Not Just an Accountant - Vinod Rai

NOT JUST AN ACCOUNTANT

Published by Rupa Publications India Pvt. Ltd 2014 7/16, Ansari Road, Daryaganj New Delhi 110002

Sales Centres: Allahabad Bengaluru Chennai Hyderabad Jaipur Kathmandu Kolkata Mumbai Copyright © Vinod Rai 2014 All rights reserved. No part of this publication may be reproduced, transmitted, or stored in a retrieval system, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. The views and opinions expressed in this book are the author’s own and the facts are as reported by him/her which have been verified to the extent possible, and the publishers are not in any way liable for the same. eISBN: 9788129134509 First impression 2014 10 9 8 7 6 5 4 3 2 1 The moral right of the author has been asserted.

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I dedicate this endeavour to my parents—to my mother or giving us roots to keep us firmly grounded, and to my dad for teaching us how to fl y. Our education was her only worldly wealth, and he was my first and only hero.

CONTENTS

oreword reface THE JOURNEY

1. Dimapur to Delhi 2. The Role of Audit 3. Media Policy 4. The CBI FOLLIES

5. Fir st Come, (Not) First Served: The 2G Saga 6. Sound & Fury: The PAC & JPC Saga 7. The Punjabi Wedding: Commonwealth Games 2010 8. Coal That Turned to Gold: Mine Block Allotments 9. A Slippery Deal: Gas Exploration 10. Off Course: Civil Aviation COURSE CORRECTION

11. Excellence, Accountability & Probity The Pursuit of Excellence

The Role of Accountability The Role of Probity and Ethics in Public Life Good Governance

ppendices cknowledgements ndex

FOREWORD When I received Not Just an Accountant from Vinod Rai, I wondered what I could share with readers. On going through the manuscript—which deals with vital issues like transparency, accountability and ethics—I was convinced that our youth had to be sensitized about these principles, and the unique quality of righteousness—righteousness i the heart. For, as I have often said, where there is righteousness in the heart, there is beauty in character. Righteousness can be injected by only three great people up to the age of seventeen—a father and a mother in a spiritual environment, and a good primary school teacher. Can governments and institutions create good human beings? The answer I arrive at is: no, not at all. The process has to start in homes and schools. I find that in countries across the globe a new paradigm is emerging—that of transparency in functioning, not only within the government but also in private institutions and civil society, with morality and righteousness being fundamental principles.Not Just an ccountant draws attention to these principles and emphasizes the importance of ethical governance in our country. This has to be the long-term goal of all nations. My conviction is that to weave the moral fabric o society, we need to target energetic youth in the country.

Democracy is a great gift to the people of India. Our thoughts and actions should ensure that we use our most creative efforts and dynamism to promote rapid economic growth. Vinod Rai has discussed such essential issues o governance which will make our economic growt sustainable in the long term. Let us work to make India a great nation, wit righteousness in the heart and the pursuit of excellence i our endeavours. Dr A.P.J. ABDUL KALA Former President of India August 2014

PREFACE Benjamin Franklin once said, ‘If you would not be forgotten as soon as you are dead, either write something worth reading or do something worth writing.’ I do not think I have done anything worthwhile for others to write. So the next best option was that I consider penning my thoughts and experiences, which may be worthwhile for some to read. The decision was taken for no other reason but for posterity to know something about the accountability of the government towards its people. There was a moment of hesitation though, when it struc me that my words would attract the usual vituperative utterances from those who have the irresistible urge to be in media light. But then I found that Benjamin Franklin had also said, ‘Anyone can criticize, condemn and complain… and most fools do.’ It was then that I decided to persevere, regardless o the opportunity being provided to such people. In pursuit of that decision of mine, I am going to narrate to you a story—the story of my life, a story of how events and people touched me in myriad, simple ways, releasing immense energies and inspiration which I did not know existed in me. I hope my thoughts will resonate with the people who read this book and wonder what holds the back from doing only that much—not too much—only that

much which society expects of them. It is not a tall order. Each one of us has it in him or her to do it. Maybe your time to seize this opportunity is yet to come. I am writing this for thousands of young men and women who see it all happen; have the resolve and inspiration to meet the challenge, but may not rise to the occasion when the opportunity arises and so, sadly, may see it pass. I would, therefore, alert them to keep their radar fully functional because there is no advance warning. Life gives only one chance—don’t fritter it away. Hence, I present to you this book. It is not about creating a sensation or revealing mysteries. It is not about running down anyone or deriding the administration. It is not about finding fault and paraphrasing audit reports o the comptroller auditor general (CAG). This is a and book about accountability. It is about transparency. It is about that vital quality in society o which we seem to have created a huge deficit. It is about ethics. It is about how a nation—which prides itself on the greatness of Ashoka, the nobility of Akbar, the compassio of Buddha and the courage of Gandhi—seems to have lost its moorings. It is about how we are now mired in a whirlpool of decadence and malevolence in society, opacity in administration and, above all, a total lack o leadership in the higher echelons. The book is about how we have renounced excellence and settled for mediocrity as our guiding beacon. The book seeks to reinvigorate

among us, especially GenNext, the spirit and quality for striving for the very best in every pursuit of life. It seeks to delve deep into the conscience of the reader, provoking him into seeking a higher order of accountability fro institutions, so that the vision of the framers of the Constitution is fulfilled. It is all about our responsibility to bequeath a system to the coming generation which not only strives for excellence but is also built on an edifice o probity, transparency and accountability. We are a proud nation with an ambition to see the country become a superpower in all spheres—economic, scientific, military, sports—and we wish to assume leadership in international affairs. In an endeavour to loo at some of these areas, I have drawn on five case studies based on the audits done by the officers of them the Indian and accounts department. I have relied on as noaudit study of the financial dealings of the state can be more authentic than a scrutiny of these reports. The facts in the audit reports are unimpeachable. The methodology is transparent, and the inferences unassailable. We may certainly differ on the conclusions derived from these inferences, but that is a matter of perspective. I have no regrets whatsoever about the reports put out by the department. We do not have to be contrite about anything that was stated in them. In fact, I am proud o having had an opportunity to be part of a professionally sound and totally apolitical team—a team which has

commanded respect and approbation all over the globe, a team with impeccable professional credentials, whose findings resonate well with objective commentators in the country. Audits were done by specialists in different areas o administration. Their product, a labour of untiring effort, is there for all to see. In any other dispensation, these professionals would have been applauded. In ours, they have been called ‘untrained’. They deserve better. Maybe they had to pay for the direction and guidance provided to them by me. But I take solace from the thought that they are trained auditors and their audit capabilities have bee honed to such perfection that no criticism or pressure fro whatever source will detract them from the assigned task. Tillthemselves a while ago, apologists government were crying hoarse, puttingfora the substantial part of the blame, if not all, on audit—nay, the CAG—for the slowdown in economic growth and policy paralysis. They unabashedly besmirched the robustness of the India economy, painting it as so fragile that a couple of audit reports would do it irreparable damage. They did not realize that the public did not believe them. They failed to see that their explanation was an alibi for nonperformance. It was a bogey. They did not realize that, through their actions, they only underscored those commo platitudes—the worst wheel in the cart makes the most noise, or the empty vessel is the loudest. The noise was

made by those who realized their ways, and hence their days, were over. In a parliamentary democracy, a government can be only as good as we make it. If the government falters, the folly is that of the ultimate stakeholder: ‘we, the people’. Hence, if things went wrong for the country and the economy, it was probably—in fact, most definitely— because we permitted it to drift, safe as we were in our own insular environment, totally divorced from hars realities. This was a dangerous trend, as our appetite and threshold to accommodate malfeasance and inefficiency was increasing with every general election that we endured. In that context, the one incident that really stirred our conscience—the proverbial last straw on the camel’s bac —was the horrific bus incident in New Delhi involving the young lady who lost her life in December 2012. Her brave struggle against the perpetrators of the crime and her ultimate sacrifice awakened the somnolent conscience of a nation that had lost the capacity to think for itself. This stirring was provoked not only by the clarion call of a frail old man but also the despair of millions of young me and women who spontaneously descended on the streets o Jantar Mantar and India Gate to register their protest against and concern about the way in which the society and the nation were headed. And what did we do? We read the signals wrong as usual—we water-cannoned the

in the month of December. This was the psyche which, by then, revelled in shooting the messenger. It highlighted the complacency of a nation which had completely misread the Mahatma’s message of ‘see no evil, hear no evil, spea no evil’. It is this paradigm that I wish to address in the book. Should we just shut our eyes at the wrongdoing and blindly shoot the messenger who uncovers the wrong? Has this attitude become the soul of the nation? Through some of the case studies that I have presented, I propose to familiarize the readers about the message that the messenger was trying to convey. If we had read it correctly, the economy would have become more robust, the nation better respected, and we, the people, would not have suffered from the mood o despondency that need not We focusneed on the delinquents, as theenvelopes law will us. dealWe with them. to invest our energies on how to ensure that such aberrations do not recur; that systems and, more importantly, the people who operate the systems, work towards professional excellence as an end. Today, for India, development is not an option—it is a necessity. The lives and livelihoods of far too many people are at stake. Development cannot be sustainable unless it is premised on an edifice of transparency, accountability and ethical governance. Government spending needs to be done wisely. The nation’s natural resources are finite and have to be exploited to achieve

the twin objectives of people’s welfare and the mobilization of resources. The moot point is that it is not the maximization of resources that the CAG was talking about, but only themobilization . Thus while a developing country—or for that matter, any country—has to strive to fulfil the welfare needs of its people, its schemes and programmes directed towards such fulfilment can be successful only if it can mobilize resources effectively. nd as these resources are generally exploited by a private partner, it is logical to exercise robust economic principles. The issues that audit dwelt upon were of taking remedial action at the appropriate time, for which not only audit but various other agencies such as citizens’ groups, the media non-governmental were raising alarmand signals. The nation wasorganizations crying out for a leader to emerge, take control and ensure that there were no further slippages. Separately, there is need for the private party partners to introspect whether entities who are in business for the long haul need to be rent seekers or need to seek only maximization of normal profit. The case studies chosen are across a spectrum that portray a diversity in failures. The issuance of licenses for the second generatio spectrum allotment underscored procedural irregularities that were intentionally committed. Even though the alar bells were ringing loud and clear within and outside the

government, no one had the courage to stop the entire process from being hijacked. Goal posts were being shifted, and every protesting department of the government was told to stay out, with their advice being labelled as ‘out of context’. The government was certainly not caught napping, as the design became apparent as early as January 2006 itself, when the terms of reference were framed for the group of ministers and spectrum pricing was sought to be kept out of its ambit. Again, when no meeting of the group of ministers was allowed to take place by the then minister for telecommunications, the prime minister’s office silently acquiesced. It was only after a revision of the terms in December 2006 that the group of ministers met. The aconduct the Commonwealth was awas tale of how flawedofmodel of delivery ofGames the games designed, despite the country having seen a different model being successful for the 1982 Asian Games. This was a clear failure of leadership; a failure of the agencies in government, who were not working as a cohesive whole; a failure of those entrusted with the conduct of the games, who did not follow the well-trodden and accepted path. The coal story is a classic example of how those entrusted with safeguarding the nation’s natural resources allowed it to be frittered away to agencies who were neither capable of exploiting the resources nor had the

intent to do so. In the process, they lost the licenses whic were later cancelled by the court. Power generation—the avowed objective—fell by the wayside and, finally, it was the economy that suffered by being deprived of that critical input which would have been the engine for growth. The exploration of hydrocarbon is a story of a model of public-private partnerships which does not, till this day, inspire trust or confidence in either the production sharing contract (which regulates the partnership), or in the actions of the government or the operator. Furthermore, it does not assure us that the nation’s resources are indeed being exploited in the best interests of the nation. The civil aviation story is a tragic tale of an airline which waswarm onceand thepleasant pride dreams of the ofnation—its conveying a palace inlogo the sky. It has now come to such a sorry pass that the salaries of its employees were delayed for over five months. It is a saga in which generations of ministers and CEOs could not control the downslide, and the airline continues to be a parasite on the national exchequer. In the last few years, the country has also been held captive by ‘cronyism’. Cronyism extends to handing out contracts and rigging bids for the undeserving, which has done untold harm to the economy. Agencies wit inadequate domain knowledge have cornered contracts and national finite resources. They have muscled their way

into major infrastructure projects, thereby denying the meritorious their legitimate due. This has been a direct consequence of opacity in government procedures, whic has killed competition and the efficiency of the market system. A number of credible voices have been raised against the cancerous spread of this phenomenon, but remedial measures are being sacrificed at the altar of the compulsions of coalition politics. If public accountability is indeed the essence o democracy, why is it that we have not been able to enforce such accountability? We repeat the same mistakes. GenNext is fed-up and inquiring whether we continue to err by design. Also, why do we allow less than one per cent of the population of the country, comprising elected and selected servants’, toper make rulers, while the rest‘public of the ninety-nine centthemselves remain ruled? We will be called upon to answer these queries. I hope that ‘jan sunwai’ will soon take its toll on the wrongdoers, and that ultimately, transparency, probity and good governance will indeed be brought about by a determined people. And hopefully, in my lifetime itself.

THE JOURNEY

1

DIMAPUR TO DELHI Five IAS [Indian Administrative Service] probationers reported to Dimapur railway station today. Since the state government has not agreed to accept them in the Nagaland cadre, they have been directed to go back and report to the department of personnel, government of India.

his was ofthe message received by bee five officers thewelcome 1972 batch of the IAS who had allotted the Nagaland cadre. They were in Dimapur, en route to Kohima, where they were to report for the district training phase of their two-year probationary period. The cadre allotment process is architectured on the principle that half of the allottees to any cadre are from the state itself (referred to as ‘insiders’) and the other half are the so-called ‘outsiders’, allotted on a very comple ‘roster’ principle, which is understood only by the mandarins of the department of personnel. They ca operate it to suit any argument and can out-argue any

inconvenient allotment. That year, Nagaland had no insiders among the successful candidates; all five of us were from the outsider category. The government of Nagaland, a Congress-led ministry with Hokishe Sema as chief minister, was of the view that the state, which had only three districts at that time, could accommodate only two or three officers in a batch. There was a flurry of correspondence on this issue between the state and central governments, with both sides trotting out learned arguments in favour of their respective views. either government appeared to relent. The government o India seemed to believe that as the federal government and the cadre regulating authority of the All India Services, its will should prevail. The government of Nagaland cited practical problems and did not acquiesce to the central government. The five probationers—R.S. Pandey, A.P. Sharma, Ravi Dhingra, N.G. Laloo and I—had been privy to this debate as all correspondence between the two governments was copied to us. Till the day we were to leave the academy for our respective cadres, copies o correspondence available with us indicated that both the state and central governments were sticking to their adversarial positions. We were a confused lot, understandably. On behalf of all five, I had mustered up the courage to seek advice from the director of the academy, D.D. Sathe,

who offered it with alacrity: ‘The central government has allotted all five of you to Nagaland. The state has no choice in the process. They will have to accept all of you. So, proceed to the state capital and report to the chief secretary.’ Unfamiliar with the ways of bureaucracy as we were, we accepted this advice as gospel and proceeded to Kohima, Nagaland’s capital and the seat of the state government. Since the academy had informed the state government of the date and time of our arrival, we hoped to be met by at least an official vehicle to take us to Kohima, a distance of seventy-six kilometres by road fro Dimapur, the railhead. We were indeed met. As we disembarked from the train at Dimapur, a official to us to seek confirmation we were the fivecame IASup officers coming from thethatMussoorie cademy, and allotted to the Nagaland cadre. On hearing that we were, he handed each one of us a sealed envelope. With some degree of expectancy (a welcome message?), we prised open the envelopes. In each of them was a copy of a wireless message sent by the state government to the central government—the text of the telegram is what I have reproduced at the beginning of this chapter. We turned to the officer who had handed us the message. He had vanished; he had simply melted into the crowds on the platform. We searched for anyone who might eve remotely be connected to the government, going to the

extent of trying to locate any government vehicle in the parking lot which could take us to the Circuit House, but all to no avail. What were we to do? Well, we had strength i numbers, which kept our morale high and the spirit o adventure alive. And, since we had been advised to report to the chief secretary, we decided to continue our journey to the state capital. But first, we headed to the Circuit House for a well-deserved bath and some food. Things improved a tad by the afternoon. Binod Kumar (a 1970 batch officer, posted as a sub-divisional officer at Wokha) and T.K.K. Nair (a 1971 batch officer, posted at Dimapur) came to look us up. They were encouraging, and advised us to head to Kohima. Binod Kumar even offered to take us to Kohima his official vehiclecolleagues, the next morning. Wit such support infrom our senior we were reassured. We set off towards Kohima the following morning. Reaching there, we met with the chief secretary, H. Zopianga, an exceedingly gentle and warm person. He took pains to explain to us the government’s stance. Though he was apologetic about, and sad at the treatment being meted out to us, he was duty bound, he said, as the chief minister had decided not to permit any one of us to oin on a matter of principle. We were in no-man’s land, figuratively and, in fact, even literally. We had been allotted a cadre which refused

to accept us, were effectively unemployed and without pay, far from home, dependent on the kindness of the inspector general of police, who arranged a roof over our heads and food to keep us going in the police mess. This state of uncertainty lasted fifty-three days. We were the informed that Prime Minister Indira Gandhi had intervened, and advised the chief minister to accept us for the training period, after which three of us five would be reallotted to other cadres. A remarkable solution, thoug one that can be termed as being inexplicable too—because the training and district experience in Nagaland was rather inadequate; those reallocated to other cadres would have negligible training in revenue administration. After all, the tribal areas of Nagaland had no land revenue, and the Code Criminal (CrPC) did not apply to the ‘inner ofline’ area. Procedure There was no question of judicial training either. These were not issues that mattered in any case because we would now have a job to do, an office to go to and, hopefully, a pay packet to receive. R.S. Pandey and I were allotted to the Tuensang district for training. Back then, Nagaland had only three districts and Tuensang was deepest in the interiors— beautiful but not with many modern amenities. Our deputy commissioner, John F. Halliday, a handsome Mizo officer and a man of few words, was a quintessential ‘bada saheb’ who was initially in the Indian Frontier

dministration Service (IFAS). He told us to quickly familiarize ourselves with the local lingo, Nagamese, get to know the place and acquaint ourselves with the administration. Basically, he meant, keep off me. His wife turned out to be an excellent host and a remarkable cook. A part of Tuensang district then, and now a independent district, is the area of Mon. It is inhabited by the Konyak tribe. The tribe still follows the tradition o being led by the ‘angh’, who is the hereditary village chieftain. The angh’s wife is known as the ‘chatai’. The Konyaks tattoo their faces and hands, and hold on to an old belief that only dogs have white teeth; so they paint their teeth black. The Konyaks practised headhunting till it was banned by the government in the 1950s. Young Konyaks who enemy the angh rewarded wit brassoffered replicas, whichheads they’dtoweave intowere a necklace. These necklaces with brass human-head beads would be wor proudly by the menfolk.

