CAG powers and constraints article


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Describes the legal environment of the Comptroller & Auditor General of India in the light of attacks upon him by senior Indian politicians and concludes that the CAG of India merits greater powers.

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CAG powers and constraints article

  1. 1. CAG of India: A Tragic Hero in Eternal Anarchy In the last few months, the institution of the Comptroller and Auditor General (CAG)of India has been pilloried by senior politicians in a cathartic nation, best expressed in theimmortal words of John Milton – “A dark illimitable ocean, without bound, withoutdimension, where length, breadth, and height, and time, and place, are lost: where eldestNight And Chaos, ancestors of Nature, hold Eternal anarchy, amidst the noise of endlesswars, and by confusion stand.” Does such pillorying of an already debilitated body haveconstitutional sanction? Is it based on educated opinion? Does it augur well for ourdemocracy? Article 148 of our Constitution provides for CAG with the legal status of a SupremeCourt judge. The CAG is sworn by Article 148(3), like a Supreme Court judge by Article 124(6), to uphold the integrity of the nation and is ineligible, by Article 148(4), for further officeunder the Government (i.e. rank of a Secretary and below) after retiring as CAG. In order topreserve his independence, the CAG‟s expenses are charged (without vote) to theConsolidated Fund of India. The CAG can be removed from office only under Article 124(4), like a Supreme Court judge. The CAG‟s terms and conditions of service have beendetermined by Parliament by Article 149 of our Constitution in the shape of the CAG‟s(Duties Powers and Conditions of Service) Act, 1971 (DPC Act). Evidently the foundingfathers of our Constitution viewed CAG as a key preserver and triumvir of India‟sdemocracy, sworn to uphold the integrity of the nation and therefore worthy of constitutionalprotection. Therefore, as Edward Gibbon said, “their persons were sacred and inviolable.Their force was suited rather for opposition than for action.” Unfortunately, the DPC Act, theproduct of an authoritarian majority in 1971, legislated otherwise. A deliberate executive-sponsored legislative disconnect from the lofty ideals of the Constitution that militates againstfundamental checks and balances and separation of powers enshrined in our democracy. Consequently, unlike the Supreme Court under Article 129, the CAG‟s powers areseverely circumscribed by Sections 14, 15, 19(3) and 20(1) of the DPC Act that curtailsCAG‟s mandate to authorities substantially funded by governments (i.e. 51% or more of theirannual expenditure). Without prior government sanction, the CAG is precluded by rule/lawfrom auditing all other bodies, such as PPP partners, private contractors, regulators, NGOs,state local bodies (such as municipal bodies and panchayats) even as these agencies receivelarge government funding or involve exploitation of vast national natural resources. Forinstance, by Section 15(2) of the DPC Act, the CAG can be deprived of his audit mandatewhere an organization‟s Act is tailor made to specifically nominate an agency other than theCAG for its audit, even though government has a large shareholding or interest in its sharecapital or gives large annual budgetary support. In fact, organizations even have the right under these sections to represent againstaudit by the CAG. The Standing Committee of Public Enterprises (SCOPE) has, over theyears, vociferously protested against CAG‟s audit for mucking their annual accounts,sometimes even supported by a previous Finance Minister. Governments have not hesitatedin taking advantage of Section 15(2) and excluded all major financial institutions from auditby CAG. This is in marked contrast to Article 140 of the Constitution that specificallyauthorizes Parliament to confer upon the Supreme Court such supplemental powers notinconsistent with any of the provisions of this Constitution, unlike the DPC Act, as mayappear to be necessary or desirable for the purpose of enabling the Court more effectively toexercise the jurisdiction conferred upon it by or under the Constitution. 1
  2. 2. The CAG is also haunted by the specter of finding his reports hitting the junk pile ofgovernment records in the absence of any provision such as Article 141 that confers power topass any decree and make any order for the purpose of securing the attendance of any person,the discovery or production of any documents, or the investigation or punishment of anycontempt of itself on the Supreme Court. Or Article 144 that requires all authorities, civil andjudicial, in the territory of India to act in aid of the Supreme Court. All the CAG can fall backupon is Section 18 of the DPC Act that neither provides any time limits for production ofdocuments and replies, nor any contempt proceedings for their denial. Similarly, God‟slifetime is the limit within which CAG‟s Reports are required to be presented to theLegislature after submission to the President or Governor. Neither does CAG have the rightto release these Reports in the public domain if they are not presented in the legislature withina month of their submission by CAG nor can he enforce any of his findings by decree, akin toParliament‟s Public Accounts Committee. Indeed CAG is a prosecutor with a disabling law,judge without the power to sentence and a litigant with no right of appeal – a willfulsubversion of the Constitution by the DPC Act. Again, unlike the Supreme Court under Article 146 of the Constitution which isempowered to recruit its own personnel and determine their terms and conditions of service,Article 148 (5) of the Constitution states that the conditions of service of persons serving inthe Indian Audit & Accounts Department (IA&AD) and the administrative powers of theCAG shall be such as may be prescribed by rules made by the President after consultationwith the CAG, akin to the Supreme Court. However, the