Sunday, November 11, 2012

Making CAG a 3-member body is a very good idea sirji….

Institutions change over time. Institutions change when, based on their performance, a need is felt for them to change. It’s a good suggestion that the CAG should be made into a multi-member body. There are several reasons for this.

The first is that in the true spirit of democracy – and we’re seeing such demands being made of the Executive all the time – no one person should wield so much authority that he becomes a veritable power broker. The essence of democracy is preserved through a system of checks and balances. This should be especially true in the case of “appointed” personnel who end up owing no responsibility to anyone. Take the case of the CAG. Technically, the CAG owes accountability to the Parliament and if the CAG conducts his office callously, can be taken out via an impeachment motion in Parliament. The same process applies to removal of judges and we know exactly how many judges have been impeached since independence by Parliament. For all practical purposes, the CAG has become completely totalitarian – issuing statements (more like gibes really), conducting reports with no respect for protocol and standard restrictions of staying within his mandate and in general behaving indecourously. In a massively divided Parliament, putting together 50% of support is difficult; what chance is there for getting a 2/3rd vote to impeach someone?

The second is again related to the conduct of the CAG under Vinod Rai. The CAG is making fundamental mistakes. The CAG has no business getting into policy decisions of the Government. For example, the Government gives subsidies on diesel, kerosene and LPG. This costs it about Rs 2 lac crores a year. If one were to add up such costs over the last 10 years, this number could exceed Rs 10 lac crores. Given the penchant of this CAG for sensationalizing matters, he may well call such costs as “losses” (“notional” perhaps). Once that happens, the opposition would spin it into a scam. But the CAG would be wrong. If that loss is a Government strategy, aimed at providing relief to the poor, it would be constitutionally valid. The Government likewise kept 2G pricing low and elevated at least 500 million careworn people – who would otherwise not have been able to afford this revolutionary technology – out of the vicious grip of poverty, joblessness and disempowerment. For this, the Government incurred a “loss” on spectrum. Big deal. That loss was dutifully passed on by the telcos to the public because of the severe competition in telecom. The “loss” did not result in profits for the corporate sector, but was an efficient transfer of national resources to the poor. Yet, the CAG had no qualms in putting out such a flawed analysis. It’s the same story with the coal “scam”. Giving coal free to power utilities and steel and cement producers is a Government prerogative. What is not a Government prerogative however is implementing such policies in a corrupt manner. There is no doubt there was corruption in 2G and in the coal allotment as well. But that’s the tragedy. The CAG is so interested in the big numbers that the real problems that the CAG should have highlighted get lost. Worse, as a result of the flawed reports, the Government ends up replacing its pro-people policies with wrong ones. Just wait and watch what happens to telecom. The poor will soon be disempowered again. The CAG can then gloat with joy.

The third reason the CAG must not be given unfettered powers is that this particular CAG has forgotten the rule all auditors follow. That they submit their reports only to their bosses, the audit committees in the corporate sector and the PAC in the Government. But this CAG loves to “leak” reports to media. And worse, he even likes to address press conferences, spitting out boilerplate criticism of the Government. If this is not breach of a well established and understood protocol, then what is? The fact is that the CAG has fallen in love with his own image in the media; and he’s lost all sense of balance and proportion in the process. This needs to be immediately corrected.

And finally, this particular CAG has messed up big time in even understanding the complexities of today’s business. He failed to understand that S-band spectrum, spectrum though it is, cannot be compared to 3G spectrum. It’s like comparing a flat in Malabar Hills with one in Virar and then suggesting that the pricing for the two should be the same because they are both the same size. Yet, this is exactly what the CAG did with S-band. He pegged the “loss” at Rs 2 lac crores. And yet when the fingers were pointed at him for this whopper, he didn’t apologize. He just scooted. Given the generally “benevolent” attitude our media and public take to any government basher (calling them whistleblowers), he even got away. Likewise, in the coal mining sector, he has made completely flawed comparisons between easy-to-exploit mines and tough ones. In the mendacious report against RIL, he has shown complete immaturity in understanding a technology-led business like deep-sea drilling. Why, he has even made the most fundamental of errors – that of failing to consider “time value of money” in arriving at notional loss figures. And when grilled on this, his reaction was not to accept the mistake but to attack by saying that he could have chosen a higher loss figure. What are we saying here? That the CAG is God who chooses a particular figure rather than another one? That he cannot make mistakes?

With such a disastrous experience, all political parties should think of the problem that this CAG has created. If the CAG had been a multi-member body, maybe it would have reined in its politically ambitious head. Maybe a sane voice would have prevailed over an imprudent head. Maybe the gaffes could have been avoided and the reputation of this Constitutional body protected. Today however, the CAG has become a political body. There is a need to provide checks and balances in the CAG’s functioning and making it a multi-member body would be the right decision. No one would mind it, least of it the Anna brigade. Remember, even they wanted to make the Lokpal a multi-member body. The Election commission (EC) and Central Vigilance Commission (CVC) are both multi-member bodies and I dare say they perform far better than the CAG has performed in recent times.

Unfortunately, the Government has not shown the spine to stand up and look the CAG squarely in his eyes. It buckled under the CAG and SC pressure and agreed to conducting 2G auctions, when it should have sought a review from the SC. It is now likely to defer the talks on the CAG’s structure as well.

Rather than making it a political issue, the BJP (which may well suffer at the next CAG’s hands – now that it has been convincingly established that the party is at least as corrupt as any other) should support what is inherently a good thought. The BJP often thinks of itself being a party that is destined to be in the opposition. It looks at all changes as being motivated to help the ruling party – which is the Congress in its minds. The BJP has to remove such an inferiority complex and has to believe that in the future, it may well rule the country for half the time.

The real truth is one only learns through experiences; this CAG’s experience has been so distasteful that it has provided the opportunity to make changes. Correcting something that is wrong is a good idea; no matter what the political overtones may be. If we had a thoughtful media, maybe we would have had a better public debate on this. But shying away from facing the truth is going to hurt the country. I strongly urge that we have a robust discussion on this….

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