A Collection of Sk ulls in the Angh’s House

Pandey and I visited a Konyak village and were greeted by the angh. He carried a muzzle-loading singlebarrel gun and was not keen on being photographed as he was not in the best of health that day and felt his photo would not do him justice. His wife, the chatai, took us to their home, which was a long bamboo hut with a thatched roof. In the Spartan living room, we were greeted wit three shelves with rows and rows of familiar looking decorations—human skulls—thirty-seven of them proudly displayed. The chatai explained that this was their family heirloom—the maximum number of heads in these parts— a unique collection-cum-trophy indeed! The traditional animal in these parts is a mithun—a cross between a water buffalo and a cow. According to tribal law, murder can be

compounded if the widow of the murdered person is compensated with a mithun. Pandey and I spent an exceedingly interesting and exciting nine months in Tuensang. Food was limited. It was rumoured that if vegetables such as eggplants or okra ever came into the marketplace, a partial holiday would be declared so that families could do their grocery shopping. After completing our district attachment, we returned to Mussoorie and the academy for the final phase of our training. In early 1974, while we five probationers were undergoing secretariat training in Kohima, we heard of a most unfortunate incident—the deputy commissioner o Zunheboto, K.K. Gupta, an IAS officer of the 1969 batch, was ambushed killed while tour. Gupta had been sittingand in the front seatonofan theofficial jeep, between the driver and the commanding officer of the Assam rifles battalion. The bullet had hit Gupta only, and that too in the chest; his death had probably been instantaneous. The news spread like wildfire in the town. Late afternoon, I decided to drive down to Zunheboto. The commissioner, S.C. Dev, lent me his jeep and driver. I initially told the driver that we were headed for Phek, another town in the same direction. However, when the road forked and we took the lane to Zunheboto, the driver showed reluctance, having heard of the incident; besides, night had already fallen. He required some persuasion before we could

carry on. We reached Zunheboto late at night. The next morning, the chief secretary and the commissioner helicoptered into Zunheboto and arranged to evacuate the body and the family to Delhi in an Indian Air Force (IAF) aircraft, with me accompanying them. This was probably the first incident when the underground had targeted a IAS officer. KERALA

When the Trivandrum Mail steamed into Trivandru Central Station on 21 July 1974, I realized that I was attempting to find myself a cadre yet again in my fledgling two-year career in the coveted IAS. I had joined wit dreams of rapidly climbing the rungs, and rising to the post of a district magistrate in a well-known district. Yet, here I was, unable to find a state that would accept my services. nd what was my fault? None that I could think of. Three of us from the 1972 batch had been withdraw from Nagaland, after having ostensibly completed our probation. R.S. Pandey and N.G. Laloo had been retained in Nagaland, A.P. Sharma had been reallotted to Manipur, Ravi Dhingra to Himachal Pradesh, and I had bee reallotted to Kerala. After a tiring three-day journey fro my hometown of Lucknow via Madras, I had reached Trivandrum. The next morning, I sought an appointment with the chief secretary and was promptly ushered into the

room of K.P.K. Menon, a former air force officer. I was a trifle baffled to find a glass of pale yellow liquid o Menon’s table. This was at about 11 a.m. Coming fro Tuensang in Nagaland, where the redoubtable John F. Halliday started his early lunch with a glass of beer, I had not expected to witness the same trend in distant Kerala. It was only after spending many days in the state that I came to identify the contents of that glass. People of Kerala prefer to boil their drinking water (to make it safe for consumption), and to add some flavour to it, they heat the water with cumin seeds (jeera) or dried ginger whic gives it that yellowish tint. In fact, very soon I became partial to this ‘coloured’ water. K.P.K. Menon was intrigued by my credentials. I had supposedly my two-year and was ready for acompleted regular posting; yet, asprobation a sub-divisional magistrate, I had not the foggiest idea of Kerala’s geography, let alone its language and laws of the land. Menon could not understand how I had been reallocated to Kerala from Nagaland, that too without my requesting for a change. Quite amazed by the situation, he exclaimed loudly in his clipped accent: ‘Oh, oh! You are going to be fairly indigestible material for us!’ This was a rather strange interpretation of my abilities. Nevertheless, I mustered some courage and offered a solution: ‘Sir, please give me an attachment with any district collector for two months and I will make myself digestible.’ If digestibility

was indeed going to be the criterion for getting regular employment, I had to couch my employability in those terms. This suggestion seemed to appeal to Menon. He arranged a two-month attachment with K. Srinivasan, the the district collector (DC) of Cannanore (now Kannur). With this major feather in my cap, I spoke to a few friends posted in Trivandrum. On learning that I was to move to Cannanore, they had a hearty laugh. The cause for their amusement remained a mystery till Cannanore’s location on the map was made clear to me. While the government of India had posted me to the region farthest from Nagaland, the government of Kerala thought it best to send me even farther from the seat of government, to the district furthest from Trivandrum. In September, after my two-month stint in Cannanore —during which John Mathai, the sub-collector o Tellicherry (now Thalassery), taught me the basics o revenue administration (especially during our long inspection trips to Kasaragod and Taliparamba); K.M. Chandrasekhar, who had been posted as the project officer of the Small Farmers Development Agency (SFDA), trained me in development administration; M.K. Ravindranathan, the additional district magistrate (ADM), coached me in general administration; and K. Srinivasa schooled me in Malayalam and basic survival values—I was posted to Thrissur (Trichur in those days). Located roughly in the centre of Kerala, this compact, semi-urban,

Malayali cultural capital has now become my second home. I was first posted here as the assistant collector, then the project officer of the SFDA (the precursor of the present District Rural Development Agency, DRDA) and later, the DC. THRISSUR

K.S. Nair was the DC of Thrissur when I arrived there from Cannanore. An officer of the state revenue service, he was thorough in his approach, popular in the district and very affectionate towards me. In fact, when I wanted to shift from the rest house to the residence earmarked for the assistant collector, he would not allow me to do so o a Tuesday, ostensibly because it was not auspicious. I earned my spurs in this job and slowly gained confidence in dealing with the public in Malayalam and managing the officials. One of my achievements was the successful organization of a ‘gana-mela’ programme, an entertainment show to collect funds for flood relief and other victims; a part of the fund collected was utilized to build an indoor stadium. My stint in Thrissur as an assistant collector came to a sudden end a year-and-a-half later, when I was peremptorily removed one fine morning from the post. I learnt that my actions with respect to a church belonging to 1 the Jacobite Syrian Christian community were counter to

the instructions which appeared to have been issued by the then home minister, K. Karunakaran, to my DC, but whic were probably never conveyed to me. The move was within the district and to the SFDA, an assignment that I held for about two years and view as amongst the best i my career. A word about the politics of Thrissur. K. Karunakaran, the then home minister (and later the chie minister), a devout Congressman, belonged to this district. So did the chief minister at that point, C. Achutha Menon, an equally devout Communist Party of India (CPI) member. They were distinctly different personalities. Karunakaran was loquacious and outspoken, and would visit the district at least once a week, whereas Menon had an hardly andKarunakaran would comewas to the intellectual district oncebearing, in about three spoke months. an ardent devotee of Lord Guruvayoorappan, the Sree Krishna temple in Guruvayoor, and would, without fail, visit the temple on the first day of every Malayala calendar month. He was very good towards officers and, if they gained his trust with their work, would back the to the hilt. The contribution of Karunakaran to the development of Thrissur district has been remarkable. He was a strong administrator who believed in development. He was fond of travelling very fast on the road—and this is not the most advisable thing to do on the lanes and bylanes of Kerala.

Once, while travelling from Thrissur to Kochi, whe despite his repeated goading, the driver did not speed up, Karunakaran sarcastically told him to give way to the bullock cart that was honking behind them and wanted to overtake their car. That’s when the speedometer showed 100 kmph. But then, for Karunakaran, anything less tha 110 kmph was not acceptable. He lived life in the fast lane. TRIVANDRUM

My initiation to a secretariat posting in Trivandrum was when I was made the deputy secretary in the revenue department in 1977. It was also here that I got to witness, rather intimately, the functioning of the bureaucracy. This was when the state was reeling under a severe monsoon; there was loss to life, property and crops. As is customary in such situations, a damage assessment team came fro the government of India. Usually these teams are looked after very well as they have the power to recommend additional financial assistance to the state. It was my responsibility to prepare the memorandum for financial aid required to be presented to the central government through this team and accompany the squad when it toured the flood-affected areas. The visit went off well, with the team and its leader conveying their appreciation of our arrangements. After their departure, on my return to

Trivandrum, S. Padmakumar (the secretary of the revenue department) and I went on to brief the minister, Baby John. When the minister conveyed his satisfaction, I was amazed to hear Padmakumar tell him, ‘At least give us a good treat for a job well done!’ The minister responded by putting his hand in his kurta (jubba, as they say in Malayalam) and pulling out a fistful of crushed currency notes. No sooner had he put the money on the table, than Padmakumar grabbed and counted the notes: 700. He was satisfied; it would buy a meal for two. Padmakumar and I drove off to Mascot Hotel, the only decent eating place in Trivandru back then. After a hearty meal, when the bill came, Padmakumar tipped the waiter and told the manager to send the bill to his house. I was surprised, since he had the cash he needed. Padmakumar’s justification, i an elementary-my-dear-Watson style, was:delivered ‘You see, Vinod, when this bill goes home my wife will pay it. In the process my ways and means position has gone up by 700!’ I did not survive very long in the secretariat. The chie minister, A.K. Antony, was prevailed upon by one of his political seniors, Meloth Narayan Nambiar, to post me to the Kerala State Cooperative Marketing Federation, o which Meloth was the chairman. I was back in Calicut, i the Malabar area of Kerala. The marketing federation was an excellent opportunity for me to learn about trade in spices. We procured pepper,

cardamom, dried ginger, turmeric and cloves, and exported them to different countries. The erstwhile USSR was our largest trading partner, purchasing pepper and cardamom in large quantities. Besides having very knowledgeable officers within the federation, such as P.S. Muralidharan Nair, I learnt a great deal about the nuances of the trade from such stalwarts as Jaysinh V. Mariwala (of M/s Kanji Morarji Pvt Ltd). He was among the best informed and respected spices traders of those days, and continues to be a close friend.

The government of Kerala had announced that the Kerala State Cooperative Marketing Federation would be the state’s procurerwould of rawbe cashew nuts. by The the raw cashew monopoly so procured allotted government’s cashew special officer to cashew processing factories. This was to ensure that all cashew processing factories got enough raw cashew to process— thereby providing the labour attached to each factory with gainful employment, and stalling the monopoly of a handful o factories. The move would also ensure that all cashew was processed in the state, and not smuggled to neighbouring Tamil Nadu or Karnataka, where Kerala cashew processors had set up factories to reap the benefits of cheaper labour. Expectedly, the larger cashew factories were up i

arms; their freedom had been curtailed. They went to court against the government’s orders, and prolonged litigatio commenced. My batchmate Gopal Pillai was the cashew special officer; he was a stickler for norms, and both of us had a pathological dislike for misplaced political pressure. He was in perennial chase of lorries smuggling cashew to neighbouring states, and quite enjoyed the task. On one such occasion, he caught a lorry load, and after confiscating it, promptly got it sent to our godown for allotment to a particular factory. Not to be outwitted, the lorry owner pressurized the minister, concocted a case o mistaken facts, and accused us of overenthusiasm. The minister started searching for Gopal who, by then, had made himself scarce—the age of mobile phones was still to come. The minister did the next best thing—he summoned me and told me to release the lorry. However, since he was not the minister of my department, I refused to budge. Besides, there was a written order for confiscation, and I could not release a lorry on verbal instructions. The minister was livid. Here was an officer, with precisely seven years of service, openly defying him. He made known his opinion of young IAS officers who were irreverent towards ministers, and ended by saying, ‘If yo do not release that lorry, I will suspend you.’ Now, suc threats did not appeal to the young, still idealistic and upright officer in me. In chaste Malayalam I retorted,

‘Well, that is not what you can do to an IAS officer.’ The minister’s eyes grew to the size of footballs and his jaw dropped open—not welcome signs. I beat a hasty retreat. I realized that I had put myself in an unenviable situation. The chief minister was a CPI leader, and so was this minister. IAS officers were available a dime a dozen; suspending them was child’s play, and the central government rarely interceded to remedy the egoistic actions of some state busybody. Panic was soon getting the better of me. I made my way to the residence of Baby Joh who was the cooperation minister, the minister for my department. He was laid up. Nevertheless, I got a audience with him. His comment on hearing my account was, ‘You have not done the wisest of things.’ Wise or otherwise, left itofto indisposition, him to fix thehesituation. man. Despite hisI state went toPoor the chie minister’s office post-haste as he realized that the situatio could spell difficulty for me. The industry minister, I believe, was already there, and was fuming. Thankfully, with Baby John’s intervention, the problem got sorted, and I survived to tell the tale. Back then, politicians had depth of character! DELHI

My first tenure at the government of India was in 1980, as under-secretary in the ministry of commerce. I was

looking forward to the assignment, having had some experience of exports and foreign trade in my tenure as the managing director of the Kerala State Cooperative Marketing Federation, which had emerged as the largest exporter of spices in the country. My first day at work i Delhi was 23 June 1980, and by the time I got to Udyog Bhawan, which houses the offices of the ministry o commerce, news of an unfortunate aircrash involving Indira Gandhi’s younger son, Sanjay Gandhi, was circulating in hushed tones—hushed because the news was unconfirmed; neither Doordarshan (the government-owned television channel) nor All India Radio had announced the accident. The news, which was being referred to as having ‘monumental consequences’, had compelled people to huddle in groups and discuss the event and its o one, not even the section officer in aftereffects. charge o administration, had time for this minion (yours truly); not one person helped him file his ‘joining report’. No business was transacted that day. The next day, I reported for work again. News broke that V.V. Giri, a former president of India had passed away. Friends and colleagues advised me to desist from reporting to office the next day—lest someone else fell victim! I learnt my first lesson of working in the ‘ocean’ called the government of India within a few days of being on the job. The door closer on the door to my room broke and fell off one late evening. Being somewhat familiar

with government procedures on equipment replacement, however non-functional, I picked up the broken piece and secured it safely. The next morning, I called for the perso designated to attend to such administrative duties and requested him to replace the door closer, the broken ar of which I dutifully handed over. He agreed and stepped out of the room to bounce back within a minute with a clarification. He announced that as an under-secretary, I was not entitled to a door closer! I bristled at the import o what he was telling me; only a month ago, I was a ‘mighty’ managing director who could replace infinitely more tha a mere door closer. However, wiser counsel prevailed, and I respectfully enquired what my—a lowly undersecretary’s—entitlements were. And here is what I learnt: An under-secretary is entitled to a single bay room whic he has to share with his personal assistant. He also shares a telephone with another under-secretary. He is provided with a window-fitted air cooler in the summer months. He has half a peon too. A deputy secretary (the next in the rung) is entitled to a single bay room, with the personal assistant sitting i another room, and a telephone with a buzzer. He is also provided with an air cooler in the summer months. A whole peon is at his disposal. A director has the same facilities as a deputy secretary, but with a major qualitative upgrade—he is bequeathed an air conditioner instead of an air cooler.

It is the joint secretary who really sets the men apart fro the boys. A two-bay room. Two air conditioners. Two personal assistants. Two peons. The additional secretary gets just about the same privileges. The secretary gets a three-bay room. Three air conditioners. Two or three personal assistants. And I guess whatever else he can demand! The staff car—the majestic and status-establishing Ambassador—is available only to the secretaries. This was the entitlement hierarchy in the government at that time—far more important than the take-home salary, which in any case, till the award of the pay commission i 1996, line. kept government officers well below the poverty I served with some of the finest officers during this tenure, including S.P. Agarwal (who offered me basic lessons of survival in the government of India) and Usha Vohra, a quintessential bureaucrat, absolutely upright. My other seniors were S. Badrinath and S.P. Shukla, both o whom left for Geneva, and V.C. Pande, who later became the cabinet secretary. One of the secretaries was Abid Hussain, a delightful person, warm and forthcoming. My tenure at the centre certainly prepared me well, and I learnt to ‘survive’ in Delhi. In April 1985, on the completion of my roughly five-year central deputation, I returned to Kerala to be posted as the DC of Thrissur.

THRISSUR

s the DC, among the first few things I set about to do was planning the town. Thrissur’s architecture is unique, having grown around the Vadakkumnathan Temple. Around the temple runs a circular road, with arterial roads feeding into like Connaught Place in New Delhi. This wholeit—quite area is called the Swaraj Round. The round was terribly congested, with a successio of buses halting at the bus-stand and creating a nightmaris traffic jam. With the support of like-minded people, we managed to relocate the bus stand; we also created a new fish and vegetable market away from the round, whic substantially eased the clutter near the temple. The entirely new township, comprising the bus stand and the market, was named Sakthan Thampuran Nagar, after the most popular ruler of the Cochin dynasty. Though the relocatio of the bus stand and the market was initially seen as a inconvenience, its benefits far outweighed the temporary hassles, and the move was hailed by the people as very progressive. that, one group dissented—the students fromHaving Vimlasaid College, a popular women’s college i Thrissur, away from the town centre, who now had to walk an extra 200 yards to catch a link bus. I received a ‘testimonial’ from a student, and I preserve it to this day, as a reminder that even the best of plans meet opposition.

The ‘testimonial’, on a page torn from a notebook, reads: ‘I have seen a lot of fools in my life, but never a fool like the present district collector. He has caused so much o difficulty by shifting the bus-stand. Someone please put some sense in to [sic] him.’ Sadly, I never got to meet the author of that letter.

Over time, I came to see that people were, for the most part, amenable to reason if matters were explained transparently. I am reminded of an incident involving K. Radhakrishnan, a remarkably upright and well-meaning politician from the Congress, and presently the chairma of the Thrissur Urban Development Authority. Among other is apage, nature and though we were usuallythings, on thehesame welover, had reason to oppose eac other when I was getting the Karunakaran Nambiar Road widened. Obviously, a few trees which came in the way were to become casualties. However, Radhakrishnan and team would not let us proceed, and hugged the trees, Chipko-style. I tried pointing out the absurdity o constructing a road with a tree right in the middle; I highlighted the fact that this would only be a traffic hazard and inconvenience commuters. Moreover, the road was a critical link to decongest major arterial roads and the mai sports stadium, which always had crowds collecting for sporting events. Interestingly, once I explained the

rationale guiding our actions, Radhakrishnan and his tea saw reason. They retreated. In turn, we cooperated wit their part of the bargain: to organize a tree-planting exercise on both sides of the road. This brings me to the National Games of 1987, awarded to Trivandrum (now Thiruvananthapuram). The chief minister wanted the swimming events to be conducted in Thrissur. There was only one minor hitch— Thrissur did not have an Olympic-size swimming pool! We got to the job of locating land barely one-and-a-hal years before the games. Government land near the indoor stadium was identified; it was low-lying and had to be filled. However, filling it up would stop the natural drainage of a cluster of houses, unless good alternative drainage were created. Since the conduct o the gamesmechanisms in Thrissur would be a huge achievement for the ruling Congress, the Communist Part of India (Marxist) (CPM) chose to dispute the site selected for the pool. We managed to thwart the protests, but to our ill-luck, one fine evening, while the pool was being constructed, there was a heavy downpour. This immediately caused waterlogging in those houses in which we had created only temporary alternate drainage channels. Gopalan, a CP party member of the legislative assembly (MLA), led a mob to break some of the embankments. Thousands o gallons of water poured into the area dug for the pool, inundating machinery. There was a furore from both sides.

