Recent developments all point to the need for greater transparency in the management of funds and projects when contributions and investments are made by large numbers of people. There is no substitute for integrity. Tax dodging,that slight bending of the rule of separating personal from corporate expenditures and assets and so on,all slip on to fraud and criminal financial activity. But systems are also important which force those in control to think through their responsibilities in an increasingly complex integrated world and to lay out their judgements in the bottom lines.
For the government it started with the recommendation that some of us had made to the Rangarajan Twelfth Finance Commission,which he accepted — that governments should move over from the existing cash accounting to accrual accounting. Government accepted this but is going ahead at a snail’s pace.
My first job in government was as Adviser,Perspective Planning in the Planning Commission,in those days a very powerful job. My predecessor was Pitamber Pant who would mark files to the then PM with the salutation ‘Indu’. He got her authority and implemented the decimal system in two years. Everybody said he would fail. If not for him,we would still be counting sixteen annas to a rupee,chattaks to a seer and of course ounces to a pound.
A couple of years ago,we started with the implementation of a system of International Financial Accounts (IFRS) for the private corporate sector. It is becoming increasingly urgent as we globalise and in any case many corporates abroad go by these rules. Some companies did it and others hemmed and hawed. The authorities gave in,but are again bringing it back. It makes books which make the past more up to date. Assets have to be valued in replacement terms — in other words,what they would fetch in the market rather than written down book values. You have to explicate your judgements on expected prices,interest rates and exchange rates. It is an economist’s paradise and an accountant’s nightmare. Above all,in the corporate world as an ideal there are standards of integrity,codes of conduct,requirements of rigorous standards of scrutiny by financial and audit executives and checks on insider trading and profiteering. All to the good and a good beginning.
When people say how nice a minister he was,and has a twenty-year-old very well maintained car,I know they are sniggering. But there is no other way out. Otherwise,you can see behind the celebrity face the smell of hawala and hafta and of course the hawala and hafta man who is the celebrity. Systems and rules have to be introduced,but also enforced. Jaya Ho.
