B S Raghavan

CAG and Govt at loggerheads again

B.S.RAGHAVAN | Updated on August 19, 2012

Coal Minister Sriprakash Jaiswal — Shanker Chakravarty

The initial reaction of the spokespersons of the UPA Government to the three reports of the CAG on the allocation of coal blocks, mega power projects under special purpose vehicles and on the private-public partnership project for Delhi’s Indira Gandhi International airport has been on entirely predictable lines.

Hit between the eyes by the astronomical estimate of the undue favours of nearly Rs three lakh crores shown to private companies, they are desperately casting about for explanations.

Minister of State in the Prime Minister’s Office (PMO) V.Narayanaswamy lost no time in accusing the CAG of “exceeding his mandate”. This is not borne out by The Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971. It makes it the CAG’s duty to audit all expenditure from, all receipts which are payable into, the Consolidated Fund of India and of each State and of each Union territory. Likewise, all transactions of the Union and of the States relating to Contingency Funds and Public Accounts, also come under his audit.

He has, further, “to satisfy himself that the rules and procedures in that behalf are designed to secure an effective check on the assessment, collection and proper allocation of revenue and are being duly observed and to make for this purpose such examination of the accounts as he thinks fit …”

Going by a similar caveat raised in respect of the CAG’s report on 2G spectrum, what Narayanswamy means by absence of mandate is that the CAG has no right to go into the merits or otherwise of policies framed by the Government in respect of any matter.

For instance, the Government would like the CAG to accept as given a policy — say, first-come-first-served in the case of spectrum allotment, or allocation of coal blocks by the process of selection by a screening committee — and not look at the extent of any loss caused to the public exchequer by such a policy, even if there was a prospect of gain from a more profitable or prudent policy, which the Government, deliberately or otherwise, omitted to adopt.

A reading of the entire Act relating to the CAG’s duties and powers will leave no one in any doubt about the comprehensive nature of the CAG’s overall “mandate” to ensure that the management of the funds of the Government and institutions brought under his purview conforms to the principles of propriety, prudence and probity.


Considering the enormous damage done to the reputation of the Government, particularly to that of the Prime Minister by the CAG’s strictures in his report on coal block allocations, and the fact of the windfall gains to private entities computed by him at Rs 1.86 lakh crore being the highest in all the 65 years’ history of free India, I must say that Minister of State in independent charge of the Ministry of Coal Sriprakash Jaiswal, made a good impression at the media meet called to present the Government’s side of the case with his calm, cool and restrained answers to inevitably probing questions.

Naturally, any opinion on his arguments will have to await the completion of its own enquiry by the Public Accounts Committee (PAC) on the CAG’s findings and the submission of its report to Parliament.

The Opposition parties, especially the National Democratic Alliance (NDA), must be looking on the CAG’s reports as a political windfall. In their reckoning, the timing is just perfect: The hauling over coals of the UPA is neither too close to the polls to make a difference nor too distant to remain in public memory.

The situation created by the reports can be kept on the boil for just the right length of time before it becomes passe or blasé. One can be sure that the Opposition parties are licking their chops thinking of a landslide victory in the general election of 2014.

The temptation to milk the reports for all they are worth will be hard to resist, but resist it they must. They had better let the PAC do its job and not persist with condemnations and demands for resignations just yet. Nor should they make the reports an excuse to waste taxpayers’ money by creating bedlam in Parliament for days on end and bringing it to a standstill.

Published on August 19, 2012

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