Damaging a Basic Institution of Democracy

by S. Krishnan and B.P. Mathur

Montek Singh Ahluwalia, the Deputy Chairman of the Planning Commission, has recently made a statement that the CAG is ill- equipped for conducting performance audit and lacks trained personnel for doing so and further that the performance audit conducted by him was not credible as it was done by accountants not trained for the same. (The Times of India, August 13, 2013) A few days earlier P. Chidambaram, the Finance Minister, blamed the former CAG for the prevailing pessimism in the economy and said he had exceeded his mandate. (Interview given on July 31, The Times of India—India Business)

In their keenness to find an alibi and divert attention from numerous scams bedevilling the government and the current downslide of the economy, these high functionaries of the government have tried to find a scapegoat in the CAG, instead of appreciating that he is doing his duty as a guardian of national finance and serving the national interest. Such obser-vations are in stark contrast to the views of the founders of the Indian Constitution. Dr B.R. Ambedkar, during the course of the discussion on the role and functions of the CAG in the Constituent Assembly, had described him as a more important functionary than even the judiciary. The first President of India, Dr Rajendra Prasad, while commenting on the CAG’s powers, had stated that “he has the power to call to account any officer, however highly placed so far as State moneys are concerned†.

The Institution of Public Audit in India is more than 150 years old and conducts audit with a view to ensure that the monies voted by State Legislatures and Parliament are spent for the purposes for which they were sanctioned, and with due regard to economy, efficiency and effectiveness. In the past many of these reports— such as on the Bofors gun deal, first round of disinvestment of the PSUs causing huge loss to the exchequer (1993), coffin purchase during the Kargil war, misuse of the MPLAD by Members of Parliament—have earned encomiums not only from Parliament and its Public Accounts Committee, but also from the enlightened public of the country, whose demand for accountability and transparency on the part of public officials, an essential hallmark of democracy, was increasingly being voiced in various quarters including the media.

It seems that the outbursts of Montek Ahluwalia and Chidambaram are due to the extreme discomfort the present UPA II Government has faced on account of the exposure of scandals and irregularities connected with the Commonwealth Games, 2G spectrum allocation, Coalgate and other cases, brought out in the audit reports, resulting in CBI enquiries, jail terms for some highly placed functionaries and Supreme Court intervention.

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The reports of the CAG themselves speak for the technical and professional competence of audit officials and their fearlessness and courage in exposing blatant abuse of public office by high public functionaries. It is said of judges of the Apex Court that ‘they should not make speeches, but their judgement should speak for them’. The same can be said of the audit officials—the audit reports submitted to Parliament and State Legislatures are adequate testimony to their professional expertise and competence to do performance audit. The professional expertise of the Office of the CAG has been recognised by the United Nations, which has entrusted it with the audit of several of its agencies. The CAG of India is the member as well as Chairman of several technical committees of the INTOSAI (International Organisation for the Supreme Audit Institutions), and a large number of officers of member-countries come to India every year to receive training in audit techniques and practices.

It needs to be emphasised that in recent years, Parliaments in all mature democracies have extended the role of the Supreme Audit Institution to conduct performance audit, in view of the massive increase in public expenditure and increased responsibilities which governments have to shoulder in a complex technocratic world. In the UK, whose parliamentary traditions we follow, the hundred-year-old Audit Act was amended in 1983, and the CAG was given statutory backing to conduct economy, efficiency and effectiveness audit. During the 1990s, all advanced Commonwealth countries, such as Australia, New Zealand and Canada, had amended their Audit Acts and made provision similar to that of the UK and given the CAG the mandate to conduct efficiency audit of government operations. The USA’s Government Accountability Office, since its inception, has been recognised as a legislative branch agency and reports on a wide variety of subjects from federal fiscal issues and debt control to aviation security, gun control and counter-terrorism measures. The Lima Declaration of Guidelines for Auditing Precepts says: ‘Audit is not an end itself but an indispensable part of a control system whose aim is to reveal deviations of the principles of legality, efficiency, effectiveness and economy of resource management.’ The Auditing Standards issued by INTOSAI says that full scope of government audit includes regularity and performance audit.

It is a welcome development that the Planning Commission has undertaken the job of programme evaluation of various schemes launched by it, so that it can improve their functioning. However, this activity is distinct from the performance audit conducted by the CAG, which is done on behalf of Parliament and that audit is meant to enforce accountability of the executive to it—a necessary ingredient of our democratic polity. While doing the audit, the CAG’s primary focus is to evaluate the financial parameters, but since executive decisions are taken while implementing schemes and projects, the audit is bound to comment on the decision-making process and whether decisions have been taken with due regard to propriety and in a transparent manner.

The observation of Chidambaram that the previous the CAG, Vinod Rai, who has since demitted office, contributed to the current pessimism in the economy, is deeply disturbing and possibly meant to discourage the Audit Department, and particularly its new head, from bringing out reports which may highlight misdeeds of the government and put it in the dock. Such an accusation, coming as it does from the Finance Minster, has a highly demoralising effect on the officers of the Indian Audit Department and is detrimental to its efficient functioning. The Audit Department, during its long history, has been built on the strength of professional competence and integrity of its officers and staff and does not function on the personal bias of any individual, even if he is its head. An institution is always greater than the individual. There is need to preserve the institutional integrity of the Office of the CAG. Benjamin Disraeli, the great Victorian era Prime Minster of Britain, had said: ‘Individuals can form communities, but it is institutions alone that can create a nation.’ The government should not undermine the institutional integrity of an essential pillar of parliamentary democracy.

S. Krishnan is the President, IAAS (Retired) Officers Group, and was formerly Member (Finance), Department of Posts, and Additional Secretary, Ministry of Finance. B.P. Mathur is an erstwhile Deputy CAG.