Shows how retiring civil servants have sequestered the post of India's CAG notwithstanding their omnipresent conflict of interest.

1. Why India’s Comptroller& Auditor General Need not
be a Retired Civil Servant
Shantanu Basu
Art. 148 of our Constitution provides for a Comptroller and Auditor General of
India (CAG) with the nominal legal status of a Supreme Court judge only for
purposes of determining his remuneration and securing his removal from office.
The CAG is sworn by Art. 148(3) like a Supreme Court judge by Art. 124 (6) and
by Art. 148(4), debarred for further office under the Government (i.e. rank of a
Secretary and below) after retiring as CAG. In order to preserve his independence,
the CAG’s expenses are charged (without vote) to the Consolidated Fund of India.
The CAG can be removed from office only under Art. 124 (4), like a Supreme
Court judge. The CAG’s terms and conditions of service have been determined by
Parliament by Art. 148 (3) of India’s Constitution in the CAG’s (Duties Powers
and Conditions of Service) Act (DPC Act), 1971.
S. 6 of the DPC Act provides two scenarios for pension to a CAG - S. 6(2) for a
civil servant and S. 6(3) for a non-civil servant. S. 6(4) of the same Act also
provides a separate pension for a non-civil servant (“any other person”) CAG.
When qualifications are not prescribed, no limitations can be imposed upon
appointment to the CAG’s post only from amongst civil servants. Any internal
administrative instructions issued by DoPT/Cabinet Secretariat, etc. that impose
such limitations are openly antithetical to and contemptuous of the Constitution.
Thus, legally and ethically, the appointment of a civil servant to this post does not
conform to the letter and spirit of the Constitution and subordinate legislation
thereunder. Therefore, there is no reason whatever not to consider any private
person, not being a former/serving civil servant, for India’s next CAG. And for this
there is no need of amending either the Constitution or the DPC Act, 1971.
At the same time, there is every need to prescribe academic and professional
qualifications for the next CAG, e.g. M. Phil/PhD level qualifications in disciplines
such as public policy, journalism, statistics, taxation, economics, political science,
sociology, business management, law, information technology, engineering,
accounting, auditing, finance, budgeting, and/or 30-35 years of research and
project monitoring and evaluation experience, etc., akin to S. 3(2) of the Lokpal &
Lokayuktas Act, 2013. Art. 148 (3) would cover such amendment to the DPC Act.
Equally, there is an urgent need to widely advertise the post of CAG or consider

2. any professionally qualified individual for this prestigious job from the non-
government sector and/or independent professions.
There is also a need to introduce a five-member Search/Selection Committee.
Since audit is common to the Centre and States, such committee headed by the
Prime Minister could comprise two Chief Ministers (one from Opposition-ruled
States) the Union Finance Minister and a State Finance Minister (again from an
Opposition-ruled state) for the next CAG. The remaining terms and conditions of
service of the CAG would remain unchanged and stand extended to the Auditors
General (in a multi-member body suggested below).
Over the last three decades, only retiring civil servants that owed loyalty to
successive Govts. of India, have been appointed CAG, irrespective of their mostly
mediocre academic and professional achievements. Nearly all these CAGs have
also been party to selective politically-charged and often unilateral audit findings
entirely to feather their own nests and play favorites. Moreover, conflict of interest
for a civil servant appointed as CAG is nothing new, indeed subversive of the
independence envisaged by the constitutional debates and Constitutional
provisions for this august post. Recent media reports state that the Hon’ble Public
Accounts Committee (PAC) has recommended legislative oversight over the CAG
and making CAG an officer of Parliament, as in the US (GAO). This is a welcome
move and worthy of acceptance by the Govt. of India.
However, the PAC’s recommendations need to be carried forward by the following
supplementary measures:
i. Given the giant gamut of professional coverage of the CAG, this body is best
converted into a multi-member body with at least four more members (Auditors
General) with qualifications akin to in S. 3(3)(b) of the Lokpal & Lokayuktas Act,
2013, modified for unique qualifications mentioned above. This would need
amendment to Art. 148(1) of the Constitution.
ii. In order to preclude conflict of interest or indulging in politics by any CAG and
Auditor General during his/her tenure, it is imperative that S. 8 (1) of the Lokpal &
Lokayuktas Act, 2013 is incorporated, suo motu, in the DPC Act in a separate
section. In addition, Art. 148 (1) & 148 (2) of the Constitution and S. 6(8) of the
DPC Act may need to be amended to remove the CAG and Auditors General from
office without the need for impeachment, on grounds of moral turpitude, and for
conflict of interest.

