Mega scams only tip of the Iceberg, says Vinod Rai

Comptroller & Auditor General of India, Vinod Rai, says his office does not have any constitutional mandate to audit over 50 per cent of the money spent by the government. Speaking to

Vinod Mathew, India’s crusading CAG opens up on how it is out of auditing half the government’s expenditure that the CAG has unearthed so many scams during the last four years. Thus, the CWG scam - Rs 70,000 crore, 2G spectrum scam - Rs 1.76 lakh crore, the coal gate scam - Rs 1.84 lakh crore (reports of Rs 10.67 lakh crore are unfounded), could well be the tip of the proverbial iceberg.

(Excerpts from the interview)

Q. What stops the CAG from auditing the remaining 50 per cent of government expenditure - the likes of public private partnerships, panchayati raj institutions, self help groups?

 A. Since PPPs, PRIs and SHGs were non-existent in 1971 when the CAG’s Duties, Power and Conditions of Service (DPC) Act came into force, an amendment is very much on the cards. After holding discussions with Finance Minister Pranab Mukherjee and getting his in-principle nod, we put up the draft amendment to DPC Act for government approval in November 2009.

   I have no idea why it has not been put up before Parliament or even the Cabinet for approval in the last 30 months. We have a situation where over half the entire money spent by the government is not audited and Parliament never gets to know the details. We do conduct audits of some of these funds now, but through executive order, as done by ministries of rural development and health. Minister Jairam Ramesh wanted the entire Rs 90,000 crore spent by his ministry to be audited by us.

Q. What has been the biggest criticism against CAG? How have you addressed it?

A. One major criticism against CAG was that the audit reports were only postmortems or even worse (Rai relapses to Malayalam, which he speaks with effortless ease, and refers to the adage about writing the horoscope of a still-born child). CAG reports came out almost three years after the deed was done; by then the principals involved were no longer in the picture.

One of the biggest achievements for me is that the lead time has been brought down to almost eight months. This, I would like to think, has instilled a sense of extreme caution in those fence-sitters, who after weighing the pros and cons of indulging in a scam, hopefully back out.

Q. There has been much criticism that CAG is exceeding his brief, looking into policy matters. Any comment?

A. Yes. Policy formulation is the sole prerogative of the government. It is the implementation part that we audit. In 2G spectrum allocation, even the first come-first serve policy was not transparently adhered to and no proper price discovery was done. There were many instances of policy flip flops. Now, in 2010 the government has again decided to auction 2G spectrum.

  Regarding civil aviation, we never questioned the decision of Air India to buy 111 planes, only the way they went about it, about 98 per cent through debt. What sort of a debt-equity ratio is that? And there was undue haste shown in clearing the purchase.

On the hydrocarbon discovery at KG basin, involving Reliance Industries, again it was the flawed production sharing contract loaded heavily against the government that forced it to bear majority of the expenditure while the private player cornered the spoils almost entirely.

  We are talking of an expenditure of $ 8.8 billion and the government agency to verify its veracity. When a policy, in its implementation, becomes sub-optimal, then we question it.

Q. How many audits do the CAG conduct a year and how many of them turn out to be about embezzlement of public assets/ property?

A. We average about 35-37 audits a year, of which only five or six throw up instances of mala fide practices. Most audits do turn up fault lines. But in case of acts of omission, we merely nudge the agencies to take corrective steps. It’s only when acts of commission come up that we crack down. Also, we do not wait to write reports when major acts of embezzlement come to light. Instead, we, the CVC and the CBI get tipped off straightaway.

 Q. Have there been many positive takeaways from the audits?

A. We get a pan-India perspective on many government projects, how they are practised in different states. When we come across some good models, we highlight that in our reports for other states to follow. In the case of NREGA, the best practices were found in Andhra Pradesh, Rajasthan and I think Karnataka.

In the case of NRHM, Kerala has by far the best model. Same is true in the case of Kudumbasree poverty eradication mission under the National Rural Livelihood Mission where Kerala has been most effective in preparing a shelf of projects for implementation.

Q. Finally, will coal gate become the mother of all scams in India?

A. There is no way I can talk about this as the audit report is yet to be tabled in Parliament.