Court‟s constitutional locus standibeing eons ahead of the CAG‟s, the executive can play no mischief. Even though theConstitution makes no distinction between the IA&AD (a 50000-strong public entity), theGovernment of India has struck a deliberate and invidious distinction between the CAG andhis executive department, separating the kettle from the fire. While the CAG‟s budget is notsubject to Parliamentary vote, the IA&AD has to face regular budget cuts and personnelrecruitment bans. Neither is the CAG permitted to recover the IA&AD‟s establishment costsfrom government programmes nor does he have the authority to directly hire domainspecialists and/or support staff on his own. Where the Constitution raises CAG to a lofty pedestal, the DPC Act subversivelytoasts him as a tragic modern-day last Mughal Emperor, Bahadur Shah Zafar. Section 16 ofthe CAG‟s (DPC) Act states that it shall be the duty of the CAG to audit all receipts whichare payable into the Consolidated Fund of India, each State and Union territory having aLegislative Assembly to satisfy himself that the rules and procedures in that behalf aredesigned to secure an effective check on the assessment, collection and proper allocation ofrevenue and are being duly observed and to make for this purpose such examination of theaccounts as he thinks fit and report thereon. In a similar vein, Section 13 (a) of the CAG‟s(DPC) Act states that it shall be the duty of the CAG to audit all expenditure from theConsolidated Fund of India and of each State and of each Union territory having a LegislativeAssembly and to ascertain whether the moneys shown in the accounts as having beendisbursed were legally available for and applicable to the service or purpose to which theyhave been applied or charged and whether the expenditure conforms to the authority whichgoverns it. Then, why is CAG pilloried for his expenditure reports on the MNREGA or AirIndia when the DPC Act does not define even the term „public moneys‟? Or why is CAGpilloried when he comments on receipts of public moneys from 2G or Reliance-KG? The CAG‟s mandate is light years longer and wider than that of the Supreme Court.While the CAG has the status of a judge of the Supreme Court, yet the wherewithal providedto him to ensure accountability hobbles his efforts, indeed lays him on a stretcher. In the 2Gcase, CAG commented on faulty implementation of policy, clearly distinct from policy- 2
  3. 3. making as made out recently by senior politicians, as CAG seems to have done in the recentReliance-KG case. Earlier, CAG has commented, inter alia, on improper valuation of assetsof PSUs being disinvested and telecom licenses issued during the NDA regime. Oddlyenough, CAG‟s previous reports are now being used to pillory him. The present politicallogic seems to state that if CAG pointed out lapses in the policy process of issue of telecomlicenses in 1999-2000, then this is the benchmark for further malfeasance that shall proceedby extrapolating the past onto the future. So why should CAG object again? When CAG has not questioned the wisdom of policy, even as the Constitution and theDPC Act empowers him, criticism of the CAG is certainly rooted in uneducated opinion anddeliberate suppression/obfuscation of facts with its genesis in deep-rooted bureaucratic andpolitical antipathy to accountability. This is when CAG is only a second level accountabilitycheck post to government Ministries/departments, Secretaries of which are the PrincipalAccounting Authority (and Internal Auditor), the primary custodians of our national wealth.The CAG‟s audit is not a substitute for administrative ennui but certainly is for bad policythat coverts good public moneys into shadowy investments in personal fiefdoms. Poorimplementation obviously casts a shadow on the wisdom of policy and concomitant andencourages recurrent malfeasance. Hence CAG is pilloried when, as Gibbon famouslydeclared, “They (read CAG) were instituted to defend the oppressed, to pardon offences, toarraign the enemies of the people, and, when they judged it necessary, to stop, by a singleword, the whole machine of government.” In the brouhaha over the Lokpal the CAG isforgotten while fresh efforts are made to create another feel good and populist but toothlesswhite-collar employment exchange, another layer of bureaucracy. Notwithstanding the severest limitations imposed upon him by his legal and politicalenvirons, CAG still creditably survives in defense of accountability, a knight in shiningarmor, standing firm in an ocean of fallen Roman triumvirs in this hapless nation. The uniquecombination of knowledge, integrity, commitment and fearlessness of successive CAGs,officers of the Indian Audit and Accounts Service, their Audit Officers and other personnelthat has preserved India‟s last pillar of democracy is exemplary and worthy of replication in anation sunk in the depths of Milton‟s “eternal anarchy.” Demeaning CAG demeans ourdemocracy and greatly widens the alienation of the rulers from the ruled. Four decades later, the DPC Act has evidently outlived its utility as models ofgovernance have dramatically changed and introduced many dubious non-state players andunprecedented white-collared crime has overtaken this noble nation in the midst of an ever-widening gap between the rich and the poor. Foreigners ask why India is poor since it canafford loot of billions of dollars of taxpayers‟ moneys, even as we nurse delusions ofgrandeur as a powerhouse of the new century with China. Will some one at least speak up forthe CAG and the proposed new Public Audit Bill for this venerable institution on its 150thanniversary, rather than concentrate on the Lokpal alone? If we fail, as Cicero famouslyremarked, “It was due to our own moral failure and not to any accident of chance that, whileretaining the name, we have lost the reality of a republic.” The author is Director General of Audit under the Comptroller and AuditorGeneral of India. The views are personal and do not reflect official policy orpronouncement. 3