I merely decided to have photographs taken of the inundated area. I plastered them in all the local newspapers with the help of a well-meaning and development-oriented journalist named K. Balakrishnan, so the public could decide for itself. People, as a rule, respond sensibly if taken into confidence. There was a groundswell of opinion against the CPM and the MLA. We never again had trouble constructing the swimming pool, and managed to ready it in time for the National Games. Radhakrishnan and Balakrishnan still remain good friends of mine.

During my tenure as the DC of Thrissur, I was faced with a rather complicated lawCand order issue in the context o, hristuvinte Aaram Thirumurivu the staging of the play, roughly translated as ‘The Sixth Wound of Christ’. This play by the Kerala Sahitya Akademi Award-winning playwright, P.M. Antony, was based on Nikos Kazantzakis’ historical novel, translated into English i 1960 as The Last Temptation of Christ . As in The Last Temptation of Christ , Antony depicted Jesus not as the son of god, but as a human being subject to fear, doubt and lust; Mary Magdalene was portrayed as free of blemish. Antony had first attempted to stage this play i lleppey (now Alappuzha) district. But acting o complaints filed by Christian groups, the police seized the

script from the rehearsal camp and arrested the dramatist, thereby beginning a long struggle and a series of court cases. On account of a High Court ruling, the play was forced to shift out of Alleppey. The court had ruled that they could stage it outside Alleppey district. Thrissur was the next district of choice for staging the play. However, public opinion was no different i Thrissur. It needs to be emphasized that roughly 20 per cent of the population of Kerala follows Christianity; this religious minority is not only well-educated and vocal, but also rich and influential. The Christians in Thrissur opposed the staging of the play. Priests and nuns joined demonstrations; fasts were organized; candlelight processions were held; posters were put up. The bishop o Thrissur, Joseph and reasonable clergyman, raisedKundukulam, objections to an theerudite performance as well. On the other hand, playwrights, artists and men of letters regrouped. They maintained that banning a play set a dangerous precedent for the freedom of thought and expression. They further claimed that the objectionable portions had been removed. Their voice found favour i Trivandrum, the state capital. Our intention, as administrators, was to let the show go on. However, a day prior to the scheduled staging, protests assumed a feverish pitch, pressure from the church became strident, and large groups of people, including miscreants, started to converge. Candlelight

processions, token gheraos of the collector’s bungalow, and street corner meetings were organized to put pressure on the district administration to ban the play. Police intelligence trickling in was disturbing, as it seemed that i those in favour of the ban reached the auditorium, the opposing side would not hesitate to take them o physically. We had to act quickly. Using Section 144 of the CrPC and prohibiting an assembly of people would be counterproductive, as it would make the staging of the play virtually impossible. On the other hand, banning the play could attract contempt of court, since the High Court had permitted the staging. I called a meeting of the police authorities and the executive magistrates of the district. Information coming from all quartersfor was maintaining analysed. I finally decided the responsibility public peacethat and tranquillity was the direct and immediate responsibility o any district magistrate. While freedom of expression, undoubtedly a fundamental right, needed to be upheld, it could not be defended at the cost of carnage and destruction, and the loss of innocent lives and public property. I reasoned that if a fundamental right was being impeded, it was for the higher judiciary to give an order which could be applicable to the state or the country, and the larger government machinery could implement this decision. At the local level, I was not in a position to let a conflagration take place. Hence, I decided not to permit

the staging of the play. At the same time, to be fair to the artistes, and so they could present their case before a court of law, I decided to pass the order prohibiting the staging of the play the previous evening itself, so the aggrieved party could approach the High Court and seek redress in the morning, before the time slotted for the first show of the play. The next morning, the theatre company did go to court. The court heard them out, but on reading the order of the district magistrate and his reasons for imposing the ban, the court upheld the order. The play was banned fro being staged in Thrissur district. Any guilt that I harboured for supposedly having stifled the freedom of speech and expression was set to rest when about a year later, in the December after just about all the DCs had banned play in 1987, their respective districts, the High Court gave a final ruling. The court clubbed my order with other orders, and issued the verdict that any functionary in the position of the collector, while aware of the sentiments of large sections of people in his urisdiction, could not possibly ignore the potential consequences of overlooking majority opinion. The court ordained that the issue was not whether the play was a true adaption of the book by Kazantzakis, but that the disruption of public order, tranquillity and harmony i society could not be allowed. The court further ruled that the district magistrate had the power, even under the

Kerala Dramatic Performance Act, to prohibit objectionable performances after following the prescribed procedures under the Kerala Dramatic Performance Rules 1964. This was an important learning curve. I came to see merit in taking action that was balanced and objective. This was all the more important since the state and its people trusted me and were in some ways at the mercy o my pronouncements; the responsibility placed on me was onerous. The decision taken regarding the play stood the test of scrutiny over the years and has become the beaco for future action in similar circumstances.

Thrissur provided me another meeting with His Holiness Popeunique John opportunity: Paul II on 7a February 1986. The Pope visited India from 1 to 10 February 1986. His schedule, made available in the public domain weeks before his arrival, indicated that he would be in Kerala on 7 and 8 February 1986. The cities that his itinerary covered were Cochin, Kottayam and Trivandrum. There was no mention of Thrissur. However, Chief Minister Karunakaran kept insisting that Thrissur would eventually be part of his itinerary. Since the district administration and the Christia community had tremendous faith in the word of the chie minister, everyone, including the bishop of Thrissur, had to

prepare for the event. There were barely weeks remaining for the papal visit, and we swung into action. The chie minister inaugurated the central committee constituted for the papal visit, and a site for the public meeting was identified. Making arrangements for the expected gathering of about 1.2 million people were daunting. Every detail had to be taken care of. While planning was in progress and the venue was under preparation, we were nagged by lack of any official confirmation from the government of India regarding the Pope’s visit to Thrissur. I would check with the chie minister at least twice a week to see if the formal programme had been received. Each time he would give me his characteristic wink and say, ‘You go ahead, everything willall fallbegun into place’. It didsince ultimately. But not before we had to perspire, public money was being spent without any official confirmation fro Delhi. The Pope arrived at 10 a.m. on 7 February 1986, landing at a specially prepared helipad. The Pope mobile had been stationed there. The route of the papal cavalcade to the venue was dotted with people. The Thrissur temple committees had lined up fifteen gorgeously adorned elephants and had traditional panchavadyam music. It was a lovely sight. The entire ceremony lasted for about two hours and we all heaved a sigh of relief after the Pope took off. It was probably the largest gathering of people i

Thrissur from north Kerala, parts of Tamil Nadu and Karnataka.

s a consequence of the elections held around April 1987, the Congress-led United Democratic Front (UDF) alliance, of which Karunakaran was the chief minister, lost to the Left Democratic Front (LDF) led by the CPM. Ordinarily, when governments change, the secretary to the chief minister, the DC of the chief minister’s district and other so-called favourites end up as bureaucratic causalities. I had reconciled myself to this, more so as I had already completed two years in the district. But a different kind of crisis awaited me. Bureaucrats undergo a mid-career programme abroadusually of about nine months to a year.training I had also applied and had been shortlisted for a training programme at the Harvard Kennedy School (in Harvard University) for what is popularly known as the Maso Program. This is a prestigious course and probably the only one in which a professor from the foreign university comes to interview and then select the applicants. I pril, I was informed that I had been chosen. I was thrilled. After the change of government in the state, I did a routine ‘calling on’ on the new revenue minister, a CPI man. He was nice to me and in the course of the

conversation I told him that I had been selected for a course abroad. He immediately responded, ‘Don’t assume that we propose to remove you from Thrissur, and try to go away on a course. In fact, we do not plan to remove you at all, so go back and complete the projects you have initiated. Forget the course!’ I panicked. Going to Harvard was an opportunity of a lifetime. I was among the five selected from about a hundred applicants. How could I give it up merely to remain a DC for another six months or longer? I politely explained the significance of the course. The revenue minister wished to hear no more and dismissed me from his presence. A feeling of terror slowly began to engulf me. What was I to do? I could not blame the minister, as he was being nice to me and Out did not know the significance of the training programme. of desperation, I made a beeline for the chief secretary’s office, waited my turn, met him, and narrated my tale of impending woe. He did appreciate the situation, and told me he would take care of it. I remained on tenterhooks till, finally, I took the flight out for the US. I left Thrissur in June 1987. My love affair with the town and the district continues. DELHI

Later, in 1992, I got another opportunity to come back to

Delhi—as joint secretary in the ministry of defence, dealing with issues pertaining to the Indian navy. N.N. Vohra was the secretary, an outspoken, experienced and no-nonsense bureaucrat. He was a stickler for norms and punctuality, and I became familiar with his scribbles o discussion notes: ‘Pl discuss today at 2.12 p.m.’ Sure enough, he would be back from lunch and in his office at the appointed time. Vohra introduced me to the significance of the civilia bureaucracy, and why the Constitution makers had buffered them between the uniformed bureaucracy and the political executive. The presence of the civilia bureaucracy is seen an impediment and a stumbling bloc by the armed forces. However, the earlier the officers i the armed forces the accept thisit basic premise enshrined i the Constitution, easier will be for them to manage their affairs efficiently. There is quite often a demonstrated tendency to win over the political executive (the minister) on issues which suit the immediate requirements of the military, without a detailed examination, ostensibly in the belief that ‘babudom’ will delay decision making. This phenomenon has been succinctly explained by the the defence minister, R. Venkatramanan in a one-page noting on one of the files of the ministry of defence; here, he clarified why the Constitution makers provided for a civilian bureaucracy between the minister and the uniformed executive.

I had an interesting experience during this tenure. The Indian navy had seized a Liberation Tigers of Tamil Eela (LTTE) vessel carrying arms and ammunition; on board was Kittu, one of the most senior leaders of the LTTE. Kittu and his men did not surrender, and in the melee that ensued, the vessel MV Ahat caught fire and sank in India waters. Besides the probable disappointment that Kitt could not be captured, the Indian navy lost the arms and ammunition that were on board. Later, a habeas corpus petition was filed by Kittu’s mother in the Madras Hig Court against the Indian navy seeking that they make Kitt available; the belief was that he was in Indian captivity. I filed the affidavit on behalf of the government. The case got adjourned repeatedly; it turned out that no bench was willing try the for itself: fear oftransfer the LTTE. It cametofrom thecase court the The casesolution? to the ndhra Pradesh High Court, ostensibly on the grounds that the ship had been seized by the navy off the coast of Vizag.

Very soon, I moved to the desk of the joint secretary (air force)—another disciplined and professional force whic was easy to deal with. Mulayam Singh Yadav took over as the defence minister. All officers were advised to brushup on their knowledge of Hindi. Air force pilots, especially those from the helicopter squadron, had soon to familiarize themselves with all the towns of Uttar Prades

(UP). In one of his first visits as minister, Yadav wanted to visit Etah. While quite a few in the squadron, and otherwise, knew of Etawah, not many knew of Etah. So, when the first requisition came for the minister to be flow to Etah, the squadron actually thought it was a spelling mistake for Etawah! Needless to say, we didn’t lose time in becoming familiar with all the towns in UP. I had an interesting altercation with Mulayam Sing Yadav. The minister summoned me and requested that the transfer out of Delhi of a certain sergeant rank noncommissioned officer (NCO) of the air force be cancelled. s is the practice that we follow when such requests are made, I said I would check on the position and get back to him. The response seemed to surprise him—why not carry out the order then report on the situation and and revert—but heback, let itrather pass.than Thecheck air force informed me that this sergeant had already spent eleve years in Delhi and was in the habit of using political connections to stay on whenever transferred out. This pulling of political strings did not go down well with the air force. I informed the minister of the air force’s reservations, citing discipline, norms, rules of tenure, demonstration effect on other officers, etc. It was then the minister’s turn to see red! He sent me packing with the suggestion that I get back to him after carrying out the assigned order. I was caught between a recalcitrant air force bureaucracy and the minister—my sympathies

obviously being with the former. So I made an appearance in the minister’s room again. Our conversation went something like this: Me: Sir, the air force has serious reservations as this person is spoiling the morale of others by repeatedly circumventing orders to suit his convenience. In a uniformed service, they consider it an act of serious indiscipline. Mulayam Singh Yadav (MSY): What? You mean I can’t even ask the air force to change their orders? Me (looking contrite): Well… MSY: Are you trying to tell me that whereas in the state as a chief minister I could transfer a three-star director general of police at will, here I can’t transfer a three-stripe wearing NCO of the air force? What kind of a helpless minister do you want me to be? This logic. Indeed, very had good logic.went Whaton. doesAnd one on. say?Good I left it at that. The NCO to ultimately move out, albeit three months later. The bureaucracy also has its bag of tricks.

There were very many other ‘exciting’ times—exciting when one reflects on them, but not necessarily exciting when one is in the midst of those issues. Leaving the more strategic incidents aside, I find two episodes wort narrating. One pertains to Arunachal Pradesh. States in the ortheast have genuine logistical problems. To facilitate VIP and emergency movement, each of the states has bee permitted flying hours each month by IAF helicopters. The then chief minister, Gegong Apang, was a frequent user o these flying hours. On one particular occasion, he had to board an air force single-engine Chetak helicopter fro Pasighat to Itanagar. This helicopter can carry four passengers and baggage besides a crew of two pilots. lso, since there are no refuelling facilities at Itanagar, the helicopter has to perforce fuel arrived sufficient forhelipad the up and down sorties. The chiefcarry minister at the with his entourage. They were to board when the pilot realized that the number of passengers and the weight o the baggage together exceeded permissible limits. He apprised the chief minister of the danger, but the latter would hear none of it. There was a deadlock: the chie minister insisted on being flown in the manner he decreed, while the pilot insisted on following the safety protocol. The chief minister told the young pilot, ‘I have eightee years of flying experience in these areas, so please do as I direct’. The pilot pleaded again. By this time the chie minister, not being accustomed to his instructions being

flouted, had got worked up. His ultimate threat was that i the pilot did not do his bidding, he would have him locked up. And he did. This was the height of arbitrariness. Phone lines started ringing. The air force was understandably upset. The issue reached the defence minister who promptly tried to contact the chief minister on phone, unsuccessfully. The union home minister was then prevailed upon to speak to the chief minister. He did so. The pilot was not released. Meanwhile, the services were getting restive and wanted the officer released before nightfall. The army brigade stationed near Pasighat was more than willing to walk into the so-called police lockup and bust the officer out. Tempers were rising. Night fell with the poor pilot still behind bars. At 5 a.m, I was dispatched to Arunachal and bymelt the chie minister’s heart. We flew toto try Jorhat a fixed-wing aircraft. From there I was to take a chopper to meet the chief minister. However, after landing at Jorhat, I was told that no one seemed to know where the chief minister was. fter some effort, the air force located him in Ziro. I too the chopper to Ziro and managed to meet him at the guest house there. The chief minister was indeed indignant about the ‘disobedience’ displayed by the pilot. I tried to placate him. He rejected my efforts at mollification. His refrai was, ‘For a mere flight lieutenant, the home minister of the country had to speak to me!’ Anyway, after a great deal o

appealing and cajoling, he finally relented. Word was sent. The poor pilot was released. As they say, all’s well that ends well.

The other event that merits narration is what has now popularly come to be known as the Purulia arms drop case. The arms drop on 17 December 1995 in Purulia had happened, and the media and the intelligence agencies were agog with the news. It was known that a Latvian AN26 aircraft had flown from across the border and, via Varanasi, flown over Purulia district in West Bengal. Here, it had dropped a cache of arms and ammunition i the night for unidentified persons. Before the aircraft could be it hadwere left Indian airspace. beenlater, sent out,located, but these to no avail. Alerts Severalhaddays probably on the night of 21 or 22 December 1995, the aircraft re-entered Indian airspace; it seemed to have flown around the eastern coast to Madras, refuelled there, and was flying over Mumbai en route to the Gulf. It was a alert air traffic controller who recalled the ‘call sign’ as being the one for which the lookout had been posted. He informed his commander, who went up the hierarchy. The air chief was out of Delhi. Then Air Vice Marshall M.S. Sekhon contacted me at night. The aircraft had been traced and it was being requested to return and land at Mumbai. It was headed in a westerly direction over the sea. What

was one to do if the aircraft did not agree to return and continued on its predetermined flight path? The air force scrambled its MiG-21 fighters fro Jamnagar. They caught up and buzzed the AN-26. Tensions were rising, in case the AN-26 ignored all signals— during times of peace you cannot afford to shoot a civilia aircraft. The air force flew alongside the AN-26 and I believe the pilot’s nerves gave in. He blinked. He turned around and landed at Mumbai. We breathed easy and went back to sleep—to later learn that Kim Davy, the pilot, had ust walked out of the Mumbai airport after landing there! But that would be another story, possibly for someone else to tell.

In the last couple of years, much has been said about the decision making paralysis within government as a result o the ‘over-activism’ of the CAG, the central vigilance commission (CVC), the central bureau of investigatio (CBI) and the courts. It needs to be stated that audit, in all its ferocity, has been in existence and has always bee feared. We have faced audit in the public accounts committee (PAC) in Parliament and in the legislatures, and have lived in constant trepidation of it. However, transparent and well-recorded decisions involving huge financial commitments have never faced any difficulty. I recall one such example. In April 1996, a contract

was signed with Russia for the supply of 120 Su-30MKI aircraft for a sum of 6,310 crore. This contract was signed after more than a year of technical and commercial negotiations. All necessary procedures were followed. With a delegation led by the then defence secretary, K.A. ambiar, I had signed the contract on behalf of the government of India, at the manufacturing base of the aircraft—Irkutsk in Siberia. After signing the contract, a advance, as per contractual conditions, of 596 crore was paid. The payment of this sum at a time when Russia was going to the polls attracted a lot of attention in India. People’s imaginations ran wild and, as is common for large contracts, allegations started surfacing. Soon, India too had general elections, and a government led by Atal Bihari Vajpayeeminister. took charge; Pramod over as the defence Obviously, thisMahajan contract took attracted his attention. Mahajan asked for the papers and a briefing. The defence secretary felt we should give him all the details in a comprehensive note. This was done. Unfortunately, that ministry lasted only thirteen days. O the day he demitted office, Mahajan returned the file, convinced of the deal being above board. I only wish to say that large contracts obviously attract adverse attention, but as long as officers have transparently recorded the actions taken and have done everything in good faith, they have no reason to feel paranoid about any audit or investigating agency. Hence, why cry wolf?

