Coalgate- Part 2: Analysis and CAG of India

The previous post talked about the actual facts behind what has become infamous as the Coalgate scam. It is similar to the 2G spectrum as a natural resource was handed out cheaply to private entities who made profits selling it and did not, as the government claims, result in lower price to the consumer and went against governments own declared intentions and goals and there were favours given to a chosen few. The difference lie only in the specifics of how it happened.

The similarity continues in the government claiming Zero loss and blasting the CAG for sensationalising the entire issue. I just do not get it. Don't these people have even common sense required of politicians? The CAG did not announce these in a press conference! He submitted his report, which is his constitutional duty, to the President. Our previous President kept it with her till the last day in office and then placed it before Parliament. Due process was followed and nothing was out of the line and irresponsible comments against a constitutional authority is irresponsible and childish.

There were also claims that the CAG figures are wrong and exaggerated. Let us assume that the CAG figures are wrong to the tune of 99%. So, there was a loss of only 1,860 crore. Cheap money?? It is our money and the government is responsible to us and must explain why it threw away this much money! Another fact is, the CAG has not said that this is the exact loss to the exchequer, this is based on calculations merely to give a sense of the magnitude of the issue and can be off by some margin. Rather than giving a lot of explanations on possibilities, it is the responsibility of the CAG to bring more clarity into the picture and say what is the potential loss and the CAG must be lauded for this work.

Next comes the issue of whether CAG crossed his constitutional mandate. The CAG was called the most important constitutional authority by Dr.Ambedkar and that too for a reason. This is the only institution that scrutinises the governments work, generates over 70,000 audit reports along with Principal Accountant Generals in the states, detects procedural and financial irregularities and in case when financial irregularity is high, detect administrative irregularity as well. It is being alleged that CAG cannot delve into policy matters and he can only audit the accounts. If the CAG is only an auditor who has to ensure the balance sheets match, then he does not have to take an oath to uphold the Constitution and law whereas ministers take an  oath to bear faith and allegiance to the Constitution and work in accordance with the Constitution. The CAG is an independent Constitutional authority and can be impeached only in the manner of a Judge of the Supreme Court. It is highly unlikely that a mere accountant or auditor would require such freedom and high constitutional status.

What separates the CAG from normal auditors is not mere accounting but its audit of propriety and audit of efficiency, economy and effectiveness. This is not mentioned in the constitution but this is the worldwide practice of Supreme Audit Institutions and also the legacy of colonial rule. The CAG can ensure whether the expenditure was necessary, whether it attained its goals and whether it did so at lowest expense. Its reports can also go into whether the governmental action is improper even if it is legal (like arbitrary allocation of coal blocks). Thus, it can go into whether a decision was correct and this has been the accepted practice so far.
(Arora and Goyal, Indian Public Administration Institutions and Issues, Part8,The Accountability System,"Comptroller and Auditor General of India"
http://www.thehindu.com/opinion/lead/article2568360.ece
http://www.thehindu.com/opinion/lead/article2568360.ece )

A popular misconception is that CAG has fixed government's corruption and indicted individuals in the case. CAG reports are meant as a tool of self-correction in departments and to rectify these errors. The hearings of Public Accounts Committee, which uses the CAG report and is assisted by the CAG, are not meant to act as hearings on disciplinary actions or court hearings but meant to fix the system and correct flaws. Therefore, a personal attack on the CAG is uncalled for and if it does happen, it is just like what we all would do when someone points out our mistakes- we go on the defensive and the best defense is to attack the individual.

If the government intended to rectify the errors, it would have recognised the report and accepted that there were errors in the system and we would rectify it. But this can happen only if these were errors in policy and system because accepting these errors would also mean admitting that individuals are responsible for these errors. Therefore, the only viable defense for the guilty is accuse and attack.

These are the facts and these are the issues. I leave it to you to judge. I hope it does more than become a brand building exercise for P&G.

full disclosure- I have been preparing for civil service exams and most of what I have written about CAG come from the books and newspaper articles I have read and from my father who works in the Indian Audit and Accounts Department headed by the CAG