When C in CAG stood for confrontational

Here's an 'audit' of the tenure of former Comptroller & Auditor General,Vinod Rai.

Written by Subhomoy Bhattacharjee | Published: May 28, 2013 3:56 am

Subhomoy Bhattacharjee audits the tenure of former Comptroller & Auditor General,Vinod Rai

Just a day before he quit as the Comptroller and Auditor General,Vinod Rai paid a visit to finance minister P Chidambaram,the only call-on he made that day.

Five years ago in 2008 it was from his perch as secretary,banking under Chidambaram as the finance minister that Vinod Rai had stepped across to become the CAG.

That brief meeting ended a long innings. In the summer of 2008 Rai had then taken over a highly regarded but more in the nature of a postscript job that clearly grabbed less eyeballs than presiding over the banking sector. India was growing at 9 per cent and surely public sector banks were at the heart of that story.

This summer the story lies in tatters,Chidambaram has been brought back to the finance ministry for a rescue act. And Vinod Rai is leaving behind a legacy at the faux-colonnaded new office he moved into in 2009,which is still very early to measure for its effect on the economy. Was his team partly responsible for the policy paralyses that set in the government,or did he personify the anti-corruption world view of the Indian middle class?

There are pointers. Just a week before the audit report on the NREGA programme was to be placed in Parliament in April this year,rural development minister Jairam Ramesh sought an unusual meeting with Rai. Ramesh wanted to bring his officers handling the Rs 40,000 crore a year spending programme to sit across the auditors to figure out the ways to fix the weaknesses,but away from the cameras.

The audit report,(see box) the most prominent in the last batch of reports by Rai had claimed less than 30 per cent of the NREGA-financed projects were found to be completed while states like Bihar and Maharashtra had used only a fifth of their funds to provide employment in rural areas. Typically the report had missed the main criticism of the programme that even at the best of districts,there was a much better way to reach money to the poor.

But Ramesh was demonstrating the difference the CAG reports had begun to make within the government under the tall gardening geek. He wanted to engage the auditors instead of getting on with recriminations. It was a sign that after a gap of three years,the government and its auditor were talking again.

This is quite a distance the UPA government has travelled from 2010 when telecom minister Kapil Sibal hotly disputed a telecom audit report that had imputed a Rs 1.76 lakh crore in the allocation of 2G spectrum. He claimed the government had suffered a zero loss in the case where one minister lost his job and growth in the Indian telecom sector went cart wheeling. Each subsequent report widened the chasm and at one stage also drew in the private sector too (see box).

This was Rai’s real innovation. Since early 2000s the government has got into partnerships with the private sector to push investments. His team began to use the right to audit the ministries to ask questions over these deals. In the privatisation of Delhi airport the auditor claimed a loss of Rs 1.64 lakh crore loss to the civil aviation ministry in a licence deal that will be spread over 60 years. GMR,the concessionaire correctly contested the numbers. In the audit of new licensing policy for oil and gas exploration of the petroleum ministry RIL disputed the estimated loss in the sharing of the profits between the company and the government from the KG-D6 gas fields.

As the storm raged,some of the industrial leaders now wanted to meet the CAG. Rai acknowledges that he refused to meet any one except at seminars. He instead advised them to meet the ministries concerned. Has Rai been guilty of throwing up a set of presumptive numbers to measure the losses from government action that oversimplified the auditor’s role?

Meena Chaturvedi,former AG in his office and now CEO of a private sector firm says the numbers instead brought accountability to the centre stage of debate.

She draws attention to the system of comprehensive appraisal in the audits. The series of performance audits also known as value for money audits under previous CAGs are she says products of “outstanding systems where sample sizes were always drawn within limits of mathematical tolerance”.

Defending the use of these figures Rai had said they were necessary to draw attention to the issues involved. But in the process the auditor was drawn into a direct confrontation with the executive. The audit reports got a public profile that often overlooked the details and created uproar disproportionate to the issues involved.

Former Coal India chairman Partha Bhattacharya feels the analysis did suffer in the process. The wrong questions were asked and audited. “The entire objective of allocation of the coal blocks should have been examined with reference to end-use. Instead the report assumed a figure of loss that did not examine the reasons for allocation and whether those were transparent,” he said. The CAG report on the coal blocks imputed a loss of Rs 1.86 lakh crore from the allocations,and asked questions that led up to the Prime Minister’s Office creating a political furore which has refused to die.

Rai,who never carried a file home brought his experience in economic ministries to demand his officers to examine the big ones,says an official who worked with him closely. The other innovation was telescoping the period within which the reports were presented to Parliament and increasing the number of them his officers worked on,each year.

Just sample this data. Till 2009 each audit reports were tabled with a gap of at least two year between the event being audited and the presentation of the report in the legislature,as per data from the CAG website. Rai changed this mould. For instance,his office issued an unusual letter in 2009 to the government drawing attention towards preparedness for the forthcoming Commonwealth Games. “This deviation from normal process of submitting the report to the legislature was in the nature of an early warning signal providing ample scope for improvement before the final event,” said an informed source in the department. The faster publication of the reports “ensured accountability,as the concerned officials would still be at the same desk which would ensure mid-course corrections in implementation of the schemes,” said BS Chauhan,the spokesperson of the CAG.

Till 2009 the CAG had rarely exceeded 15 performance audits in a year. It shot up to 23 next year from next year. In 2013 Rai’s team has already asked questions on food movement,MGNREGA and agricultural debt waiver.

Yet have these helped the government? Would they promote growth,for instance? No CEO of any private sector company was willing to come on record for this story. The former CAG says it is strictly not his remit,but Arvind Virmani,Brookings fellow says “they mixed up illegality with comments on policies,which is not the job of an auditor. It hurt the economy”.

So did the CAG over extend the ability of his team to create media friendly audit tracts? Two snapshots come to mind. In 2009,the President,Prime Minister and the Speaker of the Lok Sabha were at hand to inaugurate the new CAG office in central Delhi. But next morning no major newspaper reported the event. In March 2013,the CAG held a far more modest ceremony to inaugurate a refurbished state office in Jaipur. There were 53 news items from just Delhi-based publications.

Yet last week,four days before demitting office,Rai quietly left his bungalow in Kushak Road to move into his private house in South Delhi. One of Rai’s prized photos from his last days at 2,Kushak Road,is him standing with his malis,in front of his organic farm. His “real social circle” as his wife Geeta put it.

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