TRIVANDRUM

I had another stint in Kerala as the principal secretary i the finance department of the state. This was in 1997, when I had returned from Delhi after the stint in the ministry of defence. The LDF government led by the CP was power. and E.K.the Nayanar, CPM veteran, the chief inminister, financea minister was T.was Sivadas Menon. The latter was an exceedingly affable and war person. He was very considerate towards his officers and was receptive to new and progressive ideas. The ways and means position of the state was precarious and it was quite a struggle to collect resources to cover the development and administrative expenditures of the state. For a short while, I was also in charge of the sales ta and excise commissioner’s post. It was during this assignment that I came to understand the distinctio between a corrupt officer and an honest one. According to the excise officers’ yardstick, an honest officer is one who quietly accepts his share of the payouts (hafta) as is apportioned by the assignment he holds. The apportionment are well delineated thewho, hierarchy. s against this,norms the dishonest officer is inone after accepting his apportioned share, is dissatisfied and goes forth to extract more from the party. A rather unique definition, but I guess each department comes with its ow ‘ideology’.

I was fortunate to have colleagues such as Dr A.K. Dubey, Dr K.M. Abraham and V.S. Senthil to help me within the different branches of the larger finance department. These officers knew their work thoroughly, were dedicated to their assigned duties and were objective in their approach. Having such a dedicated tea did lessen the burden on me; moreover, the minister trusted us and would not take any major decision without consulting us. For the finance department, the most important period is always the budget preparation time. In the year 2000, we had a very peculiar problem, which could have caused great embarrassment. The state budget is always read out in the legislative assembly in Malayalam. According to standard practice it is written first initEnglish, and after being okayed by the finance minister, is translated into Malayalam during the night preceding the presentation. This is done at the eleventh hour to avoid the possibility o any leakage of information. That year, we decided to complete the entire process in-house. While transcribing the translated portion, the computer malfunctioned and portions of the speech were irretrievably lost. There was panic. These kinds of catastrophes have more watchers from the sidelines than problem solvers. The Kerala secretariat is also the battleground o political unions, owing allegiance to the ruling and opposing combines. By morning, word spread like

wildfire that the Malayalam text was unavailable and that the finance minister would be forced to read the Englis version instead. Obviously, the opposition, looking for a opportunity to mortify the government, would not allow the speech to be read in English, thereby orchestrating a first-class constitutional crisis. Abraham and I had sat through the whole night in the office. As a measure of abundant caution, every page o the translated speech that was shown to me for approval had been photocopied by me and kept. This was the document which was available with us, and indeed saved the day. I apprised the minister of the situation at about 7 a.m. He was unflustered. He was perfectly willing to read from the photocopied text as against the normal neatly printed speech. We assured that by time have he completed the speech in the him assembly, wethe would redone the entire process and have the printed versions ready. The assembly convened. Fireworks and theatrics were expected. Just as the speaker gave permission to the finance minister to present the budget, the leader of the opposition got up to protest in advance against any attempt by the minister to read his speech in English. There were shouts and counter shouts. Finance Minister Sivadas Menon played along, enjoying himself thoroughly as he had the Malayalam (photocopied) version—a fact that the opposition was not aware of. Every five minutes spent o

such wrangling gave us additional time to finish our work. fter a good twenty minutes of hurling allegations and counter allegations, the minister was allowed to read his speech. And the opposition got a surprise as he bega reading it in Malayalam—their intelligence reports through union representatives had suggested otherwise. By the time all the formalities in the assembly were over, Abraham and his team had redone everything, and the printed version of the speech and the budget documents were in the pigeonholes of the MLAs in the MLA hostel. DELHI

I had an opportunity to return to Delhi for my third central tenure as a joint secretary in the cabinet secretariat i ovember 2001—an appointment which blue-blooded bureaucrats do not consider very attractive. The the cabinet secretary was T.R. Prasad, a thoroug professional, and he had three joint secretaries working with him—Dr Sanjiv Misra, Anup Mukherjee and myself. In the government of India, senior officers, namely joint secretaries and those higher up, have the status symbol o a red or green light outside their rooms, to indicate whether they are occupied or free. In the cabinet secretariat, the cabinet secretary had such a light outside his door; as a departure from the tradition, the joint secretaries had red and green lights affixed inside their

rooms. Why, you may well ask. This was to indicate whether the presiding deity, the cabinet secretary, was free or engaged. However, the lights being red or green did not excite us. What excited us was if both the lights were switched off. This indicated that the boss had left, whic meant deliverance—translated, we could quit office— invariably within sixty seconds of the lights losing their glow. Despite the ‘non-attractive’ tag attached to the post, the three of us enjoyed our stint and did have substantial freedom in our interaction with the cabinet secretary. He listened to our views and contributions. And we, o course, were rather liberal in providing our opinions. It was during this period that there was a terrorist act 2

in Parliament. Following the attack, participating i cabinet meetings and consultations of the cabinet committee on security was educational; above all else, I got to see that if the cabinet secretary had the depth o expertise required to innovate solutions, the post provided enormous scope. It was also during this time that the unfortunate events in Godhra and Ahmedabad took place —I was entrusted with the task of coordinating relie efforts in Gujarat. Finally, at the point when India seriously began considering the possibility of a conflagration on our western border, the cabinet secretariat provided real-time coordination among the different ministries of the government, which I handled

inter alia. After spending exactly 365 days in that office—as part of a large number of lateral transfers of joint secretaries out of the ministry of finance—I was moved into the ministry of finance as joint secretary (banking). Jaswant Singh was the finance minister. One of my first tasks was the immediate restructuring of the liabilities o financial institutions such as the Industrial Development Bank of India (IDBI) and the Industrial Finance Corporation of India (IFCI). It was a complicated task as the institutional creditors were other public sector banks who were in no mood to take a haircut on account of the difficulties being experienced by these two institutions. They felt that the government must step in to take over all liabilities. of out course, was not feasible. We somehow managed toThis, thrash a solution. The creditor banks involved sought an opportunity to present their case before the minister rather than acquiesce to a mere joint secretary. Jaswant Singh initially ignored the request, saying that the officers represented the ministry as much as the minister, but the finance secretary Dr S. Narayanan and I finally managed to prevail upo him to meet the creditor banks. Before agreeing to do so, Singh cryptically remarked, ‘I shall brook no dissent’. The representatives of the creditor banks were ushered into his room. Before they could reach his desk, he had walked down the length of the room to the door and greeted the

with folded hands, saying, ‘Gentlemen, thank you very much for your cooperation.’ Singh turned around and went back to his desk. That was all. The issue was settled. All of us trooped out.

In May 2004, the government changed, and P. Chidambaram became the finance minister. A lawyer o repute, this was his second term as finance minister. He was a study in contrast to his predecessor. Whereas Jaswant Singh was the large-picture, helicopter-view minister, who gave the mandate and left the details to the officers, Chidambaram was totally hands-on, and it was a challenge to keep pace with him in terms of the actions and decisions to with be taken. it was a pleasure to interact both of Professionally, them. In June 2005, a piquant situation arose. Public sector banks were being exhorted to reposition and reorient themselves, and face the challenge posed by the new generation private sector banks which had begun to market their products and services rather aggressively. Some public sector banks did take up the initiative in right earnest, one of them being Bank of Baroda. The bank had decided to change its logo to one which represented energy and dependability—a rising sun, branded as ‘The Baroda Sun’. The logo was in vermillion, akin to one o the colours in the national flag, and was launched by the

bank’s brand ambassador, Rahul Dravid, then labelled ‘Mr Dependable’ due to his consistent batting performance as a cricket player. The logo was received well and the bank did manage to score in terms of capturing eyeballs and brand recall. However, some mischief mongers wrote to those hig up in the Congress party, and said that the bank had adopted the saffron colour which was the colour of the principal opposition party, the Bharatiya Janata Party (BJP). Rather far-fetched, but it set tongues wagging. The viewpoint being touted was that public sector banks should take government clearance to change logos. This put pressure on P. Chidambaram, the finance minister. It required considerable convincing on the part of the bank’s chairman and managing A.K. Khandelwal, to thwart a concerted effortdirector, to seekDrthe withdrawal of the logo. Once the finance minister was convinced, he also lent his weight to the effort, and a rather embarrassing and retrograde action was aborted.

In July 2006, we had another very interesting situatio emerge. The government was keen that financing for productive investments be facilitated and encouraged by banks. The idea was to offer credit at competitive rates. Such rates are usually benchmarked to the prime lending rate of each bank. The cost of funds was increasing and,

naturally, banks felt the need to hike their rates and, indeed, the prime lending rate. They did so, and practically all banks announced increases in the prime lending rate in the range of 25 to 50 basis points. This was unacceptable to the minister as it would make credit more expensive for borrowers. He wanted all banks to reconvene their boards and reconsider their decision. Most of us officers who were on the boards of these banks thought it improper for the government to issue suc directives. The minister however was adamant. The boards met. I was then on the board of Bank of Baroda. The bank officials made a presentation. The logic for hiking the prime lending rate was compelling, and all the other directors too felt that the hike was justified. I could not go against the merit of the case. Bank of Baroda’s rate remained unchanged. Understandably, the minister was upset. He felt that the banking secretary was not in sync with him. After the board meeting, I sent a note to the minister informing hi that withdrawing the hike was inadvisable. In all fairness, he accepted the position taken by me after reading the logic guiding it. The banks heaved a sigh of relief, and board autonomy was preserved. The following day, The conomic Times3 carried an editorial which said, ‘Congrats, Mr Chidambaram’—congratulations for preserving the functional autonomy of banks. Sometimes—though not too often—one blesses

ournalists too.

————————— 1The Jacobite Syrian Church is an integral part of the Syrian Orthodox Church located in Kerala. The Patriarch of Antioch is its supreme head. It functions as an autonomous Indian church with a provincial episcopal synod under the authority of the Catholicos of the east, ordained by the Patriarch of Antioch. The community, however, developed two factions owing allegiance to the Cathilicos (headquarters at Kottayam) and the Patriarch of Antioch, and these factions came to be known as the Malankara Orthodox Syrian Church (which has its presence in Kerala) and the Jacobite Syrian Orthodox Church. These are colloquially referred to as the ‘Methran faction’ and the ‘Bava faction’. The Syrian Orthodox Church challenged the supremacy of the Patriarch of Antioch beyond being its spiritual head. The two groups are constantly in dispute with each other over church properties and the right to worship in different churches belonging to the faith; so bitter are their disagreements that they have been litigated up to the Supreme Court with no solution as yet. To avoid clashes, the churches have been taken over under the CrPC by the subdivisional magistrate, who then allots different timings for the two factions to enter the premises and conduct prayers every Sunday. 2See ‘Indian Parliament Attack Kills 12’,BBC, 13 December 2001. 3T.T. Ram Mohan, ‘Mr Chidambaram Has a Point’,The Economic Times, 9 August 2006.

2

THE ROLE OF AUDIT n 17 March 2008, while I was in Washington, DC to 4 attend a meeting of the steering committee, Meenakshi Sharma, deputy secretary in the department of personnel and administrative reforms, called to inform me that the cabinet secretary wanted to speak to me about my participating in the Civil Service Day function. This function is traditional ly held on 21 pril every year at Vigyan Bhawan, the government’s iconic convention centre in Lutyens’ Delhi—iconic because all major events in which the president and prime minister of the country participate are traditionally held at this venue. I called K.M. Chandrasekhar, the cabinet secretary, a close friend and colleague. Sekhar, as he was popularly known, was from the Kerala cadre (as was I) and is a widely officer, often lauded as the quintessential civilrespected servant and a good human being. He told me that Prime Minister Manmohan Singh wanted me to speak at the event, focussing on the positive aspects o audit, and thus countering negative preconceptions about audits conducted by the CAG. He also wanted me to

dispel the impression that the bureaucracy is traditionally dogged by three Cs: the CAG, the CVC, and the CBI. Unhesitatingly and enthusiastically, I accepted the invitation. By then I had spent over two months on the job as the country’s CAG and felt the need to create a more constructive role for, and attitude towards, audit. Such a role was feasible only if the auditing community and the audited departments were on the same wavelength and viewed audit as a mechanism contributing to better governance and greater transparency. THE FUNCTION OF AUDIT

Internal control or concurrent evaluation is a process effected by an organization’s top management, and designed to provide reasonable assurance of objective and efficient operations, reliable financial reporting and compliance with applicable regulations. Effective internal control requires a strong internal audit function. The responsibility for such concurrent evaluation lies primarily with the executive, and the vehicle of suc evaluation, in most jurisdictions, is internal audit. The stronger the government’s capabilities for internal audit and control systems, the greater the chances of speedy and efficient implementation of projects. Further, a strengthened internal audit function helps mitigate fear o external audit.

The government auditor, or the CAG, provides a critical link between the executive on the one hand and the Parliament and the community on the other. It alone subjects the operations of the executive to regular, independent investigation and review, thereby providing credibility to government operations. The audit objective is to draw the attention of the executive to the loopholes, the lacunae, the acts of omission and any violations o established policy guidelines in the process o implementation. The attempt is to improve the delivery system so that society benefits from better governance, and the efficiency and effectiveness of governmental devolutions are not lost. Audit provides oversight, over and above the internal accountability system of the executive. Audit has often been labelled as being an impediment to accelerated performance, a function that blunts initiative, and as a fault-finder. Not so, in my estimation. I contend that of the government departments and public sector undertakings (PSUs) liable to the same audit, a majority have performed extremely well. We have examples of public sector banks, telephone companies, aviation companies and government departments in the social sector that, with the same so-called ‘drawbacks’, have delivered better. They have, in fact, outperformed private sector agencies. This would lead one to the inevitable conclusion that citing audit as a stumbling bloc

is indeed an alibi for non-performance. No doubt, government programmes merit expeditious implementatio and the government’s procedures are often long-drawn-out and cumbersome. These deserve to be streamlined. But one has to be judicious in cutting corners as core issues cannot be compromised on grounds of expediency. There is no ‘we’ or ‘they’ between ‘audit’ and the ‘administration’: we both are on the same side and share common goals. While the administration is the expending agency of governmental resources, audit is merely the validation agency providing comfort not only to the government but also to the common man that the money extracted from him (as taxation) has been efficiently spent. Let me explain this with an analogy: the government machinery a are kindthe of relationship. represents The principals mainprincipal-agent shareholders, namely, the public at large. The executive, acting as the agent of the principal, must periodically account to the principal for its use and stewardship of resources and provide comfort regarding the extent to which public objectives have been accomplished. The principal relies upon audit to provide an independent and objective evaluation of the accuracy of the agent’s accounting. Audit, then, reports on whether the agent used the resources i accordance with the wishes of the principal. It ensures parliamentary control over expenditure voted by the legislature. It also ensures accountability of public

authorities towards public monies raised and spent by them to implement policies and programmes approved by the legislature. Accountability and transparency, the two cardinal principles of good governance in a democratic setup, depend, for their observance, on how well the public audit function is discharged. It is for this reason that the legislatures of many countries the world over have ensured the independence of supreme audit institutions. Clearly, long-term benefits can be derived if audit and the executive share a cooperative and proactive relationship; they need to establish a close rapport to encourage interaction without sacrificing audit objectivity, independence and integrity. Audit is not a dragon—it should not be considered a ‘drag’; it is not even a ‘gun’. Rather, is an instrument in the hands of the administrator, awaitingitpositive application. BARBS DIRECTED AT AUDIT

In the recent past, the office of the CAG has been at the receiving end of a number of comments, sometimes congratulatory, oftentimes scathing. Four statements in the recent past sum up the situation. Manish Tewari, former information and broadcasting minister, said: In the last two or three years, India has been

witness to a most corrosive discourse which a democracy or any nation could possibly feel. Some of the actions which were taken by some of our institutions or especially people who headed the institutions, is a classical reminder that when individuals decide to go rogue, institutions suffer. That possibly has the most detrimental effect on the India growth story, and I refer to the CAG’s report with regard to the 2G spectrum.5 This is the government’s perception—that the CAG’s audit reports were a dampener on the India growth story. Now, see what the business community has to say. CNBC TV18 presents the India Business Leader Awards every year. This award isfrom decided a jury of seven eminent persons —leaders theby business community, media, government and the financial sector. The award for ‘Outstanding Contribution to the Cause of the India Economy, 2013’ was presented to me—a person who, according to certain ministers, had decided to go rogue and cause harm to the Indian economy. Interestingly, the people who actually contribute to the growth of India, feel otherwise. Then, we had Sharad Pawar, the former food and agriculture minister, say: CAG has taken certain decisions that have created a different atmosphere in the country. I

have a serious objection—when we see half reports being leaked, when CAG officials are addressing press conferences and talking about sensational things. […] I haven’t seen something like this in the forty-five years of my career as a politician. […] We have to think ourselves whether we have selected a proper person.6 The most befitting answer to this was given by the government itself. Pranab Mukherjee, then the finance minister and now the president of India, while speaking at the Economic Editors Conference, said: ‘I am making it clear that I do not think the CAG [is] exceeding its urisdiction, because the basic responsibility of the CAG 7

is toFurther, identify ifinthere is any lapse.’ a written response to Parliament on 23 December 2012, the former finance minister stated: There is no urgent concern about CAG being partisan or working in favour of the government or a particular political party. As custodian of [the] public purse, CAG has played the role of a vanguard in reporting on financial irregularities, irrespective of the government in power.8 If ever there were a case of mixed perceptions, this is it.

In the rich tradition of parliamentary democracy, auditors general have been given a position, independent and equal to Supreme Court judges. In this context, it is interesting to learn of an exchange that took place in 1960 in Parliament. s is normal, the CAG presented a report in Parliament o the audit of the ministry of defence. The report stated: Despite repeated exhortations by successive Public Accounts Committees and assurances given by the ministry, their provisions continue to be disregarded by the administration authorities. Fictitious financial adjustments intended to conceal lapsed grants or to cover up excesses over allotments were noticed in a number of engineer divisions. This observation did not go down well with the the defence minister, Krishna Menon, and he made the following statement in the house: If it [the observation] had not come from the auditor general and we were not familiar with it, and if I so wanted to say—I do not want to—I could have said that this was a malicious overstatement, but I do not intend to say so, sir. Even this mild statement by the defence minister attracted criticism. Members objected. The then CAG, A.K. Chanda, wrote to the speaker. While the letter was not

placed on the table of the house as the CAG had marked it ‘secret’, the speaker explained the gist, stating that the CAG felt that under the Constitution, he was bound, in the discharge of his duty, to point out mistakes, and because he found these from time to time, he had to use this language. The CAG took exception to the words attributing motives, and if this was allowed, he would not be able to discharge his duties, nor would the host of subordinates. The speaker then asked the defence minister whether he had anything to say in response. Defence Minister Krishna Menon, speaking on 14 March 1960, said: Mr Speaker, I do not want to explain any of these, because it is likely not only to convey the wrong impression, but in a sense make the expression of regret qualified. Therefore, I would like to express my regret in regard to these two statements to which you have made reference, and request that, as you direct, they may be withdrawn. This was the quality of our their parliamentarians. were statesmen; they recognized strengths andThey limitations and conducted themselves with dignity. The speaker decided to withdraw the defence minister’s statement i view of his expression of regret; but the statement would not be expunged as it had to be kept on record.

