Thursday, November 17, 2011

Post JPC grilling, CAG Rai’s reports on S-Band, UMPP may become harsher

Comptroller and Auditor General of India (CAG) and 1972 batch IAS Vinod Rai’s tough posture during his interaction with JPC members has indicated more trouble for the government. The CAG, whose report on telecom auctioning unearthed what’s now called 2G scam, may take on the government in audits of the Ultra Mega Power Projects (UMPP), S-Band spectrum and Padma awards which are now being undertaken. According to some media reports, audits on S-Band spectrum may embarrass none other than India’s Prime Minister’s Office (PMO).
After Prime Minister Manmohan Singh criticized the CAG for entering into the policy space, Rai reportedly toned down the language of the next few reports. The CAG report on Air India, for example, was carefully drafted. Unlike the reports on 2G Spectrum and Commonwealth Games, there are no instances in the report on Air India which would even remotely suggest that the CAG entered into the policy domain. According to a media report, the draft on Air India’s audit included expressions such as “government nudged”, “loss” etc., which were later deleted in the final report. Similarly, his report on KG Basin dragging India’s most powerful corporate group Reliance Industries, was not that harsh either. Here too, CAG did not put any figure of the loss to the exchequer which would have been a headline.
But things may no longer be the same now. After Rai was grilled and almost humiliated by the Congress members of the JPC, there is a strong possibility that he takes on the government again. For the government, it’s a matter of concern as no one knows whether CAG would put an estimated loss to the exchequer in reports on Ultra Mega Power Projects and S-Band spectrum too. Corporate groups like Tata and Anil Ambani-promoted ADAG were awarded Ultra Mega Power Projects.
Rai now wants more power to be given to the CAG to audit the entire Plan expenditure. While talking the CAG’s 150th year celebrations on Wednesday, Rai urged the government to give it the auditing power of projects under public private partnership and other private projects where the government has a stake.

Why Sushil Modi wants CAG to be multi-member?
Bihar deputy CM Sushil Kumar Modi said that the office of the CAG should grow in tandem with the changing times, referring to the fact that it’s 150 years old. The BJP man in Nitish Kumar’s government wants CAG be a multi-member institution. But why is Modi angry with CAG while all his senior colleagues in the party including Murli Manohar Joshi are happy with Rai. Is it the CAG’s catch on AC-DC bills issue, Mr Modi?
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1 comment:

  1. Why shouldn't CAG Vinod Rai and Rekha Gupta be impeached?

    The impact on the exchequer of the policy not to auction 2G spectrum must be based on a normative judgment of what policy

    seeks to achieve with telecom. Is to maximize revenue? If so, they should auction to the highest bidder to maximize revenue.

    Or is to maximize market penetration that enables the maximum number of individuals in a poor country to afford the service?

    Then these services need to be priced the cheapest.

    Governments cannot have the cake and eat it too - meaning that they have to choose either of the options. The UPA

    government, just like the NDA government before it, opted to maximize market penetration. So we have today around 600

    million mobile connections, one of the highest in the world. Even a beggar or a fish vendor or a domestic helper or an

    autorickshaw driver can be found with a mobile phone. The UPA policy substituted a share of the revenue from telecom

    services for up-front charges. The policy of not collecting up-front charges for spectrum underpinned this telecom spread. The

    CAG report ignored all this and came up with its notional loss that are nothing but arithmetic extrapolations divorced from

    policy intent or consequence. The 2G scam lay, as the charge framed by the CBI court notes, in the fiddling of the queue for

    fresh licences, not in the policy of not auctioning spectrum.

    It is unfortunate that the common man fell for this conspiracy of viewing 2G spectrum as a scam. Unfortunate as they did not

    ask what will happen to their per minute mobile costs if spectrum was indeed auction and for the value - Rs 1,658 crores

    which CAG estimates as the loss. This would have made mobiles a luxury service for only the super rich with per call per

    minute at least Rs 16. As it is, without paying spectrum charges, companies like Reliance are running in the red, trying to

    recoup their investment. Imagine if they had to apportion spectrum fees into their operational costs! India has one of the

    cheapest mobile rates in the world. Instead of celebrating these cheap rates, the BJP conspiracy turns it as a scam.

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