3. iii. Art. 148(6) of the Constitution would need amendment to provide for
external/statutory audit of the office of the CAG. The annual inspection of the US
GAO by Inspectors General nominated by the US President and similar
arrangments worldwide merit urgent consideration. If India’s CAG can audit the
Supreme Court and PMO without affecting their indenepndence, why should
different yardsticks apply to the CAG and his office?
iv. The Indian Audit & Accounts Service should become a service of the Lok
Sabha, instead of the Govt. of India, with the Hon’ble Speaker becoming the
Cabinet Minister-in-charge and Appointing/Appellate Authority. Recruitment too
should be based on at least an honors level degree in the above mentioned
discplines with a minimum first division mark. Don’t the RBI and several CPSUs
require a minimum of 60% undergrad degree marks to even apply for specialist
careers in these agencies? After all, those that point fingers at others should be
subject to much more stringent QA at recruitment than those they audit! Likewise,
why not appoint non-CAG officers to senior posts in the CAG’s office and CAG’s
officers in Ministries/Depts. on fixed tenure basis (this system was there in the
1950s and 1960s)? These would need only a minor amendment in Art. 148(5) of
the Constitution with the Hon’ble Speaker of the Lok Sabha replacing the
President. The UK’s NAO and the US GAO are worthy of emulation in this
regard. Their reports too are professional aeons ahead of India’s CAG for those
who have read them.
Audit is listed at Entry 76 of the Union List in the Seventh Schedule to the
Constitution. Therefore amendments to the CAG’s (DPC) Act and Art. 148 of the
Constitution by simple majority in the Lok Sabha are not difficult of achievement
considering the substantial majority the NDA government enjoys in that House of
Parliament. Nor is the likelihood of opposition from other parties likely to be of
much consequence since all have faced the CAG’s often baseless innuendos at
some point in time.
Remember the hushed up Kargil coffins report where the lowets price of an
aluminium coffin for our soliders was based upon an unauthenticated document
that showed the lowest price at around $1500 whereas the other offers were double
that at least? Or that CAG did not touch the procurement of refuelling ships from
Russia in 2008-09 (when audit should have taken this up some time after the ships
arrived in 2014-15) even when commercial grade steel was used in their hulls,
instead of defence grade; all these ships have major leakages and Mr. Parikkar has
ordered an investigation. Did this act of commission owe to an evident conflict of
interest between the then DG (Acquisition) in MoD and the present CAG, the same
officer at different points in time?

4. The CAG’s audit reports have become increasingly political and often not based on
fact, instead sustained by baseless surmise and often dubious and motivated
research and incomplete data sets. In turn, such reports have wrecked, for instance,
India’s fledgling private telecom and energy sectors, in several instances without
any attendant gain to common citizens. The CAG is supposed to be an aid to
administration, not supplant the executive itself. While CAG’s reports may serve a
short-lived useful political purpose, they needlessly complicate governance of this
nation and often cause harm to the country’s economy by their skewed
accountant/auditor’s interpretation of facts and context and a patently false public
halo that surrounds such findings and adversely impacts policy-making, a fact that
the judiciary is not alone guilty of.
The urgency in revisiting the mode of appointment of India’s CAG is explained by
the fact of the present CAG’s proven conflict of interest, reported ongoing
investigations against him and a PIL pending before the Hon’ble Apex Court in the
Agusta Westland case. Should the Apex Court reopen the twin 2013 PILs against
the present CAG’s appointment and set it aside on grounds of now proven conflict
of interest, the Govt. of India may well have to appoint a new CAG substantially
before the current incumbent’s term expires in Sep. 2017.
What better time than now to overhaul the system of appointment of the new
CAG?