In case we believe that these were the good old days, and no longer do politicians display such decorum or respect for constitutional institutions performing their duty, we have another example of statesmanship at the turn o the millennium. In early 2000, specifically after the Kargil conflict, there were a large number of allegations inside and outside Parliament regarding the procurement o defence equipment. After a short discussion, the defence minister, George Fernandes, requested the CAG to conduct a special audit in the areas pertaining to the allegations. This was on 10 February 2000. A special audit was done and the report was tabled in Parliament on 11 December 2001. The report—‘Review of Procurement for OP Vijay (Army)’—highlighted the fact that nearly all supplies were either received, or contracted and received, wellsupported after the cessation of hostilities and therefore in no way the operation. Meanwhile, The Times of India published a scathing article on these procurements,9 appearing on the same day as the CAG report was tabled in Parliament. As a result, the working of both houses of Parliament was stalled for two days. It was around this time that some unclassified information was made available by the ministry of defence to journalists, and in particular to one R.V. Pandit, ostensibly to set the record straight. R.V. Pandit did his own research and came out with a booklet titled The Whole Truth With All the Documents About the

luminium Caskets Bought by the Defence Ministry in 1999-2000. This booklet was critical of the CAG’s audit review and, on the cover page itself, made references o the following kind: ‘What does one do when the CAG is the culprit? Review of procurement for OP Vijay (Army) is half baked, almost intentionally malicious’. The booklet went on to suggest that the CAG either refute the charges levelled in the booklet or resign.10 This booklet was circulated by the defence minister to all members of Parliament (MPs), including members o the PAC, ostensibly to support the contentions of the ministry of defence and to find fault with the CAG’s findings. This action of the defence minister and the observations in the R.V. Pandit booklet enraged all PAC members. N.D. Tiwari, the chairman of the PAC, in its sitting on 20 February 2002, observed that the manner i which the office of the CAG had been castigated in the booklet was ‘unparalleled in the history of the country’. The chairman regretted that this booklet had been certified by the defence minister and circulated to MPs. The chairman was of the opinion that after having sought a audit review, for the ministry to lambaste the CAG’s findings in this fashion, besides inflicting embarrassment on the institution, encroached upon the rights and privileges of the PAC. An upset N.D. Tiwari did not wis to discharge his duties as the chairman of the PAC and offered to resign. However, after being persuaded by other

members to reconsider, Tiwari relented. The PAC, in turn, unanimously felt that the ministry of defence had transgressed the boundaries of propriety and had, i particular, breached the privilege of the PAC. After many rounds of deliberation, and after Buta Singh took oath as chairman (even as N.D. Tiwari proceeded to take oath as the chief minister of Uttarakhand), the PAC arrived at a unanimous resolution on 4 August 2003. It was held that with the defence minister circulating derogatory remarks against the CAG in the booklet, the matter regarding a possible breach of privilege also amounting to interference in the functioning of the committee by the defence minister be brought to the notice of the Lok Sabha speaker for examination by the privilege committee—suc was thedefence force ofminister. the protest against the actions of the It of is the alsoMPs noteworthy that these views of the PAC members were unanimous, across party lines, and no attempt was made by the ruling coalitio MPs to support their minister. Contrast this with the majority of the situations emerging in recent times. Manish Tewari, when asked i the J-Virus (J referring to Jairam Ramesh, Jayanthi atarajan, Sriprakash Jaiswal and C.P. Joshi) had derailed the Indian growth story, said: The R-Virus has infected the Indian growth story. The R-Virus stands for a phenomenon where responsible individuals decide to become loose

cannons, which essentially means that nations and institutions have to suffer. One of the greatest damages done to this country was by the former CAG.11 On reading and hearing statements of this kind, fuelled by total frustration, some distinguished persons, including a couple of leading legal lights, invited me to analyse them. Discussions ensued. Ultimately the consensus was that these commentators did not deserve a rebuttal. After all, Tewari, in the Mail Today Education Conclave, also said, ‘Unfortunately, we have created an academic environment where our universities do everything but teach academics.’ Clearly, everybody else was doing everything wrong, was Tewari’s perception. The debate by apt a distinguished senior statesman whowas saidput thattotherest most reply to such people had, in fact, been given by their ow leader. Rajiv Gandhi’s reply to sundry questions asked o 12 him was: ‘I do not respond to every dog that barks.’ I have followed that statement in toto. Then there was Montek Singh Ahluwalia, the former deputy chairman of the planning commission, who said, ‘untrained staff [is] auditing CAG reports’.13 He claimed that our performance audit was not credible as it was done by accountants not trained for the job. The accountants who Ahluwalia believed were untrained also conduct performance auditing for the United Nations, Food and

griculture Organization, World Health Organization, World Food Programme, and have recently been selected to audit the International Atomic Energy Agency and the World Intellectual Property Organization. Do our ‘accountants’ have to travel abroad for their merit to be recognized? It doesn’t end here. Ahluwalia went on to say, ‘The CAG’s primary work is to evaluate on financial parameters, but when it starts doing performance evaluation, it gets problematic.’14 My officers wanted to educate him. They wished to let him know: ‘Sir, we do not do evaluation, we do audit. We do not do performance evaluation, we do performance audit. That is why you’ve got an independent performanceevaluation office.’ But, more importantly, if you do not like a particular face, why run down an organization, recognized in the world as possessing among the best trained professionals? Then there were allegations by the usual persons speaking on behalf of the Congress that the CAG and PAC chairman met and discussed issues before and after meetings—as though this were a crime and was done surreptitiously. The CAG and PAC chairman did and do meet. Not only that, they discuss reports presented i Parliament. It is the job of the CAG to act as the ‘friend, philosopher and guide’ of the PAC. The PAC chairman, by convention, is the leader of the major opposition party, and thus, there is a well defined official relationship

between the two entities. Such a relationship has bee nurtured over generations of PACs and CAGs, and attempting to read meaning into it is only missing the obvious. The list of accusations and accusers continues. Eve before the CAG report on spectrum was in the public domain—it was placed before Parliament on 16 ovember 2010—the then law minister, Veerappa Moily said: The spirit of inquiry, so central to democracy, has to be accepted and institutionalized. In this context, a word about audit in India would be appropriate. The institution of the Comptroller and Auditor General of India, a constitutional body itself, is designed to be a bulwark against omissions and commissions of the executives, under the supervision of the legislature. But the way the institution of audit has functioned has not exactly fulfilled what the Indian Constitution had in mind while creating the institution. […] Scandals and scams are known even while they are being planned and executed. If audit draws attention to them forthwith in a well published manner such scandals can be halted in mid-stride. Postmortems are useful but can only be conducted when the patient is dead.15

This is a rather strange evaluation of the institution of the CAG. The minister went on to state that the ‘government expressed dissatisfaction on the working of the CAG’. How does one react to such situations—when ill-informed comments besmirch a credible institution? It did not make much sense taking up the issue with the minister. Incidentally, all these public utterances were made eve before the 2G report had been placed in Parliament! It is inappropriate for the CAG or his office to spea on a public platform or through the media. Yet, suc statements should not be allowed to go unchallenged. The minister and the government had to be educated on the difference between internal and external audit, and the fact that the CAG only does the latter which, by definition, is post facto; internal of audit, I have mentioned earlier, the responsibility the asgovernment. So I did whatis I thought was the most advisable. I thought I would bring the issue to the notice of the prime minister. I wrote to Dr Manmohan Singh on 17 September 2010, stating that internal audits could alert the executives whe irregularities were suspected and were in mid-course [Appendix 1]. I wrote: External audit, by its very nature, can be conducted only post the event, namely after the expenditure has been incurred. It is not known whether the Hon’ble Minister is referring to concurrent audit or internal audit, both of which

are integral to the administration and are not conducted by the CAG. However, since there is a specific reference to the CAG, we would very much welcome to be told how exactly the government perceives audit not to have fulfilled what the Indian Constitution had in mind while creating the institution. The statement from a senior minister on an institution, without providing a specific basis, certainly appears inappropriate, especially as it is perceived to be on behalf of the government. s usual, and as in the case of earlier letters, there was no acknowledgment from the prime minister or the prime minister’s office (PMO). Contrast this with the same-day responses that A. Raja got (more on this later). However, there was a saving grace. The Indian xpress carried a marginal news item on 26 October 2010 titled, ‘Moily to PM: Didn’t Mean to Belittle CAG’. The item went on to state that the minister, while explaining his recent remarks about the functioning of the CAG, had written to the prime minister that he had no intention o indicting or belittling the CAG. The news item stated that this was in response to the prime minister’s query to hi after ‘CAG Vinod Rai protested against the minister’s observations’. I, however, have no knowledge of the sequence of events, as I received no communication fro anyone in the government in response to my letter.

There was yet another remarkable development—a half-page advertisement in a newspaper. I reproduce it as a photo. This advertisement was released by the ssociated Chambers of Commerce and Industry in India [ASSOCHAM] on 26 August 2012. An industry body was publicly reprimanding the constitutional auditor and stating that its reports on coal block allocations, the Delhi airport, and surplus coal sharing of Reliance had created distrust. The advertisement went on to state: ‘The CAG’s conclusions over the 57 coal block allotment appear to have been arrived at without taking all the facts into consideration. Only one of the 57 coal blocks has gone into production’. I thought any prudent and concerned industry body would have questioned the urgency to allot when the allottees had not commenced But then, since every person whoeven wanted to display mining. his loyalty to the government was hastening to take potshots at the CAG, why not an industry body? There was not a murmur of protest from anyone in government, not even from those loudly professing their commitment to the dignity and independence of constitutional institutions o accountability. What could the CAG or his officers do? Some overzealous officer rang ASSOCHAM. He was told that the advertisement was released under the supervision and instructions of the higher-ups.

The barb that really took the cake was a comment reported in Business Standard on 20 September 2013—by which point I had retired, and had not made any public statement, let alone contribute to an audit report. The article carried a conversation between Aditi Phadnis, a ournalist, and Jairam Ramesh, then the rural development minister. Phadnis records her conversation: […] I [Aditi Phadnis] change the subject: What will the Congress’ campaign plank in 2014 be? ‘Too early,’ is his [Jairam Ramesh’s] instant response. ‘But don’t underestimate the resilience of rural India,’ he adds. ‘We have our task cut out

for us in urban India—although we swept urban India in 2009, it will be hard to repeat that.’ So if you swept urban areas in 2009, why have you lost ground so badly, I ask. ‘Because of the bhumihar from Ghazipur,’ he said. He was referring to the Comptroller and Auditor General (CAG), Vinod Rai, who came out with reports on the allocation of telecom spectrum and contracts for the Commonwealth Games that pointed to significant scandals.16 pparently, even one’s caste has been brought into prominence—and this after sixty-seven years o Independence. If one wants to glean the reaction to Jaira

Standard Ramesh’s regardingtweets my caste, one statement only needstotoBusiness log on to the sixty-seven and two comments against the article. They convey the mood of the public. But in all fairness, I cannot credit Jairam Ramesh with coining this casteist comment. Let me give you the background. Jairam Ramesh was a regular visitor to the CAG headquarters for discussions on the audit of the national rural employment guarantee programme. His discussions did indeed lend value. In one of his conversations wit me, he asked why N.K. Singh, the Rajya Sabha MP representing the Janata Dal (United), used to refer to me not only as a bhumihar, but as a ‘bhumihar from Ghazipur’.

I told him that I did not know what it meant. Since my father had been in the army and we had moved all across the country, the significance of caste had been lost on us. Further, the last thirty-five years in the Kerala cadre had left me with little or no impression of the caste factor. So what would I make of N.K. Singh’s comments? However, I told Jairam Ramesh that I could only conjecture that the word ‘bhumihar’ was not being used in any complimentary manner. To this, Jairam Ramesh said, ‘Obviously!’ I wonder why?

We come from a family of government officers. My father educated himself up to an MA, LLB. While pursuing a PhD programme in war, Allahabad University, in army a fiti o patriotism during the he joined the Indian 1944 as a soldier at the princely salary of 18 per month. It was on seeing his qualifications that he was recommended for emergency commission by his commandant, Colonel Ayub Khan (later General Ayub Khan, the president of Pakistan). After the war ended, my father was recommended for an engineering course at the College of Military Engineering in Kirkee (now Khadki). He added the engineering degree also to his qualifications —this, after being a student of Indian philosophy! My mother had no formal education; she brought us up imbibing in us the values of honesty and righteousness.

Quality education was provided to each of us, and we oined government service—my elder brother joined the army after completing his engineering degree, and my younger brother and I joined the IAS. While I had bee allotted to the Nagaland (and then the Kerala) cadre, my brother was allotted to the Manipur-Tripura cadre. Despite the fact that in my batch alone, about half a doze officers got their cadres changed and moved to UP, their home state, from other distant cadres, my father never eve contemplated to attempt a cadre change for either my brother or me. Where was the question of entertaining caste considerations for a true soldier who spent his lifetime’s earnings educating his children? It was because of the values inculcated in me by my parents, because of the and unwavering support Iand gotalso at home from my unstinted wife Geeta—who is most unequivocal in her belief that one cannot shirk one’s duties, and one must carry out one’s responsibilities wit absolute sincerity—that I could forbear the acerbic remarks aired in the media, and yet maintain sincerity o purpose.

On 11 October 2011, I had been invited by the Sardar Vallabhbhai Patel National Police Academy to address a combined audience of its 2010 officer trainees and officers at the mid-career level. I took the early morning

flight for Hyderabad from Delhi. In the flight I saw the industan Times; its lead headline on the first page read: ‘India Inc Says Scams, Corruption Hitting Growth’. The newspaper mentioned that in January 2011 a small group of like-minded, prominent industrialists and corporates had written an open letter to the prime minister about their concerns regarding the state of affairs in the country, drawing attention towards growing governance deficit, galloping inflation and environmental challenges. However, despite repeated pleas made by them, the prime minister and the finance minister, Pranab Mukherjee, brushed aside the issues. In another open letter to the prime minister, eminent personalities such as Deepa Parekh, Azim Premji, Jamshyd Godrej, Anu Aga, and Justice Srikrishna urged that concerted be taken toB.N. put an end to episodic corruption and action speed up decision making. Their observations indeed painted a rather grim picture of government action and functioning. After landing in Hyderabad, where the Telangana agitation was at its peak, I found officers narrating horrible instances of the situation prevailing in the government and within the state. I was told that the state civil secretariat had been closed due to agitations, not permitting entry even to ministers and dignitaries, who had to use the rear gates. About 132 local trains had bee cancelled and Andhra State Road Transport Corporatio (APSRTC) buses could not ply freely. All private vehicles

in Hyderabad city were being forced to ply with the ‘AP’ number plate covered by a ‘T’ number plate (T standing for Telangana). Most distressingly, educational institutions had been shut down. In fact, in one particular daycare school which was found to be functioning, the agitators barged in; taking offence at a lady teacher who was conducting a class, they scratched the letter ‘T’ with a blade on her palm in the presence of all the ninetee students! Could there be a worse display of the breakdow of the state machinery? Was this not the ‘Talibanization’ o the state government? In my talk delivered to the officer trainees in the afternoon, I drew attention towards these incidents. I said: Today, we are facing a testing time in the history of our nation. The quality of governance is below par and subject to severe criticism. There has been an erosion of people’s faith in government. Their confidence in public institutions has declined. National trust in bureaucracy including the police force has collapsed. The integrity and professionalism of the civil servants are being questioned. It often provides very poor testimony of our capabilities if members of the All India Services allow themselves to be used, if not as facilitators, certainly as a medium for wrongdoing, by others. This has brought the credibility of the government to the lowest since

Independence.17 I then went on to urge the officers to lead the process o change, so the Indian bureaucracy could regain its ‘steel frame’ image, and there could be trust once more in the government. Obviously this talk evoked extensive media coverage. I had barely landed back from Hyderabad that evening than all wires were narrating excerpts of the talk, with the usual government apologists airing their views on what was correct and not so correct for a person occupying a constitutional position to say in public. The freedom o speech of the Indian democracy is such that even a firsttime MP finds that he can run down an officer with forty years of experience. Byon thehow following all of the were waxing eloquent every morning, government official must go around the country with a finger on his lip, wit his eyes shut and ears plugged, such that he sees no wrong, hears no wrong—and if perchance he sees anything, he never talks about it. In my defence, I had only stated the obvious. I was speaking to a group of police officers and was calling a spade a spade and doing so as the CAG of the country. Why was that wrong? Could I stand before the audience, paint a rosy picture of the bureaucracy, deliver homilies, and give a pat on their backs for all that the public was saying about them? And in the process, have them laug behind my back and wonder at the hypocrisy of senior

officers in the bureaucracy? Since, among the voices emerging from the government, there was also Prime Minister Manmoha Singh’s faulting my comments in the police academy, I decided to call on him. My meetings with Dr Singh have always been very cordial; indeed, they have been a learning experience. It was the same this time too. The prime minister was of the strong opinion that people holding positions such as mine should not be airing adverse opinions. I painstakingly explained to him the situation in Hyderabad, to which the trainee officers were privy. It was a situation where the writ of the government was virtually ineffective. All this had left the young officers in a very confused state of mind. They were getting wrong Thisthewas alsosignals. around the time when whispers were going around that the CAG was targeting the government, as the CAG himself had political ambitions. Speaking to ournalists on 31 August 2012, which was after the coal block allocation report had been presented to Parliament, Digvijaya Singh, a former Congress chief minister o Madhya Pradesh, reinforced this rumour, drawing a parallel with T.N. Chaturvedi, a former CAG who later oined the BJP; he even went on to ask if Vinod Rai wanted to become the prime minister.18 I need not get into an analysis of such statements, which merely highlight the use of diversionary tactics, a bankruptcy of credible

arguments to defend government actions, and a propensity to shoot the messenger. However, we do need to analyse the constitutional protection offered to such constitutional appointees as the CAG, the chief election commissioner (CEC), or the chie information commissioner. The Indian Constitutio provides for our fundamentals rights. Institutions as those mentioned above have been created as establishments o horizontal accountability, and to ensure checks and balances within the parliamentary democratic setup. However, as against judicial privileges provided under the Constitution—such that blanket criticism of judicial pronouncements is assumed to be a breach of judicial privilege attracting contempt of court—the CAG has no such cover.known This, despite fact that in a 1991 judgement, popularly as thetheVeeraswamy judgement, the Supreme Court held that the Constitution had reposed suc faith in the stature, honesty and integrity of its judges, the CAG and the CEC, that they were never intended to fall within the ambit of the Prevention of Corruption Act. However, such a provision does not suit the political class who are under tremendous pressure due to the perceived wrongdoings of their own ilk. An immediate example that comes to mind is that o 2G spectrum licensing. The CAG concluded an audit o the allocation of 2G spectrum licenses. Its findings were repudiated, and a virulent attack was launched on the

constitutional body. However, no such attack could be orchestrated against the Supreme Court, which had cancelled all 122 licenses issued by the government. This is obviously since the court can, and has, hauled all suc scurrilous elements for contempt. There is sadly no suc provision to protect the audit findings of the CAG, and personal attacks seem to have become the pattern as o now. THE MANDATE OF AUDIT

gainst this backdrop of barbs and criticism, I believe it’s important to analyse the mandate of the CAG. Gopal Subramaniam, a former solicitor general, said: The CAG has the mandate to scrutinize transparency in procurement and the way in which things have been done, acting like a watchdog. If a watchdog is not allowed to criticize, then what kind of parliamentary accountability will you ever get? Its reports are based records of the to government placedon before it. and It is policies not expected frame an alternative policy, but we must understand that the CAG can certainly test the present policy and the way it is being implemented. That is certainly within its mandate. It can certainly go into the

question [of] whether the government of the day has correctly and in an accountable manner carried out a pure process of execution.19 Does this not clearly establish the CAG’s constitutional position? Unfortunately, the government continues to be guided by its own in-house lawyers. The government, appropriately so, sought a presidential reference in the 2G scam case when the Supreme Court decided to cancel the licenses of 122 companies, which would have ramifications for various sectors. The court in its judgement on 27 September 2012 clarified: Auction despite being a more preferable method of alienation/allotment of natural resources, cannot be held to be a constitutional requirement or limitation for alienation of all natural resources and therefore, every method other than auction cannot be struck down as ultra-vires the constitutional mandate.20 This clarification forththegleeUPA of anministers. unprecedented variety on the brought faces of The telecommunications minister, Kapil Sibal stated: ‘We are happy that the government can now take decisions without fearing the consequences from other constitutional authorities.’21 Considering that there are only two

constitutional authorities, and the Supreme Court (one among them) had already given the verdict, why not name the other?

