of the changes that have happened in the law and practice of accounting and audit and the reforms in the CAG’s office brought about by Vinod Rai and his predecessor, who understood the post-LPG (Liberalisation-Privatisation- Globalisation) scenario better.

 

The present political leadership is the “who’s who” of the rich and influential class which has its own constituency interests to protect. We are heavily dependent on the government’s other arms like the CAG and judiciary to come to rescue when extraneous compulsions force government departments and public sector organizations to misappropriate or divert public funds to the advantage of their masters or greedy corporates and individuals. The differentiation between public funds and private resources is getting diluted, as either public resources are freely flowing to private sector or the exchequer is becoming responsible to make good the losses incurred by greedy individuals by mismanagement of businesses they own and operate.

 

The initial response from government spokespersons to any revelations in reports of the CAG is on dotted lines these days. First, the CAG has exceeded his brief. Then, all his presumptions are not right. Third, even if some findings have some basis, losses are not as huge as are made out. Fourth and that is the icing (as in Coalgate), in the given circumstances, there were not many options as several departments/ministries were slow in decision-taking. To the total discomfort of the government, this time around, even the mainstream media which usually shows some eagerness to protect governments from disgrace refused to buy the government story without riders (remember the zero-loss 2G spectrum story of Kapil Sibal which was initially swallowed by a section of the media!).
 

The shock to some in the context of the report after a report from the CAG with more and more revelations about corrupt practices can be traced to the refusal of the government and media in publicizing the evolution of the institution of the CAG which has been silently moulding itself in recent times to meet the challenges of changing times. Destiny has put Vinod Rai as CAG at a time when the country needed a person of his stature in that position. His having gone through the thick and thin of finance ministry and certain other tough assignments gave him the analytical mind and investigative skill needed to expose mega scams.

 

The remarkable achievements of the CAG during the tenure of the present incumbent are more attributable to the interest shown by an individual in protecting public funds. To ensure that the same thrust on “conscience keeping” continues, the present approach of the CAG will have to be institutionalized by providing necessary legislative and administrative support. The CAG’s role in protecting the interest of the country in regard to public funds is similar to the role of the judiciary in protecting life and property. This emphasises the need to empower the CAG to cause audit of any transaction involving national resources and more importantly, to equip CAG’s office for the purpose.

 

A large number of the people’s representatives in legislatures continuing to be those who are rich and powerful in their own way and capable of managing politics and vote banks and not necessarily interested in the sound management of nation’s resources, we are dependent on the government’s other arms like the CAG and judiciary to come to rescue when extraneous compulsions force public sector organizations to misappropriate or divert public funds.

 

As the CAG’s audit is mostly a post-event affair and the judiciary will take a view only when issues reach them after due process, the media has a major role to play. With the exception of some financial newspapers and a few national dailies, the media generally show interest in the sensation value of issues and refuse to take on itself the burden of working like a watchdog and educating their readers/viewers about how the drain on country’s resources affect their pockets and living conditions.

 

The changes brought about in the vision and mission of the office of the Comptroller and Auditor General in recent years are worth accepting as a model for adapting with appropriate modifications by other arms of governance at the Centre and states. These changes in the approach of the CAG’s audit are consistent with the vanishing line between public and private funds as both originate from the nation’s ‘sovereign’ resources and the hard work of its people. We should sooner than later come out of the legacy of British rule inherited by us, which has drawn a clear distinction between the assets owned by the rulers (read public funds in the present context) and wealth with the private sector or individuals, individual families or trusts/companies formed outside government ownership. This distinction is causing several unethical practices in our country. Sometime back while talking to media, Vinod Rai has gone on record saying that he was open to guidance and expert advice from eminent statesmen.

 

Central and state governments should join hands with the CAG’s efforts to ensure that the country’s assets, irrespective of the nature of ownership, are not plundered by unscrupulous elements. When the CAG’s reports bring out glaringly corrupt practices or make suggestions for incorporating better practices to avoid earlier mistakes, looking at them from mere legal or accounting angle or defending individuals and organizations instead of learning from past mistakes, correcting them before further proceeding are not in the best interests of the country.

 

You may also want to read:

CAG insists it acted within its mandate on 2G spectrum issue

CAG: Undue benefits of Rs3.8 lakh crore to private parties

CAG not exceeding jurisdiction, says finance minister .

 

 (MG Warrier is a freelancer based in Mumbai. He can be contacted at [email protected].)

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Punjab Cabinet approves bill on safeguarding depositors

The Bill envisages in case of non-return of depositors' money or any fraud, the defaulter company will attract imprisonment up to six years and fine up to Rs1 lakh and allows to attach properties of managers or owners of such company

 
Chandigarh: The Punjab Cabinet has approved a bill to safeguard the interest of general public and save them from fraudulent practices of private non-banking finance companies (NBFCs), reports PTI.
 
The Punjab Protection of Interests of Depositors (in Financial Establishment) Bill, 2012 envisages in case of non-return of depositors' money or any fraud, the defaulter company will attract imprisonment up to six years and fine up to Rs1 lakh, an official spokesman said.
 
Properties of managers or owners can also be attached, he said.
 
The Cabinet also okayed the implementation of Punjab Rent Act, 1995 applicable to tenancies existing on the date of notification of the Act.
 
The existing tenancies will continue to be governed by the Eastern Punjab Rent Restriction Act, 1949, the spokesman said.
 
The new Act provides for compulsory registration of the tenancy agreement between the landlord and the tenant.
 

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Collective Investment Schemes: SEBI has done a great job on Sahara but what about the others

While we laud SEBI for the dogged pursuit of the Saharas, which issued over Rs17,500 crore...

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