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Mainstream, VOL L, No 6, January 28, 2012

Belittling CAG Diminishes Parliament’s Effectiveness

Tuesday 31 January 2012, by B P Mathur


The Comptroller and Auditor General’s Report on the 2G Spectrum has created a great deal of controversy and his role is being questioned. The Public Accounts Committee could not finalise its report due to the splitting on the issue on party lines. The JPC currently examining the matter has taken an unprecedented step of taking evidence of a junior officer of the CAG’s set up, since retired, and quizzed the CAG about the manner of calculating the loss in the deal. It has asked the Finance Ministry to give its version of ‘presumptive loss’ to score a debating point.

It is through an elaborate system of control over money that Parliament exercises supremacy over the Executive. Britain, whose constitutional practices we follow, had to undergo centuries of struggle to secure Parliament’s supremacy, dating back to the Magna Carta (1215) and Bill of Rights (1688). It was through control over national finance that democracy was secured in Britain and the House of Commons became the guardian of human rights and enabled it to secure the safety of the life, liberties, and rights of the subject against arbitrary acts by the Executive.

The Legislature’s power to control money has two elements: the granting of money and supervision of expenditure by the state audit institution. Simply securing the power of budgetary appropriation has no meaning, unless Parliament knows how effectively the Executive has spent the money. It was due to the missionary zeal of William Gladstone, the Victorian era Prime Minister, that an Exchequer and Audit Act of 1866 was enacted, and this created an independent office of the CAG, who would audit all government departments and make a report to Parliament to be examined by its Committee of Public Accounts. This solved the dilemma which had baffled Parliament for years- ‘whether expenditure should be controlled by inexpert parliamentarians or expert non-parliamentarians’.

Taking inspiration from the British model, the framers of the Indian Constitution gave an exalted status to the CAG, whose reports were to be submitted to Parliament. Dr B.R. Ambedkar observed in the Constituent Assembly that he is ‘probably the most important officer in the Constitution of India, and his duties are far more important than the duties even of the judiciary’. Dr Rajendra Prasad, the first President, had commented that the CAG ‘has the power to call to account any officer, however highly placed, so far as State money is concerned’. The CAG works in close cooperation with the Public Accounts Committee, to whom his reports are remitted, and is called its ‘friend, philosopher and guide’. The Committee works on non-party lines, and by convention a member of the Opposition is the Chairman of the Committee. Since the commence-ment of the Constiution, a relationship of trust and confidence exists between the PAC and CAG and their harmonious working has helped in maintaining probity and financial propriety in the running of the administration. Sadly, some recent developments in the working of parlia-mentary committees show that this trust between the CAG and the Legislature is getting eroded.

THE position of the CAG in enforcing the govern-ment’s accountability should be understood in the light of developments in the international arena. In order to deepen democracy and Parliament possessing the necessary expertise to make the Executive accountable, the Supreme Audit Institutions (SAIs) all over the world are being increasingly recognised as a legislative branch agency. In the UK, the Audit Act was amended in 1983 to strengthen parliamentary control over public money and the CAG made an Officer of the House of Commons. The CAG’s mandate was widened for conducting economy, efficiency and effectiveness audit. While the CAG has complete discretion to conduct audit, in determining whether to carry on an examination, ‘he shall take into account any proposals made by the Committee of Public Accounts’. During the 1990s, all the advanced Commonwealth countries, such as New Zealand and Australia, have amended their Audit Acts and incorporated made a provision similar to that of the UK, and made the CAG an officer of the Parliament. The US’ Government Accountability Office, since its inception, has been recognised as a legislative branch agency and enjoys a special working relationship with the American Congress, with 80 per cent of its reports emanating as a result of Congressional requests. In continental countries such as France, Germany, Italy, Austria, Belgium there is a system of Audit Courts which, while performing functions of expenditure control on behalf of Parliament, enjoy wide powers and act like judicial bodies. The French Cour des Comptes is assisted by the Prosecutor General responsible for providing legal advice, and has the power to recover improperly expended public funds or cash deficits from accounting officers.

While there is a great deal of convergence of interest between the government audit and the Legislature, in practice there is a huge gap due to the fact that the dividing line does not run between ‘Parliament as a whole’ and ‘the government’ as per the constitutional mandates. Parliament gets divided between the ‘parlia-mentary Opposition’, on the one hand, and the ‘government and the governing parties’ on the other. Dr Frnaz Fiedler, the Secretary- General of the International Organisation of Supreme Audit Institutions, observes that this unwittingly leads to “convergence of interests between government audit and the parlia-mentary Oppo-sition”. The situation leads to a confrontation between the parliamentarians and the SAI and the “SAI is placed in a situation where it has to defend its own criticism”. It is unfortunate that the Indian CAG is caught in the crossfire between members of the ‘ruling government’ and the ‘Opposition’ as politicians react to his reports according to their party affiliations. Such criticism of the CAG is totally unjustified. The CAG performs his job objectively and professio-nally and does not act according to conside-rations of party politics.

The JPC and PAC are in effect mini- Parliament, required to act as a single voice rising above party considerations. The CAG is de facto an officer of Parliament and there is a convergence of interest between him and Parliament. Therefore denigrating him is self-defeating, like cutting the branch of a tree on which one is sitting. Parliamentarians should realise that the CAG is an integral part of the parliamen-tary control mechanism over the Executive, a sine qua non for effective functioning of our democracy.

Dr B.P. Mathur is a former Deputy Comptroller and Auditor General and author of the book Government Accountability and Public Audit.

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