The Glee Over a Failed Auction Courtesy: Business Standard

Meanwhile, another petitioner had separately filed a petition urging the Supreme Court to declare that performance audits, as conducted by the CAG, were ultra vires of the Constitution. On 1 October 2012, dismissing the petition, the Supreme Court observed: CAG is not a munim [accountant] to go into the balance-sheets. The CAG is a constitutional authority entitled to review and conduct

performance audit on revenue allocations relating to the centre, the states and the union territories […] and examine matters relating to the economy and how the government uses its resources. […] 22 Don’t undermine the office of the CAG. This verdict has clarified the CAG’s mandate. For a better appreciation of this, let me quickly walk you through the provisions. The existence and mandate of the CAG emanates from Articles 148 to 151 of the Constitution. I particular, Article 149 stipulates the duties and powers o the CAG as may be prescribed by or under any law made by Parliament. And in the exercise of powers conferred under this Article by the Constitution, Parliament has promulgated theofCAG’s of Service) Act 1971. (Duties, Powers and Conditions Section 23 of the Duties, Powers and Conditions o Service (DPC) Act states that the CAG is authorized to make regulations for carrying into effect the provisions o this Act in so far as they relate to the scope and extent o audit function. Further, in the exercise of the powers conferred to the CAG under Section 23 of the Act, regulations on audit and accounts were framed and were notified in the official gazette on 20 November 2007. All this had happened before I had taken charge as the CAG. Now Chapter 3 of the Regulation lays down that the scope and extent of audit shall be determined by the CAG. The scope of audit is defined in Chapter 13 stating:

Within the audit mandate, the Comptroller and Auditor General is the sole authority to decide the scope and extent of audit to be conducted by him or on his behalf. Such authority is not limited by any considerations other than ensuring that the objectives of audit are achieved. It also states that the CAG undertakes audits which are broadly categorized as financial audit, compliance audit and performance audit. It is essential here to explain the difference betwee the three different types of audit. Financial audit is to verify whether the financial statements, which are the accounts of the government, are properly prepared, complete in all respects and are presented with adequate disclosures. Compliance audit examines the transactions relating to expenditure, receipts, assets and liabilities o the government, to ascertain whether the provisions of the Constitution, the applicable laws and rules, including instructions issued by a competent authority, are being complied with. Both financial and compliance audits are undertaken by chartered accountants also. The third type— performance audit, which only the CAG is entitled to conduct—is an independent assessment of the extent to which any organization, programme or scheme operates economically, efficiently and effectively. Thus, performance audit goes beyond financial and compliance audits and comments on the outcomes of the schemes too.

Would this not sufficiently clarify the mandate of the CAG? If there were still some doubts in the minds of those speaking on behalf of the government, all that was required was for some of them to consult an office memorandum issued by the ministry of finance on 13 June 2006 [Appendix 2]. This addresses at least one clarification which had been sought, namely whether performance audit falls within the scope of audit by the CAG under the DPC Act 1971. The memorandum states that performance audit, which is concerned with the audit of economy, efficiency and effectiveness in the receipt and application of public funds, is deemed to be within the scope of audit by the CAG of India, for which auditing guidelines (drawn up by the CAG) already exist. This clarification shouldfor have the toehold, arguments those who were looking the felled slightest the of slightest chink in the armour of the CAG. Unfortunately, this was not to be, and hence the sniping continued.

The CAG’s Audit Act dates back to 1971. The 73rd and 74th amendments had not been passed, and hence the Audit ct provided for an audit coverage of conventional government departments or public enterprises, but not delivery models such as private-public partnerships, nongovernmental organizations and panchayati-raj institutions. In a presentation to the planning commission in 2009, the

CAG’s office demonstrated that more than half the expenditure of the Central Plan Fund for different schemes did not fall within the automatic legal audit mandate of the CAG. As such, in 2009, roughly 60,000 crore, whic was the Central Plan Fund allocation, was not under the audit ambit of the CAG. As for the schemes passed by Parliament, these were to be audited by chartered accountants. Even if it were to be presumed that chartered accountants would conduct a rigorous audit, their report would not reach Parliament. Hence Parliament would not get any assurance that a major part of the Central Pla Fund expenditure has been properly utilized. This fact surprised the planning commission members who felt that henceforth all central government funds being released would carry instruction that all such funding would be auditable by the the CAG. In September 2009, we made a similar presentation to Pranab Mukherjee, then the finance minister. The finance minister appreciated this fact and wanted an amendment to be proposed to the DPC Act to enable a CAG audit into all Central Plan expenditures. Additionally, three more proposals were made to the finance minister. First was regarding the response time to audit queries. The present provision in the act is merely that audit queries will be replied ‘with all reasonable expedition’. It does not specify a time limit. Hence, if the department being audited chooses to procrastinate or, in fact, not respond,

audit can merely issue reminder letters and nothing more. Compare that to the common man’s rights under the Right to Information (RTI) Act—an answer within thirty days, failing which the departmental official is liable to face punishment. Our request: why not similarly empower the audit office? Second, public-private projects, schemes being implemented under panchayati-raj institutions or throug societies specially constituted for this purpose (such as the ational Rural Health Mission) could be brought under the automatic legal audit mandate of the CAG by a suitable amendment in the statute. The third major amendment that was proposed had to do with the DPC Act, which provides for the government to table Parliament audit itreport received No from the CAG ‘asinsoon as mayany be after is received’. time limit is prescribed. Not surprisingly, many a times the tabling of audit reports has been inordinately delayed, both at the central and state levels. The audit report of the Delhi metro was delayed by a year after the CAG gave it to the government. Reports given to the Maharashtra government were not laid in the house for months altogether. This had to be remedied. Our proposal: rather than rely on the good sense of the government to lay the report ‘as soon as may be’ after it is received, a time period of seven days be prescribed for laying it after it is received from the CAG. Not an unreasonable demand, i

my opinion. The finance minister certainly did not feel that the demands were inappropriate. He advised us to send the proposed amendments to the DPC Act for the government to process before putting it through Parliament. We did; we sent the proposed amendment in the form of a new act which would replace the old, outdated one. Sometime i 2010, the ministry of finance felt that a repeal of the 1971 act and the introduction of a new act would be timeconsuming; hence only those amendments that were absolutely necessary could be proposed for early placement in the house. We accepted that suggestion. The aforementioned amendments were sent to the ministry o finance in October 2010. That is where they lie. The CAG’s made numerous enquiries. I wrote letters tooffice finance ministers, with no response. Noreminder finance minister has had time to reply. I wrote to the prime minister. Silence. I have retired. The Indian audit and accounts department still hopes that its auditors will be empowered to the extent that the government has empowered the common man.

The Indian audit and accounts department’s mandate extends to roughly 2,50,000 auditable entities. Given that the department clearly does not have the resources, manpower and, at times, desire to audit all entities, it

largely targets mainstream programmes which have a hig degree of materiality and sensitivity. Thus—and based o a proper risk assessment—programmes involving huge sums of money, or in critical sectors, or those which have come up for public and parliamentary attention usually fall within the audit plan. The department has the discretion to decide on the areas to be audited. In this attempt to focus on the macro picture, the department conducts about 60,000 audits in a year, focussing on the ‘millions’ instead of the ‘thousands’. Once audit observations have been made, the executive has the option of either stonewalling them or making mid-course corrections by incorporating them i the agenda of ongoing programmes. In the event that the observations ignored, society atdeclines large loses: efficiency ofarepublic expenditure and the the competitive edge is lost. In the eventuality of a department or institution actively engaging with audit to explore ways and means of incorporating the observations and upgrading the machinery, both the parties bring value to the table and thereby improve the efficiency of the delivery process. In this process, the government’s credibility and legitimacy also improves. Ahead of every performance audit, detailed guidelines are prepared. The audited institution is then sensitized about these guidelines through the process of an ‘entry’ conference, held by the leader of the audit team with the

secretary of the department being audited; the audited institutions have the liberty of making observations and providing guidance to the audit team. The value of an audit can be enhanced if these entry conferences are take seriously by the audited institutions. On completing the audit and after detailed multilevel discussions within the audited organization, the audit team puts together its observations. Before these observations are concretized as the ‘audit report’, they are shared with the audited institution through the ‘exit’ conference, to explain the audit findings and provide the secretary of the department an opportunity to express his apprehensions, offer factual corrections and also ensure that his department is privy to all audit observations. These are recorded and jointly signed. In instancesavoidable where these conferenceshave have bee bee taken seriously, observations dropped and only those which lead to the improvement o the delivery process are included. Unfortunately, in about 50 per cent of cases, these conferences have not bee scheduled (by those audited) within the specified timeframe, resulting in severe differences of opinio between the audited and the auditor after the audit report has been prepared. Long term efficiency and governance objectives will be achieved if these conferences are made more meaningful. PUBLIC AUDITORS AND SOCIAL OBLIGATION

Considering the present climate in civil society of holding its government to account, we in the CAG actively introspected whether our mandate was merely to conduct audits, prepare a report, place it in Parliament, and full stop! We wondered if Parliament and, in fact, the public at large expected us purely to be accountants doing arithmetic over government expenditure. This was whe the government of the day believed that we were exceeding our mandate which, according to them, was to play the role of simple accountants and auditors. We were being advised to steer clear of auditing policy formulation. To understand our role better, we studied the constitutional position of supreme audit institutions i certain other parliamentary jurisdictions. All democracies around have provided for an auditor to oversee the theworld government’s spending. In mostgeneral of these countries, such auditors general are constitutionally mandated to conduct an audit of government departments and report their findings to Parliament. In India, too, the Constitution has provided such a mandate to the CAG. The obvious question in that case is—if the role of a CAG is meant to be constricted, why would constitutions worldwide appoint auditors general and give the independence, freedom from the executive, and accord them a high constitutional position? Indeed, our Constitution, too, seems to have envisioned CAGs as more than mere accountants.

This discovery is especially pertinent in the presentday context. Even as there is a distinct paradigm shift i civil society, with the public getting more vocal, there is need for a paradigm shift in the model of governance. I this is the case, should there not be a paradigm shift in the objectives and approach of public auditing? Should not public auditors seek to sensitize public opinion on audit observations, especially so in social sector audits pertaining to rural health, primary education, air pollution, environment and drinking water? After much introspectio and analysis, we felt that it was imperative to repositio the public auditor and help him deal with the rapidlychanging environment in the country. We introduced a three-fold change. premised our audits the firmofbelief that we First, are aswemuch engaged in the on business upgrading governance as any other agency in the administration. Our audits underwent a culture change as a result of positive reporting: from being a bunch of fault-finders who were often wiser in hindsight, we started recognizing and reporting good practices observed during an audit. Second, to ensure widespread dissemination of our audit observations—both positive and negative—o social sector issues such as sanitation, rural health, primary education, midday meal schemes, etc., whic would be of interest to the common citizen, we summarized the salient observations of our reports into

small booklets which were easy to understand for a general readership. We distributed these pamphlets, referred to as ‘Noddy books’, to the media, legislators, college students, citizens’ groups, non-government organizations and the like. These small pamphlets explained the gist of audit findings in about twenty pages —the pages being in the style and size of Enid Blyton’s oddy series—and also contained a CD which had the complete srcinal report in English and the local language. This exercise was undertaken in the firm belief that a awakened citizenry, once sensitized to the inadequacies o government departments, would exert pressure on these departments by forming vigilante groups, thereby ensuring better delivery of government services. The Noddy books proved to be a hugewe hitstarted even among legislators. Concurrently, working on the look and feel of our audit material. Audit reports of the early variety had a sarkari (or government document) appearance. They were unattractively printed and did not evoke any desire in the common man to read them. We began to improve the packaging of our reports. We presented our material suc that it was easily comprehensible to the layperson, and was reader friendly. Visually appealing graphs, charts and photographs were introduced for better appreciation of the issues covered. Most importantly, for dissemination o good practices observed during the course of audit, we displayed such items prominently in our reports.

Third, in our quest for deeper insight and more widespread coverage of social sector issues, we supported the concept of a social audit. Recognizing that our core competencies were limited to conducting audits, we engaged with credible citizens’ groups working i specific areas to avail of their local knowledge. This not only gave us better outreach, and helped us appreciate the efficiency of government schemes more thoroughly, but also provided these agencies with a more credible voice in the legislature. In a bid to engage actively with citizens’ groups, we gave prominent coverage in the media of our intent to conduct audits in specific places and sectors and invited suggestions as well as information about these spaces. This evoked a positive response. It helped us engage with stakeholders, our reports from also the fringes to centre stage; themove stakeholders, in turn, helped the auditors produce more well-rounded audit reports. For example, doing an audit of ‘water pollution i India’, we engaged with people like Rajendra Singh o Rajasthan and Sunita Narain of Delhi, and NGOs like rghyam in Bangalore. This offered us deep insight into the ground realities; as mere auditors, we may not have been able to capture these facts on our radar without their help. We had similar experiences with those working i the health and primary education sectors. In recent years, the focus of audit has undergone a major change. Due to massive outlays on socio-economic

development activities, the attention has shifted towards the area of ‘performance audit’, which assesses the operational performance of the government against preestablished goals, and judges its accountability in the delivery of programmes and services that affect the wellbeing of fellow citizens, like food, health, education and employment. Performance audits, therefore, provide a early warning system to the administrator and help the government make mid-course corrections. To ensure that we were on the right track while initiating these changes, we looked at trends within other supreme audit institutions in different geographies. We found that, worldwide, the inclination was to make government functioning more transparent. In this context, legislatures in other empowered their auditors general with democracies the mandate have to hold the government financially accountable through performance audits o their programmes and activities. A case in point is that o the USA. In July 2004, in the USA, several proposals were introduced in the 110th Congress to augment the mandate of the external auditor. The erstwhile general accounting office of the USA was redesignated as the government accountability office to reflect the agency’s evolution and additional duties. Most of the agency’s wor today involves programme evaluations, policy analyses, and legal opinions and decisions on a broad range o government programmes. Today, most government

accountability office blue-cover reports go beyond the question of whether federal funds are being spent appropriately, and ask whether federal programmes and policies are meeting their objectives and the needs o society. There was a similar case in Estonia where the Tallin city body contested the mandate of the national audit agency to audit its activity in the housing sector. After protracted litigation over four years, the Supreme Court maintained that it was not unconstitutional for the national audit agency to supervise local governments. The court held that local bodies function for the welfare of the people and the average citizen needs to be kept informed about the efficiency of their operations through a independent audit procedure. Such worldwide trends have reaffirmed our belief that supreme audit institutions are also mandated to sensitize public opinion with their audit findings. It is then that we commenced pushing the envelope and going beyond conventional and conservative practices. This evoked very sharp resistance from the executive. However, this was expected and we had factored it in. Statements were issued that we were exceeding our mandate; comments were made that suc ‘activism’ amounted to interference in policy formulation; remarks were passed that we were misleading public opinion. However, we continued to tread the new path i

the belief that the final stakeholder is the public at large. In taking such initiative, we were no doubt aware that, as an institution, we would be subjected to scrutiny. We ensured objectivity and transparency in the conduct of our audits; we also maintained zero tolerance to a lack o probity. We ensured that our human capital—our auditors —were professionally outstanding and equipped with the latest trends in public auditing. Our priority was to strive for service excellence and quality within a self-defined code of ethics and morality. After much deliberation and comparing of notes wit our sister organizations in other democracies, I came to understand that the role of the CAG is not merely to audit the expenditure of the government. Rather, the CAG’s mandate is to hold the accountable to the legislature. Ourgovernment professionalfinancially specialization is to point out sub-optimality in policy formulation, lacunae i policy implementation, and to provide constructive suggestions for overcoming inadequacies. Since in the times to come, governance will have to become participative and a discerning young citizenry will seek a voice in administration and policy formulation, it becomes incumbent upon audit to sensitize public opinion regarding its findings. The ability to call a spade a spade does not come easy. It comes with its own pitfalls. Audit cannot assume the role of cheerleaders, as most of those in the

government appear to be doing. In fact, audit will be failing in its duty if it does not inform the legislature, and through it, the people, of the true picture of government spending and the outcomes of the schemes intended to benefit the citizens. It is time to take on the role of the naive and precocious child, who displayed absolute transparency when he exclaimed, ‘But he has nothing on!’, as the emperor passed him by in ‘new clothes’ (Hans Christian Andersen, ‘The Emperor's New Clothes’).

