CAG Plays Saviour For Now

Over the last two years of the UPA II’s rule, the office of the Comptroller & Auditor General of India (CAG) has played a great role in changing the destiny of the country. Dr Vinod Rai has become a national hero thanks entirely to his systematic and investigative auditing, which brought before the nation large manipulations of government officials that have resulted in humungous losses amounting to crores of rupees to the Central Government’s treasury.

The CAG had estimated a loss of Rs 1.76 lakh crore to the Central Government in the allocation of 104 2G telecom licences during 2007-08. The loss, it said, was a result of selling the licenses to certain industrialist houses and businessmen on a first-come first-served basis favoured by the then Telecom Minister A Raja, rather than through the public auction route that could have garnered much more in revenues for the government. It even pointed to the fact that our honourable Prime Minister had complete knowledge of what had happened. Investigations into the matter later had led to the cancellation of all the licenses so granted, with the Supreme Court ordering the government to reallocate these licenses through the public action route.

Even in the case of the Commonwealth Games held two years ago, the CAG found a number of malpractices. There too, following investigations, Suresh Kalmadi, the Chairman of the Games Committee, was sent behind the bars for 12 months on allegations of corruption.

Again on 17th August, the CAG presented three reports to the Lok Sabha. These reports unearthed a scam of Rs 1.86 lakh crore alleging that 189 private companies were allocated coal blocks indiscriminately from 2005 to 2009 (most of them in 2009) by charging a fee of Rs 100 per tonne irrespective of their requirement and objectives. The CAG has alleged that such discretionary allocation has resulted in a huge loss to the government. Unfortunately, all this happened between 2005 and 2009, when the Prime Minister Dr Manmohan Singh was in charge of the Coal Ministry.

It is true that these huge losses claimed by the CAG may not be so big because they are based on certain rationales, but the fact is that they are to a great extent a result of favours doled out to the big cats who have made huge profits at the expense of the government.

I don’t know how many such scams are likely to come out in the future. But this is a time for the Prime Minister to concentrate on growth. There are many big projects awaiting clearances from various ministries. There is a strong and urgent need for the PM to focus on these projects and get them cleared. Huge amounts have been allocated for infrastructure development. These require the personal attention of the PM to ensure that the money is spent meaningfully.

Exports have dropped by 15 per cent in the month of July 2012 due to a difference of opinion between the Minister of Commerce, Anand Sharma, and the Minister of Agriculture, Sharad Pawar, in the matter of exporting excess food gains. Today, the Indian Railways has also earned the dubious distinction of having the highest accident rate among all major railway networks in the world. While all this is happening, India just notched up one more distinction – ‘a power outage of stunning magnitude’.

None of these areas need new legislation or any new reforms. It is only about governance. The UPA is at its worst in terms of governance today even from the time when it actually came to power. All the issues that I have listed above need to be looked at closely by those in power. Their failure to do so will only result in further embarrassment if the CAG comes up with something more. Handled properly, all of the above have the potential to turn in a positive response in terms of generating growth and employment and, in turn, to change the investment environment for the better.

Our cover story for this issue brings you the performance of India Inc. during the June quarter. Though the performance has not been very great in the June quarter, the September quarter looks to be promising. All of this points toward a positive market scenario.