The submission to Parliament of the report of the Comptroller and
Auditor-General (CAG) on the allocation of coal blocks to private
companies in the 2004-2009 period shows every sign of becoming the
starting point of a major political confrontation between the government
and the Opposition parties, especially those ranged on the side of the
BJP-led NDA.
With the next general election barely a year and a half away, the
intrinsic value of material that can be converted into anti-government
ammunition can hardly be underestimated. The matter has acquired greater
salience than it might have as Prime Minister Manmohan Singh held
charge of the coal portfolio in the 2006-09 period.
Dr Singh continues to be regarded as a man of probity, whatever his
perceived deficiencies as a politician or leader. As such, if he can be
demonstrated to have low motives, the government would go into the next
election battle on a stretcher, as happened in the Bofors era, no matter
that the probe into the howitzer deal hasn’t gone anywhere although
power has changed hands over the years.
This is the real political meaning of the so-called “Coalgate” drama.
The conceptual issues that surround it are far from clear-cut. It is
still to be established that allotting scarce natural resources through
auctions is the only true way to ensure the best deal for consumers and
the best deal for the treasury in conditions of imperfect competition
(which is the state of the real world outside the textbooks). The
auction route pursued for 3G spectrum disbursement is a case in point.
The price revealed through the process has found few satisfied buyers.
The CAG says that in the absence of competitive bidding (auctions),
the allocation of coal blocks to private parties was conducted through
non-transparent procedures which caused “windfall gains” of Rs 1.86
thousand crore to private companies. A part of this could have accrued
to the exchequer, but what proportion of it has not been specified.
So, the extent of true loss is not indicated. It is noteworthy that
the draft “Coalgate” report a few months ago — which was leaked to the
media and became the base of the scaffolding of the political case
against the Prime Minister — had suggested loss to the exchequer of more
than Rs 10 lakh crore. So, the fresh figures are vastly lower than
that. At the very least, this suggests lack of due diligence on the part
of the CAG.
Reports of the government auditors are scrutinised by the Public
Accounts Committee and then debated by Parliament. We have thus entered
the season of fireworks, inside the legislature and outside. A weakened
government has to convince the people that it has not wavered in the
service of the public good.
Courtesy : DC
4 comments:
Extravagance of Public Finance vis-à-vis curbing the power and duties of C&AG.
The constitution of India provides that the Comptroller and Auditor General of India shall be appointed by the President by warrant under his hand and seal who shall not be removed from Office, except in the like manner and on the like grounds as a Judge of Supreme Court. The term of appointment shall be for a period of 5 years and the condition of service and salary of the Comptroller and Auditor General of India shall be such as may be determined by Parliament by Law and until they are so determined, shall be as specified in the second schedule of the constitution.
The Comptroller and Auditor General shall perform such duties and exercise such powers in relation to the accounts of the union and of the states and of any other authority or body as may be prescribed or under any law made by Parliament. The report of the Comptroller and Auditor General relating to the accounts so maintained of the union shall be submitted to the President who shall cause them to be laid before each house of Parliament . The report relating to the accounts of the states shall be submitted to the Governor who shall cause them to be laid before the legislature of the states.
That the present accounting system applicable to most Ministries and departments in essentially external to Financial management function in that the payment made by the treasuries and accounts are compiled by audit and accounts offices under the control of the Comptroller and Auditor General on the basis of initial and subsidiary accounts received by them from the treasuries. This system worked fairly well when Governmental business was limited. With the increase ion the volume and variety of Governmental business and the continual set-up of developmental outlays, this system has proved inadequate to the administration task.
The scheme of separation of accounts from audit was to be implemented in selective ministries e.g communication, civil aviation, tourism, industries and civil supplies w.e.f April 1976, where the expansion regarding the expenditures and its audit was felt to be providing certain constraint and thereby resulting into the delay in implementation of the schemes at the relevant time. However by the gradual increase of the power with these ministries, the similar laxity in relation to the procedural safeguard was further provided the other ministries resulting into the defeat of the very purposes for which the office of the Comptroller and Auditor General was given the power through checks and balances. The effect of the aforesaid process has resulted in the departmentalisation of union accounts enacted in 1976 and the transfer of personnel was given effect by the enforcement of the Act no 59 of 1976 from Indian Audit and Accounts departments which was earlier under the control of C.& AG to the newly formed department of Civil Accounts under the Controller General of Accounts under department of Expenditure ministry of Finance. In this manner the office of C& AG which was constituted under the scheme of the constitution of India to provide the restraint to the expenditure disproportionate from its own discretion by the relevant ministries was brought under the ministry of Finance and thereby giving the unbridle powers to the ministers and thereby overthrowing the constitutional mandate securing the safeguard over the whimsical expenditure. According to the legal opinion of the constitutional experts, the diversification of the financial powers to be utilised by the sole discretion of the bureaucrats without taking into consideration the Audit objections, which could have been made under the original constitutional scheme, was directly resulting into the notion of conferring the absolute power to the respective ministry. This was against the democratic, federal and republic set-up of our Constitution. The aforesaid concept of the parliamentarian democracy, providing the fraternity to an individual in preamble of the constitution, was an attack on its basic structure. This has led to an inadequate financial control which would have been benefited to the nation if such power were remained with C&AG in India
That it would be relevant to point out that the office of the Auditor General of India was created under the Government Of India Act 1935 for exercising the control over expenditure incurred by Central And State Governments and for proper accounting thereof in such forms and in such manner as may be prescribed by him and he was also responsible for rendering a complied account of receipt and expenditure to the Centre and State Governments and he was also required to submit report on the result of Audit in his Audit report to the Governor- General and
the Governor of the States for laying it before respective legislatures . That after coming over the constitution of India the Auditor General was designated as Comptroller Audit General of India under chapter V of the constitution.
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