The Hindu Business Line : Audit and its rights: A question of propriety

It is fitting that the Tamil Nadu Chief Minister has set the record straight in the recent controversy that arose when the State Auditor-General commented on certain observations made in the CAG's report for 2003-04 and for previous years.

THE Comptroller and Auditor General of India (CAG) is an authority whose powers are defined in terms of Articles 148 and 149 of the Constitution. The CAG's duties and powers are further laid down in terms of a related enactment passed by Parliament.

The CAG and his officers are to keep the accounts of the Union and the State in such form as may be prescribed by the President on the advice of the CAG. The reports of the CAG relating to the accounts of a State shall be submitted to the Governor, who shall cause them to be laid before the Legislature of the State.

A controversy has arisen about the press briefing given by the Accountant General (Audit) of Tamil Nadu, who has dwelt on certain observations made in the CAG's report for 2003-04 as also the previous years. It is relevant in this context to refer to the strong rebuttal of his arguments made by the Chief Minister, Ms Jayalalithaa, in a statement issued as an advertisement (Business Line, August 6).

First, the Accountant-General is referring to an audit report for 2002-03, which has been stated to be received only very recently by the Tamil Nadu Assembly. The Assembly has yet to take cognisance of this report formally in the form of consideration by the Public Accounts Committee (PAC).

It is also pertinent to note, as pointed by Ms Jayalalithaa, that the report for 2003-04, which has been the subject matter of the AG's comments, is not yet available either with the Government or the PAC.

The haste of the AG in making public comments about the state of accounts of Tamil Nadu is regrettable, since the proper procedure does not seem to have been followed.

Inasmuch as the audit report of 2003-04 is yet to be considered by the Public Accounts Committee, a publication of comments about such a report before such consideration may, in fact, invite the adverse attention of the Speaker. The AG in charge of audit may well have exceeded his limits without realising the gravity of his action.

Granted, the CAG and his officers are an important limb of the Constitutional structure. Their reports bring to light essential ingredients of financial scrutiny and that is why the CAG is given a number of Constitutional safeguard, in respect of his position.

However, there are occasions when in their enthusiasm the CAG and his officers may exceed their limit. The latest case of the AG (Audit) of Tamil Nadu seems to be one such unfortunate instance.

The process of consideration of the AG's audit report by the Public Accounts Committee is itself an elaborate one. The Chief Minister has rightly touched on this process in her statement. The remarks of various departments are invited and the AG's remarks thereon are circulated to the PAC before it considers them. The PAC's deliberations are designed to arrive at the truth after considering both sides to the questions raised in the AG's comments.

It is, therefore, highly inappropriate for the audit report to be disclosed to the public without the benefit of the detailed analyses and responses by the Government being examined by a duly constituted Committee of the Legislature.

There have been occasions before where an auditor's enthusiasm has outrun his sense of discretion. But they have been few and far between. I recall one of these from my experience. This happened in the 1960s in the Lok Sabha.

In the early 1960s, the CAG of India, in his audit report covering the period when C. Subramaniam was Minister for Steel and Heavy Industries, had referred to an order passed by the latter regarding blacklisting of a Calcutta-based steel trader.

C.S. had subsequently revised the order restricting the term of the order to a few years. The CAG cast his remarks in such a way as to amount to adverse reflections on C. Subramaniam's motive in curtailing the period of penalty.

The PAC under the Chairmanship of the renowned Parliamentarian, R. R. Morarka — a pronounced pro-Morarji MP — went to town trying to castigate C. Subramaniam. The presumption of the critics was that the favour done to the steel trader was at the instance of the then Chief Minister of Punjab, the redoubtable late Pratap Singh Khairon, who was also a favourite of Jawaharlal Nehru.

The inarticulate allegation was of C. S. rendering favours at the behest of Khairon, who was after all alleged to be protected by the Prime Minister. But, as a matter of fact, C. Subramaniam was totally innocent of any devious consideration, although it was true that Khairon had spoken to him about the steel trader's brother, who had been of help in India's freedom movement.

C.S. had actually extracted from the trader's brother a promise of better behaviour and of turning to businesses other than trade — a promise which he fulfilled in good measure.

C. Subramaniam was so affected by the unfairness of the allegation against him that he offered to resign. But the then Prime Minister, knowing CS's integrity, turned down his offer to resign. The PAC, at the prompting of the CAG as well as its Chairman, tried to make him "confess" that Khairon had spoken to him. C. Subramaniam refused to transfer the burden to Khairon and came out with flying colours, taking the responsibility all on his own shoulders.

He himself attended the meeting of the PAC, breaking precedents which dictate that PAC meetings are attended only by officials and not Ministers. CS had felt so aggrieved that he decided to take on the accusers directly.

Suffice it to say that one of the trader's brothers, whom C. Subramaniam pardoned at the time, is today a distinguished peer of the British Realm and a master of a successful industrial empire, bringing greater glory to India. The puffed-up ego of an auditor could well have snuffed out the emerging statesman in the late C.S. but for his legendary courage and the faith placed in him by the then Prime Minister.

Government auditors are subject to the infirmity of their tribe. While they have to bring out the dirt, that should not become an obsession. They are, no doubt, susceptible to the prevailing trend of rumours and public criticisms. Even so, they have to realise their social responsibility as well.

To be fair in comment and to carry on the argument on a transparent basis is the least expected of auditors, especially when their reports can be seized upon by political opponents to twist and use to their own purposes.

By and large, the CAG and his men and women are under an occupational hazard. Their job is, in a sense, to be drain inspectors. By virtue of their occupation, which is to find faults, they seldom see the bright side of governance.

It is a pity that the accidents of service can place some of the brightest recruits to government service in this position. The challenge is for such persons to escape the confines the job casts on them. The best of them do manage to see things holistically and not just from the point of view of fault-finding.

Turning back to the present controversy on the Tamil Nadu AG's observations, it is fair and proper that the Chief Minister has set the record straight. She has more than answered the observations of the auditor.

It is to be hoped that the Public Accounts Committee, when it meets, will fully support her in her vindication of the State's stance in respect of rehabilitation of its fiscal position. The strenuous efforts made by the State for correcting the fiscal imbalance have to be acknowledged by all responsible observers.

It is perhaps appropriate for the Government of Tamil Nadu to put a stop to this controversy between itself and the AG. It can do so by setting up a Task Force similar to the Kelkar Task Force at the Centre to examine the various steps taken by the Government to meet the target of fiscal responsibility and chart out future prospects.

Such a study will at a minimum bring up-to-date the seminal insights which informed the White Paper for Tamil Nadu State finances published two years ago. It will also give the lie to allegations of poor fiscal management made by critics, such as the Accountant General (Audit) and his team.

It may also be helpful to the public to understand what options lie before the State in meeting its serious fiscal challenges. The time is particularly opportune for such a step, considering that the Kelkar Task Force at the Centre has made a number of suggestions that can impinge seriously on the State's autonomy and flexibility in raising resources.

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