————————— 4The steering committee, set up by the International Organisation of Supreme Audit Institutions (INTOSAI), a global membership organization of auditors general of 191 countries, seeks to address common issues, and garner resources from various bilateral and multilateral agencies for strengthening the capacity of supreme audit institutions in various countries. 5‘CAG Report on 2G Had a Detrimental Effect on Growth: Manish Tewari’,

The Economic Times , 27 September 2013. 6Rohini Singh and Soma Banerjee, ‘I Haven’t Seen CAG Function Like This in 45 Years of My Career: Sharad Pawar’,The Economic Times , 14 June 2012. 7At the Economic Editors Conference, October 2011. 8Saubhadra Chatterji, ‘Finance Ministry Gives Clean Chit to “Non-Partisan” CAG’, Hindustan Times , 24 December 2012. 9Rajesh Ramachandran, ‘Money Was Made Even From Kargil Coffins’, The

Times of India , 11 December 2001.

10See ‘Coffins Star in Kargil Charade’,The Telegraph , 25 January 2002. 11At the Mail Today Education Conclave, 10 October 2013. 12See Ram Jethmalani, ‘Evasive Denials Proved Bofors Guilt’,The Sunday Guardian , 21 May 2012. 13Mahendra Singh, ‘Untrained Staff Auditing CAG Reports, Montek Says’,

The Times of India , 13 August 2013. 14Ibid. 15At the Fifth Annual Convention of the Central Information Commission, 13 September 2010. 16Aditi Phadnis, ‘Lunch with BS: Jairam Ramesh’, Business Standard, 20 September 2013. 17See ‘Govt’s Credibility at its Lowest: CAG’, Governance Now , 12 October 2011, in < http://www.governancenow.com/news/regular-story/govts-credibilityits-lowest-cag>, accessed on 15 July 2014.

DNA, 31 August 2012. 18See ‘Digvijay Singh Targets CAG Vinod Rai’, 19Vinay Kumar and Sujay Mehdudia, ‘CAG Has Not Overstepped Its Mandate, Says Former SG’,The Hindu , 27 August 2012. 20See ‘Supreme Court Opinion Gives Comfort to Government in 2G and Coalgate Scandals’,Daily Mail, 27 September 2012. 21See ‘SC Says Auction of Natural Resources Not Mandatory, Govt Says Free to Act Now’, 27 September 2012, IBNLive , , accessed on 15 July 2014. 22‘Don’t Undermine Office of CAG, Says Supreme Court’,The Hindu , 1 October 2012.

3

MEDIA POLICY n the morning of 22 March 2012, on returning fro a leisurely game of tennis, I opened The Times o India. The first-page headlines stunned me. It read: ‘Government lost 10.7 lakh crore by not auctioning coal blocks: “CAG Draft Report” estimate of “undue benefits” to firms is 6 times 2G loss’. It is rather astounding how such reports get into the hands of the media—in this case, a report which had not been seen or approved by the CAG and was in a very preliminary stage. As per performance auditing guidelines, as you may recall, after the exit conference, the audit department shares the draft report with the audited agency. This is invariably the stage when the report leaks. Such leaks raise many issues. Firstly, quite often the final report ca be different, as after viewing the department’s responses, substantive changes are made. It is only then that the report is put up to the concerned deputy CAG and the CAG. Hence significant changes are likely to come about in the draft. Secondly, there is the oft-repeated accusatio against the CAG that the department leaks the report. It

beats me why the officers would leak the report and thereby steal their own thunder. The Times of India report had me very worried, more so as Parliament was in session and much would be said on both sides following the leak. My reaction to the situation was to come clean on the episode and have it placed before Parliament. On reaching office, I wrote out a letter to the prime minister [Appendix 3] indicating the preliminary nature of the findings of the leaked draft and the fact that the draft had not been seen by me as yet. I also expressed my extreme distress at one particular fact, a fact which I had repeatedly represented to government—our helplessness in taking action against the media for brazenly displaying leaked reports and taking credit for having such reports in the theirCAG possession. perreports Articleto 151 of the Constitution, preparesAs audit be placed in Parliament. It should constitute a breach o privilege of Parliament if such reports come into the public domain earlier. My anguish regarding this had also been discussed with the finance minister, the speaker o the Lok Sabha and the law minister. The problem was compounded since the central information commissioner (CIC) had ruled that we were covered under the RTI and were thus bound to share our audit findings at each phase with any person seeking information. Hence, a stage had come when there was no question of leaking reports—we were officially sharing it with the media and everyone

else! The government had not taken any action to remedy the situation, and everyone in the government was taking potshots at the CAG for supposedly leaking such reports.

On 12 January 2011, Mail Today carried a news ite titled: ‘Cong Tells CAG Not to Teach Rules to MPs.’ What was the CAG’s crime? The following press release: PRESS RELEASE Office of The Comptroller & Auditor General of India 10, Bahadur Shah Zafar Marg Statement of the office of the Comptroller & Auditor General of India on disclosure of its Reports NEW DELHI 12 January 2011 The following needs to be put in proper perspective as there mind:appears to be an incorrect perception in the public Under Article 151 of the Constitution, the Reports of the CAG of India relating to the accounts of the Union are submitted to the President who causes them to be laid before each House of Parliament. In pursuance of the mandate provided to the C&AG under this Article, the

Performance Audit Report on the issue of licenses and allocation of 2G Spectrum by the Department of Telecommunications was placed in the Parliament on 16th November, 2010. Once the Report has been placed in the Table of the House, it becomes a public document. As per the procedure being followed from 1980s the Officers of the C&AG then hold a Press Conference in the afternoon to explain their findings on that particular Report, to the media. In this case the Press Conference for briefing the media on the Audit Report on the issue of licenses and allocation of 2G Spectrum was held by Smt. Rekha th November, 2010 itself, Gupta, Dy.C&G in the office after 3 PM on 16 after the report was placed in the Parliament. The Report was simultaneously placed on the Website of the Comptroller and Auditor General. DISCUSSION OF REPORTS OF C&AG

All Reports of the C&AG are automatically transmitted to the Public Accounts Committee. However, not all Reports are discussed by the PAC. As per Para 1.12 of the Rules of Parliamentary Procedure, ‘When any matter is under consideration of a Parliamentary Committee and the Committee is holding its sittings for that purpose, no person including a Member of Parliament should make or publish a statement or comment about that matter. Making public comments on the matter which is being considered by a Parliamentary Committee is highly improper and may even amount to contempt of the House’. Later, it is in obedience to this Rule that the C&AG, who is an important adjunct PAC and on attends all itsmade meetings, didonnot commentofonthe media reports comments by others the make report any of the 2G Spectrum allocation, as it was under discussion of the PAC. The th meetings of the PAC on the 2G Spectrum Audit Report began from 27 Dec. 2010

The great folly committed by the CAG was quoting fro arliamentary Procedure: Law, Privileges, Practice and recedents by Subhash C. Kashyap. The background was that the PAC meetings on the 2G report had commenced. fter every meeting, various interpretations on the discussions that took place inside would emerge in the media. Every such day, the media would attempt to corner us for the real story behind the discussions. When I nixed the requests of journalists they wondered why I was not speaking up, despite the fact that every MP present in the meeting was giving out a ‘byte or two’. It was then that I put out this press release, quoting paragraph 1.12 of the Rules of Parliamentary Procedure, then making the CAG’s point of view clear against the last bullet, namely that the CAG did not reading make any commentsare to more the media. But then, who bothers things—we than eager to shoot our mouths off. To complicate matters, the prime minister, in his interaction with newspaper editors on 29 June 2011, made the following statement: Well, I think the CAG also leaks. It is not the function of the CAG. It has never been the case that the CAG has held a press conference as the present CAG has done. But nobody is commenting on all this. It is not right for the CAG to go into issues which are not the concern of the CAG, it is not the CAG’s business to comment on

policy issues. I think they should limit themselves to the mandate given under the Constitution. We are now a permissive society, I think if the media 23 can get away with murder so can the CAG. ow, if first-time MPs make statements, a person wit over forty years of experience in the government will let it pass—only prudence dictates so. However, when a prime minister states something which is functionally and fundamentally incorrect, how can one ignore it? I the decided that the least I owed the prime minister was to inform him that the briefing he had been given on the issue, irrespective of the source, was incorrect. I had bee travelling when he had held the press conference. On my return, with theon help of my colleague, Alok, Iofwrote to the prime minister 5 July 2011. The existence this letter was only known to Alok and me; hence, there was no possibility of it reaching the media. We did not give the letter to the Joint Parliamentary Committee (JPC); the letter was given to the JPC by the PMO. Since this letter has now entered the public domain, I have no qualms about reproducing it today. The contents follow:

Since I had chosen to put this down in writing—and of all the people, to the prime minister of the country—I had to be sure about my facts when making these assertions. The same evening, I got a call from the prime minister’s residence asking to see him the next day. Since I was travelling to Mumbai the next day—6 July 2011—I called on him at 7 p.m. on 7 July 2011. The prime minister asked me as I entered his room, ‘I hope you do not want a reply to your letter?’ I replied that I could hardly demand any such thing of the prime minister. As usual, he was very gracious and let me explain each one of the assertions that I had made in my letter.

When I took charge as the CAG in January 2008, the department had the assistance of Virendra Kumar as the media advisor. He soon retired, and was succeeded by B.S. Chauhan, who was moving out of the ministry o finance. The CAG’s media department was a one-ma setup. I recall that after a couple of reports were placed i the house in the early years, there was a huge hue and cry from the usual interested quarters that the CAG had engaged a media company and had a huge media department. All we had was one B.S. Chauhan, and no trace of any media company, not even when the department was celebrating 150 years of its existence in 2010. When voices of criticism multiplied and rose in pitch,

I delved into the genesis of our media policy. There is a whole chapter on media policy in the thematic history o 24 the CAG of India for the period between 1990 and 2007. Written by Vijay Kumar, who is a retired deputy CAG, it traces the history of the CAG’s interaction with the media from the 1950s, also quoting A.K. Chanda, the second CAG of Independent India, who is reported to have maintained that media coverage of the CAG’s reports was a healthy trend in a developing parliamentary democracy; this, in turn, added to the responsibility and need for caution on the part of government auditors. Vijay Kumar records that during CAG V.K. Shunglu’s time, several instructions were issued to the XIX Conference o ccountants General in November 1996, recommending that the accountants general may call for a press conference after the audit report is tabled, to help apprise the media of the highlights of the report. Press conferences have led to very interesting situations. In 2004, a writ petition was filed in the Madras High Court against the CAG and his accountant general o Tamil Nadu, by an All India Anna Dravida Munnetra Kazhagam (AIADMK) MP of the Rajya Sabha, for holding a press briefing and criticizing the state government for a loss of several crores during 2001-2004. He also alleged that by holding this press conference, the accountant general had infringed the privilege of the Tamil Nad legislative assembly. The honourable judges, while

dismissing the writ petition, had a word of advice for the petitioner. The judgement said that making untenable allegations against the accountant general of Tamil Nadu i vituperative language, without any basis, would not be encouraged. The court held that the petitioner’s impressions were illusory. It also advised the accountant general not to criticize but to factually brief the media. Thus the judgement upheld the right of the accountant general to hold a press conference to disseminate the findings of an audit report which had come into the public domain, as it had already been tabled in the house. On 16 March 2006, this judgement prompted the the CAG V.N. Kaul to issue comprehensive guidelines o holding press conferences by designated officers of the Indian audit andpress accounts department. This pointsbytome; the fact that such briefings were not started indeed, I have not made any change to the 2006 policy during my tenure. I have, in fact, never held a press briefing. As decided in 2006, the concerned accountants general and deputy CAGs hold press conferences. Hence, my assertion to the prime minister in my letter of 5 July— that press conferences after reports have been tabled are the norm and that I personally have never held a press conference while in office—was entirely true. For a better appreciation of the media policy issued by CAG V.N. Kaul, I have annexed the March 2006 instruction [Appendix 4]. Vijay Kumar further records that

whilst the CAGs of the 1950s were somewhat conservative about media interaction, over the years it was becoming apparent that audit findings did not reac the larger public because the media covered reports in a sketchy manner. Further, the PAC and the committee o public undertakings (COPU) had severe time constraints and could not deliberate on all the reports. Above all, the response of the executive to the audit reports, or even to the PAC or COPU’s recommendations was becoming quite lukewarm, and hence there was need for the wider dissemination of such reports to the ultimate stakeholder, the public. My contention is that once an audit report is placed o the table of the house, it becomes a public document and comes publicthe domain. whoa conduct an auditinto do the explain report If to the the officers media for clearer appreciation of the findings, such dissemination eliminates any scope for misinformation and skewed reporting. Handouts are given to the media which very concisely and clearly explain the technical aspects, if any, of the findings. All in all, this is a healthy practice which has been followed over time. More importantly, it certainly is fair practice to widely disseminate audit findings for a awakened citizenry to appreciate the efforts of the government in the implementation of different schemes and programmes. The public, after all, is the ultimate stakeholder and must be informed about the

implementation of social sector schemes in particular.

————————— 23Issued by the PMO, 29 June 2011. 24See Vijay Kumar, The Comptroller and Auditor General of India: A Thematic History, 1990-2007 (New Delhi: APH Publishing, 2008).

4

THE CBI Dear Shri Rai, We have learned that a preliminary enquiry [PE] has been registered by the CBI in connection with the appointment of Mr Atul Kumar Rai as CMD [chairman and managing director] of IFCI in 2007. We understand that you are named in the PE and that the CBI is investigating whether you as the then secretary, department of financial services, helped Atul Kumar Rai getting relieved at a short notice to enable him to take up his job as full time director of IFCI. Your comments please .

—An email received from Dheeraj Tiwari, The Economic Times, New Delhi, 30 November 2011

had no clue about any such PE. After I received information from journalist Dheeraj Tiwari, I called the director of the CBI, Amar Pratap Singh on the RAX (the restricted exchange telephone provided only to senior officials), asking him directly if any such PE had bee registered and whether my name had been mentioned in it. I need not remind readers that I was the incumbent CAG at

that point. Singh, in all fairness, did inform me that he was aware of something against Atul Kumar Rai, but was sure that my name did not figure in the PE. However, he promised to revert. And revert he did. An officer soo came to my office with a copy of the PE. He, of course, had no knowledge about how the PE had come to be registered, how the name of a serving constitutional appointee had been mentioned, and with whose clearances. 25 I found that the PE had been registered by the CBI on 21 November 2011 against: 1. Atul Kumar Rai, CEO and MD, IFCI, New Delhi 2. Unknown officials of the ministry of finance, New Delhi Now what is the PE all about? It is best for me to quote directly from the CBI information report: A reliable source information has revealed that Shri Atul Kumar Rai (IES 1985) had worked under Shri Vinod Rai (IAS 1992) in the department of financial services (DFS), ministry of finance, from November 2002 to May 31, 2007. Among other responsibilities, Shri Atul Kumar Rai was also looking after the issues relating to the sanction and disbursement of loans and grants by the government to the IFCI,

exploring various options for the restructuring of the IFCI by way of inducting a strategic partner, its possible merger with a PSU bank, and the restructuring of IFCI liabilities towards PSU banks and insurance/financial institutions, for a period of about four and a half years. Shri Vinod Rai was nominee director from the Government of India on the IFCI board from November 18, 2002 to August 20, 2005. Shri Atul Kumar Rai succeeded Shri Vinod Rai as the government nominee director on the IFCI board on August 21, 2005 and remained in the position till May 31, 2007. On February 5, 2007, Atul Kumar sought voluntary retirement from the DFS on the grounds of attending to certain personal and family matters at the earliest. The application of Atul Rai was examined at various levels and forwarded to the secretary, financial services, banking, Vinod Rai, who apparently helped Atul Rai in getting relieved as soon as possible. Subsequently Amitabh Verma, joint secretary (admin), ministry of finance, recorded on April 30, 2007: ‘Discussed with secretary (financial services). In view of the budget session of parliament being in progress, it may be difficult

to relieve Atul Rai immediately. Hence it has been decided to relieve him with effect from May 31, 2007. Shri Rai has agreed to this. May inform DEA [department of economic affairs, the cadre controlling authority in the Indian economic services or IES].’ The information report concluded: Thus, prima facie, by giving and accepting a false and backdated declaration, and not insisting upon filling form 25 for commercial employment, Shri Atul Kumar Rai, S-1 [suspect 1] with other suspect officials of ministry of finance, Government of India, committed grave misconduct. On a simple reading of the first two lines quoted in the information report of the PE, the target becomes clear. Indeed, this was the conclusion drawn by the team o reporters at Business Standard, who, on 20 September 2012, an read: article‘Did titledAtul ‘TheKumar BattleRai for pay IFCI’, with a published subtitle that the price of being close to Vinod Rai?’ The report stated that the government’s flip flop over IFCI and the perceived intransigence of its CEO, Atul Kumar Rai,

could potentially wipe out 1,000 crore of stockmarket wealth, and, in a throwback to the 1970s, lead to the government acquiring a perfectly healthy and profit-making financial institution after a confrontation with the company’s management.26 Before I quote further from theBusiness Standard article, let me apprise readers of an answer given by the finance minister to Parliament. While replying to a question o IFCI in 2007, he stated that IFCI was not a public sector enterprise. In a privilege matter, when Atul Rai was called upon to depose before the privileges committee,Business tandard states: The matter would perhaps have ended there had [Atul Kumar] Rai not said in one of his depositions that IFCI wasn’t a governmentowned company and that he wasn’t a government servant. […] In a deposition before the committee on August 9, 2010, R. Gopalan, secretary, department of financial services, said the ministry corporate affairs was of of the the opinion that ofunder the provisions Companies Act, IFCI was not a state-owned entity and that the law ministry agreed with the view. Meanwhile, in August 2010, the Comptroller

& Auditor General, or CAG, came out with a draft report that pointed out huge irregularities in the allotment of inexpensive 2G spectrum to a clutch of companies after Andimuthu Raja took over as the telecom minister in 2007. The extent of the loss to the government, the CAG report said, could be as high as 1.76 lakh crore. The nation gasped in disbelief. Vinod Rai, a 1972 batch IAS officer of the Kerala cadre, was the CAG when the report came out, as he is now. Earlier he had been [Atul Kumar] Rai’s superior in the finance ministry. This is when [Atul Kumar] Rai’s case took a turn for the worse. The government did a volte face. Through submissions to the committee in October 2010 and January 2011, it said that IFCI was under the government’s control. These submissions were based on the opinion of the ministry of law which in turn had consulted the attorney general on the issue. […] Did Rai pay the price of being close to Vinod Rai? committee out if come the two were The related to each tried other to butfind couldn’t to any conclusion. But finance ministry officials say they were close—like chacha and bhatija (uncle and nephew). Before he became CAG, Vinod Rai was secretary (financial services) in the ministry

of finance.27 This is an outsider’s point of view. I wish someone in the ministry of finance, or the committee of privileges, or the media had asked me a straight and obvious question, instead of approaching fellow officers. Was Atul Kumar Rai related to me? Now, let me provide a brief background into my association with Atul Kumar Rai.

