Controller General

Investing CAG with a moral righteousness is not healthy,it could cramp policymaking

Written by MK VENU | Published: September 5, 2012 2:45 am

Competitive politics within the legislature is threatening to undermine the space and legitimacy of executive authorities to implement social and economic policies in the country. The Congress-led UPA may have been weakened to a point where any observation by the CAG becomes a millstone around its neck,even if the CAG is seen as excessive in the way he interprets the alleged lapses by the government. The danger is that any newly elected government at the Centre will start with a disadvantage — it must constantly bear in mind the CAG’s new methodology of judging the role of the government in economic development. After all,maximising revenue from resource allocation need not,and indeed cannot,be the end objective of all government policies. This aspect of governance needs to be remembered even as the BJP publicly declares the sheer futility of the CAG report on coal being taken to the Public Accounts Committee (PAC),which is headed by an opposition leader. By doing so,the opposition is inadvertently investing the CAG with a moral righteousness that tends to show other institutions,like the PAC or even Parliament,in a poorer light. This may not be healthy in the long run.

There is a larger politics at play that will come back to haunt any coalition government that is voted into power in 2014. If one carefully examines the prime minister’s reply to the CAG’s observations on various aspects of the coal allocation policy,it becomes clear that this is only the beginning of a long drawn out tussle between the statutory auditor and governments at the Centre and the states.

The prime minister has politely indicated that the CAG has no business advising the Centre and the states on the pace of implementing new legislation that affects the powers enjoyed by the states in our current constitutional framework. It is evident that the states would be loath to give up their discretionary power to recommend private parties for coal allocation. The chief ministers of all states with coal and lignite reserves had opposed auction as a method of allocating coal blocks. The manner of future coal allocations will have to be resolved politically. There is no other way of doing it in coalition politics. The CAG’s homilies in this regard have really little meaning.

For instance,there is another highly contentious bill in Parliament that is taking a long time to fructify,simply because it has an impact on the power of the states to allocate land for private purposes. The new land acquisition bill seeks to lay down norms for the acquisition of land for public and private purposes. Since land is a state subject,the state governments want freedom to decide on the details of how the market price should be determined when agriculture or urban land is earmarked for public or private sector projects. In the past decade or so,several lakh hectares of agricultural and urban land must have been allotted by chief ministers for industrial use. Following its current morally stringent line of inquiry,the CAG might wish to calculate the difference between the price at which land was doled out by the states over a period of time and the current market price,which may be several times the value of the original allotment. One can’t say how many zeroes the loss figures in land allocation would have.

Logically,the CAG,which also has the mandate to audit state governments,can ask for a review of all such land allotments by the states. It may even appear morally and ethically right to do so. But would it be practically feasible to undo all such contracts,going back a decade? This is the question that needs to be thought through properly.

It is true that governments rarely come up with optimal policy decisions. Such decisions emerge from political economy contexts that may not necessarily pass the strictest of moral and ethical tests. Even if excessive and scathing in their observations on the way the political economy works,constitutional bodies like the CAG or the Supreme Court play an undeniably important role in bringing about lasting corrections in various institutions of governance. However,this must be seen as a gradual,even if somewhat painful,process of change. Importantly,this process should avoid major ruptures in the system of contracts and commitments that the state apparatus enters into with the domestic and global business community. There must be some continuity in the evolution of both capitalism and the institutions that regulate it. Institutions like the higher judiciary and the CAG must actually ensure that sharp corrections take place even as this continuity is not disturbed. In some ways,this has also happened in recent years. It is evident that big business today is far more wary of the consequences of tweaking the system than it was five to seven years ago.

However,if constitutional bodies like the Supreme Court and the CAG start prescribing policy on a routine basis then the continuity and balance in governance structures are seriously affected. Of course,you could theoretically take the view,like Team Anna does,that the continuity provided by the constitutional framework must be shaken and disrupted. One is not sure whether that sentiment is shared by many.

In this regard,the chief justice of the Supreme Court,S.H. Kapadia,brought some fresh perspective to what is seen by some as the judiciary encroaching on the government’s domain. While broadly concluding that various constitutional bodies must stay within their remit,Justice Kapadia said the judiciary must not venture to answer questions that it cannot. He implied that the questions to be addressed by the executive or the legislature must be left to them. Otherwise there would be “chaos” to contend with. Kapadia’s warning is quite timely and the CAG may want to heed the chief justice’s nuanced formulation.

Kapadia explained the tension between the higher judiciary and the executive as flowing from two distinctive moralities. One morality flows from established principles of jurisprudence. The other one,practiced by the executive,is a utilitarian morality. Of course,this utilitarian morality flows from the nature of the political economy,which itself is a complex interplay of many factors. In a sense,it won’t always adhere to the CAG’s moral standards either. But then that is a reality one has to live with until our utilitarian polity is permeated by greater moral content over time.

The writer is managing editor,‘The Financial Express’,mk.venu@expressindia.com

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