CAG class

The Comptroller and Auditor Generals report on the ministry of civil aviation has been tabled in the House. Its dissection of the ministrys scale-up of the 2005 purchase of aircraft for Air India,from less than a couple of dozen to 111,usefully demonstrates how government interference in the airlines management has caused it to accumulate unsustainable debt.

There are,however,problematic aspects to the CAGs report. While the report has thankfully stopped short of assigning quite imaginary figures to the loss that various government decisions might have caused the airline,it seems puzzling as to why the report should end by arguing that the ministry of civil aviation and the government must recognise that Air India is the national carrier. In very many ways,is a symbol of the state. That is not a conclusion the CAG should draw. Indeed,such emotional attachment to an archaic idea is partly what causes the government to not take the hard decisions necessary to deal with an airline that,as the report makes clear elsewhere,is under-performing all the most basic industry benchmarks. Air Indias inability to fill even a fraction of its business and first classes,its chronic inability to take off on time,have little to do with the lack of a level playing field,and everything to do with the internal contradictions of being a state-owned and state-supported participant in a cut-throat competitive market.

The CAG report also urges the government to end various bilateral agreements with foreign airlines that it believes are cutting into Air Indias turf. Whatever the reasons that actually underlay those agreements,they are now crucial in allowing Indians to reach destinations in Europe and North America through hubs outside the country. The CAGs report ignores this; but then,the CAG is not as accountable to Indian citizens as is the government. This is a crucial example of why auditors should be restrained in their suggestions about policy decisions. Parliament must,and will,investigate the nature of those decisions. The CAG must inform its deliberation,not direct it.