When Jaswant Singh took over as finance minister, I was moved as joint secretary to the banking division of the DEA on 21 November 2002. Atul Kumar Rai was already working as a director in that department. Two days later, Ms Vineeta Rai joined as the secretary. So, there were three officers with the same surname—Ms Rai having acquired hers through marriage, and Atul and I by birth. While I was acquainted with Ms Rai, I met Atul for the first time in that department. In a very short time, I assessed him as being an exceedingly well-informed professional; he had thorough grasp of his subjects, and shared his views freely. Atul was instrumental in helping me restructure the liabilities of development financial institutions such as IDBI, IFCI and Industrial Investment Bank of India (IIBI). IFCI was in bad financial health as the development financial institution model had outlived its utility and was

heading for a default of its liabilities to the banks. With the ‘cooperation’—though not entirely willing—of the CMDs of banks which had invested in or lent to it, the liabilities were restructured. This provided IFCI with some breathing space. Though the government had no direct holding in IFCI, since it had stood guarantee for SLR (statutory liquidity ratio) bonds issued by IFCI, and IFCI had about 1.1 million individual investors, it was incumbent on the government to ensure that the institution did not default. This was why, among other things, the government provided financial assistance to IFCI. 523 crore was provided as loan during 2002-2003, and 2,409 crore as a grant in 2003-2007, out of a total package of 5,220 crore that As was per approved for IFCI,filed IDBIbyand an affidavit a IIBI. government undersecretary in the case registered in a writ petition, Atul had given notice on 5 February 2007, seeking voluntary retirement with effect from 28 February 2007. Since his cadre controlling authority was the DEA, his voluntary retirement application was forwarded by the DFS, i which he was serving and of which I was the secretary, to the DEA, then headed by Dr D. Subbarao. The DEA conveyed its approval on 26 April 2007 for him to take voluntary retirement with effect from 30 April 2007. It was then that the voluntary retirement date issue was put up to me. Since the budget session of Parliament was on,

and the ministry of finance does have enormous workload at that time, when the joint secretary (administration) i DFS, Amitabh Verma, discussed Atul’s release with me, I advised him to defer the release by a month. Hence, the note was recorded by Amitabh—which has bee reproduced by the CBI in its information report. The release was then granted with effect from 31 May 2007, and Atul took over as the CEO of IFCI. The CBI enquiry is still pending. A report was sent out by the CBI to the DFS in late 2012. However, certain other clarifications have been sought and the government continues to pursue the matter. if we were to ignore innuendos the PE, that we needEven to reassure ourselves as the citizens of theincountry the resources of the CBI, the premier investigative agency of the country, are being put to best use in investigating the ‘grave misconduct’ committed by Atul Kumar Rai (i connivance with other officials of the ministry of finance) by not filling form 25. Information that emanates from the agency is that it certainly has far more important and competing demands for its investigative resources. To have these resources diverted for investigating whether a officer got himself released from the government without fulfilling the formality of submitting his application in the prescribed format—an error that could well be a

ministerial lapse—is bewildering. Further, apart from the precious hours spent by the CBI, and the reams of paper wasted, Parliament and government time at the level o successive secretaries in the DFS has been consumed. nd to what avail? More so, how did I, the secretary ‘who apparently helped Atul Rai in getting relieved as soon as possible’ facilitate early release? I, in fact, delayed it by three months. The CBI and the government would have us believe that ‘source information’ led the investigative agency to begin examination all by itself. However, we all know who instigated the filing of the PE—the source is authentic as it is from the CBI itself. But that is irrelevant. What is significant is this—understanding some elements in the government the willextent go to to which browbeat ‘recalcitrant’ officers so they toe the line. A news ite from The Sunday Guardian, dated 14 August 2011, highlights the machinations that were taking place:

CONGRESS HUNTS FOR CAG CHIEF SKELETON The Congress is searching the opposition closet for the skeletons that Prime Minister Manmohan Singh had talked about recently. The search

extends to the closet of the Comptroller and Auditor General Vinod Rai. As the Congress gets ready to question Rai’s integrity, rumours are being floated [...]. Similarly, the enforcement directorate is supposed to have asked the British government for information on Baba Ramdev’s island in Scotland. The CBI, unfortunately, gets caught in the crossfire. Being an executive agency functioning in the department o personnel—which is directly under the prime minister— makes it vulnerable to speculation. In such a administrative bind, the agency becomes easy game for a law minister to ‘correct its draft affidavits’; it is exposed to allegations of reopening investigations whenever a political ally or opponent begins to flex its muscles, and o ‘fixing’ inconvenient officers against whom cases can drag on for decades without even a charge sheet being filed. These issues made the Supreme Court comment that the CBI is a ‘caged parrot’28 without the freedom to investigate or administer. Successive governments and political parties have blamed the CBI, calling it a handmaiden of the government in power. While those in the opposition may criticize the government for misusing the offices of the CBI for narrow political ends, they never take steps to correct the CBI’s administrative control structure whenthey come to power. It is true that a police dominated investigative agency

cannot enjoy the kind of autonomy or independence offered to the election commission or the CAG; yet, it ca certainly be decoupled from the direct control of the minister for personnel or the prime minister. Such a move will not only lend a great degree of credibility to the initiating government, but will also help establish a agency with professionalism and integrity of its own.

————————— 25Case No. PE 5(A) 2011-AC III, 16 November 2011. 26N. Sundaresha Subramanian and Vrishti Beniwal, ‘The Battle for IFCI’,

usiness Standard , 20 September 2012. 27Ibid. 28Ross Colvin and Satarupa Bhattacharjya, ‘A “Caged Parrot”—Supreme Court Describes CBI’, 10 May 2013, in Reuters, , accessed on 4 August 2014.

FOLLIES

5

FIRST COME, (NOT) FIRST SERVED: THE 2G SAGA I feel somewhat sad, because I was the one who insisted that spectrum allocation should be transparent, it should be fair, it should be equitable. I was the one who insisted that coal block s should be allocated on the basis of au ctions .29

—Prime Minister Manmohan Singh, 3 January 2014 r Prime Minister, people wonder, if you were indeed convinced that spectrum allocation should be transparent, what prevented you from executing your wishes? Had you, in fact, stood steadfastly by your beliefs, the fate of UPA II might have been different. I fact, the fate of the Indian economy itself might have bee veryInstead, different.you engaged in a routine and ‘distanced’ handling of the entire allocation process, in spite of the fact that the then communications minister, A. Raja, had indicated to you, in writing, the action he proposed to take. Insistence on the process being fair could have prevented

the course of events during which canons of financial propriety were overlooked, unleashing what probably is the biggest scam in the history of Independent India.

To get a perspective on the unfolding of this mega scam, let us briefly go through the history of telecom in India. Till 1994, the state was the monopoly agency providing communication facilities in India. It was i 1994 that the government announced the National Teleco Policy (NTP 1994) which laid out the roadmap for the future of telecom in India by defining certain important objectives (including the availability of telephones o demand, the provision of world-class services at reasonable prices, etc.) Crucially, and inot recognition of the fact thatand the targets. government alone could deliver the set targets, it concluded that private investment and the involvement of the private sector was required to bridge the resource gap. NTP 1994 thus opened the telecom sector to private sector participation, albeit in a phased manner, from the early 1990s. This led to exponential sectoral growth. As of 31 March 2010, India had 621.3 million telephone connections, with wireless connections (584.3 million) outstripping fixed lines (37 million). India has, undeniably, benefitted greatly from the telecom revolution, with the sector growing faster than it has in any other part

of the world.

Radio waves are a form of electromagnetic radiatio which, like visible light or infrared, make up a portion o the entire spectrum. They cannot be perceived by huma eyes or ears, and they are not harmful in the environment. Depending on their frequency (measured in hertz), radio waves can pass through solid objects and travel long distances. This makes them useful for mobile communications, broadcasting and many other wireless applications.30 2G is a colloquial reference to second-generatio wireless telephone technology. In view of the substantial upgrade it offered over the first generation, which was confined basically to voice telephony, 2G licenses were much in demand. There were three basic benefits of 2G networks: Based on narrowband digital networks, signals were digitally encrypted thus dramatically improving the quality of calls while also reducing the complexity o data transmission. These systems were significantly more efficient o the spectrum, allowing for greater mobile phone penetration levels. They allowed data services for mobiles, such as text

messaging. The radio frequency spectrum for this technology to transmit voice, mail, data or broadcasting throug handheld devices is finite but not consumable. In India, the department of telecommunications (DoT), which falls within the purview of the ministry of communications and information technology, is the custodian of the spectrum, and responsible for its allocation. It also has the authority to issue licenses to operators in the telecom sector.

The licensing of cellular services was done in phases. Under NTP 1994, the first phase saw only two cellular mobile in theIn four 31 procedure. metros, telephone based on aservices ‘beauty being parade’allotted the second phase in December 1995, two more services were awarded in eighteen telecom services through a process o competitive bidding. In 1999, a revised policy, NTP 1999, was announced, and existing operators were allowed to migrate to a revenue sharing regime. The upfront payment was an entry fee, with the annual license fee to be paid separately. The entry fee was fixed on the basis of the highest bid received in the 2001 auction of licenses. It was 1,651 crore for pan-India licenses, corresponding to circle-specific fees. The entry fee had spectrum embedded in it. What needs to be noted in all these policy changes is

that the award of all licenses was done through a market discovery or bidding process. In September 2003, Prime Minister Atal Bihari Vajpayee constituted a group of ministers (GoM) o telecom issues. The resultant report of the GoM was approved by the union cabinet in October 2003, and these recommendations became an addendum to NTP 1999. ccording to this policy formulation, the existing syste of licensing was to be replaced by a unified licensing/automatic authorization regime. In addition, the cabinet also decided to constitute a GoM to recommend a efficient pricing formula for spectrum and for the vacatio of spectrum by the ministry of defence. This was enunciated through the terms of reference of the GoM, issued by 5].the cabinet secretary in February 2006 [Appendix However, the then telecommunications minister, Dayanidhi Maran, objected to spectrum pricing being included in the terms of reference of the GoM [Appendi 6]. He wrote to the prime minister (by then Dr Manmoha Singh had taken over) stating that it was his ministry’s prerogative to decide on spectrum pricing, and asked for the pricing clause to be removed from the terms o reference of the GoM. No meeting of the GoM was held till the PMO acquiesced. Revised terms of reference for the GoM were issued in December 2006, excluding the spectrum pricing clause [Appendix 7]. Surprisingly, no

one pointed out that this revision of the terms of reference was contrary to the cabinet decision of October 2003, which had given an equal role to the ministry of finance i spectrum pricing. Maran’s insistence on retaining spectrum pricing within his own ministry came under tremendous adverse scrutiny in 2007. It may be recalled that in the entire run-up to the issuance of licenses, DoT stood by its viewpoint of not permitting any change in spectrum pricing, which had bee arrived at in 2001 for allocation of 2G spectrum in 2008, and blocked attempts by the prime minister and the ministry of finance to engage in a review of the pricing formula.

. Raja succeeded Dayanidhi Maran as telecommunications minister in May 2007, both ministers being from the Dravida Munnetra Kazhagam (DMK) party. It was then that the process for spectrum allocatio gathered momentum. Raja decided to continue with the internally adopted principle of first-come-first-served (FCFS) for the allocation of spectrum: every applicatio received at the central registry section of the DoT would be assigned its priority based on its date of receipt. Raja was categorical, as evident in his correspondence with the PMO: he would follow the FCFS process;

there would be no cap on the number of licenses in a service area; low tariff improved the reach and spread of services; suggestions of referring the allocation issue to the GoM were ‘totally out of context’. So he was seemingly candid in wanting to decide the issue himself. To understand the process as it unfolded, let us delve into the correspondence leading to the issuance of the letters of intent (LoI) on 10 January 2008. 2 November 2007 stands out as a red-letter day in the saga of what later came to be referred to as the 2G scam. This day saw the start of a flurry of correspondence32 [Appendix 8] that Itwould change political history. started with the A. course Raja, of thenIndia’s the communications and information technology minister, writing to the prime minister to inform him that the telecom regulatory authority of India (TRAI) had earlier recommended ‘no cap’ on the number of licenses that could be issued in a particular service area, as a result o which a press release was issued on 25 September 2007 and applications were invited for telecom licenses. The last date for submitting applications was 1 October 2007. Since there were an unprecedented number of applications —575 applications had been received for 22 service areas—the ministry of communications sought the advice

of the ministry of law on how to deal with them. The ministry of law’s advice was to refer the issue, for a appropriate decision, to the eGoM. On this advice, Raja, in his letter to the prime minister, emphatically wrote, ‘[the] ministry of law, instead of examining the legal tenability of alternative procedures, suggested referring the matter to an empowered group of ministers […] the 33 Raja suggestion of law ministry is totally out of context.’ went on to inform the prime minister that the DoT had decided to continue with the existing policy of ‘FCFS’ for processing the applications, and advanced the cut-off date to that day itself (that is, the date when the press release inviting applications appeared in the newspapers: 25 September 2007). He assured the prime minister that ‘the department 34is not deviating from the existing procedures’. The prime minister responded the same day [Appendix 8]. Among other issues, the prime minister expressed concern about ‘processing of a large number o applications received for fresh licenses against the backdrop of inadequate spectrum to cater to overall demand’. In a note that was enclosed with this letter, the prime minister elaborated on the issue: DoT has received a large number of applications for new licenses in various telecom circles. Since spectrum is very limited, even in the next

several years all the licensees may never be able to get spectrum. The telecom policy that had been approved by the Union Cabinet in 1999 specifically stated that new licenses would be given subject to availability of spectrum.35 The prime minister advised Raja to consider a transparent methodology of auctions wherever legally and technically feasible and to consider a revision of the entry fee, whic ‘is currently benchmarked on old spectrum auctio figures’. Raja sent a prompt response, within hours on the same day [Appendix 8]. He wrote, ‘The issue of auction o spectrum was considered by TRAI and the teleco commission and[…] was have not recommended thespectru existing license holders got it without asany charge’. He went on to say that holding an auction would be ‘unfair, discriminatory, arbitrary and capricious’.36 He, as it later turned out, erroneously assured the prime minister that there was enough, and more, spectru available for everyone for 2G services. Information on the DoT’s plan of action was obviously leaking out and causing widespread concern i official circles—a foreboding that something radically wrong was likely to happen. Some such information seems to have reached Kamal Nath, the then commerce and industry minister. On 3 November 2007, he wrote to the

prime minister stating, ‘I am writing this letter wit concern on the sudden and alarming developments in the telecom sector.’37 He went on to add that fair play was vital for the image of India across the globe, and that a GoM be asked to comprehensively study all the issues facing the telecom sector. Raja wrote to the prime minister again on 15 ovember 2007 [Appendix 8]. Referring to the concerns expressed by Kamal Nath, which had been brought to his notice by the prime minister, he assured the prime minister that: […] in the last six months, Indian industry, including the telecom sector, has shown good growth [.…] 7 million subscribers areofbeing added per month and quarterly results these companies have shown one of the best results ever which is also reflected in the increasing share prices of these companies on the Indian Stock Exchanges. […] Since the department has decided to continue with the existing policy [FCFS] for processing of applications, the suggestion of Shri Kamal Nath for setting up of GOM is out of context. In an obviously sarcastic reference to what had bee mentioned by Kamal Nath in his letter to the prime minister, Raja adds, ‘I would also like to clarify that I a

equally concerned about the image of India across the globe and assure you that all decisions taken by me will be guided by the larger interest of the public, competitio and [the] growth of telecom sector’. The prime minister responded to this letter on 21 ovember 2007 [Appendix 8]. This letter has to be noted for its wording, and hence is reproduced. 21 November 2007 Dear Shri Raja, I have received your letter of 15 November, 2007 regarding the recent developments in the telecom sector. With warm regards. Yours sincerely, Manmohan Singh The scene then shifts to 26 December 2007, when Raja again wrote to the prime minister [Appendix 8]. Referring to his letter of 2 November and subsequent discussions which had had minister, with the prime and the Raja the externalhe affairs Pranabminister Mukherjee, categorically stated: As I have already promised to you, my efforts in this sector are intended to give lower tariff to the

consumers and to bring higher teledensity in the country, more specifically in the rural areas. It is needless to say that tariff in India is not as cheap as claimed in terms of purchasing power parity and standard of living of the country since there is no tariff fixation. In these circumstances, the discussions with the external affairs minister and solicitor general of India have further enlightened me to take a pre-emptive and pro-active decision on these issues as per the guidelines and rules framed there under to avoid any further confusions and delay.38 t the end of the enclosure attached to the letter, he stated: Since the file for issue of LoI to all eligible applicants was approved by me on 2-11-2007, it is proposed to implement the decision without further delay and without any departure from existing guidelines. Unbelievably, the prime minister chose to ignore the red flags of deviation from policy, and questionable facts and figures offered by the minister. His response, on 3 January 2008, was remarkable for its content. I reproduce it merely to bring home the point of the distanced dealing o the issue [Appendix 8]. He wrote: 3 January 2008

Dear Shri Raja, I have received your letter of 26 December, 2007 regarding recent developments in the telecom sector. With warm regards. Yours sincerely, Manmohan Singh template response (see the prime minister’s letter of 21 ovember 2007, reproduced earlier) if there ever was one, and that too, to an issue which shook the government and the country. Those were identically worded letters; only the dates are different. It is obvious from the exchange of these letters that the prime minister was indeed aware of Raja’s intentions as far back as November/December 2007. He chose, for reasons which can only be speculated, to ignore the warning signals. failedof to direct his minister follow his advice, the He counsel the ministries of to law and finance, and the commerce minister Kamal Nath’s suggestion that the issue be brought to a GoM for threadbare discussion. Why, and under what compulsion, did the prime

minister allow Raja to have his way, which permitted a finite national resource to be gifted at a throwaway price to private companies—private companies that, going by the minister’s own admission, were ‘enjoying the best results […] which was also reflected in their increasing share prices’? If only Prime Minister Manmohan Sing had responded differently; if only he had instead said—‘I have received your letter of 26 December 2007. Please do not take any precipitate action till we or the GoM have discussed this.’ Such a letter would have changed the course of UPA II. It is for this reason that I have, at the outset, asserted that had the prime minister insisted o transparency, as he claimed on 3 January 2014, the course of political history of this county would have bee different. more on this later. ThereBut were strong interjections from the ministry o finance that clearly felt that applying a price determined i 2001, without indexation, was inappropriate. However, this was brushed aside. Giving finite spectrum to a private party for commercial exploitation, even if it enhances teledensity, requires a balance between revenue generation and achieving social objectives. It needs to be emphasized that even the tenth five-year plan document o spectrum policy mentions that ‘pricing needs to be based on relative demand and supply over space and time in a dynamic manner, [with] opportunity cost to reflect the relative scarcity of the resource in a given situation.’39

Thus, the action of the DoT to take a price discovered i 2001, when the sector was still nascent, and apply it after a passage of seven years in spite of changes in market conditions, and in the face of contrary advice from the PMO and the ministries of finance and law, certainly does not pass any test of transparency. The DoT constantly emphasized that its decision was taken to serve the twin objectives of providing cheap telephony and deeper teledensity. In fact, Raja, in his letter to the prime minister on 15 November 2007 writes: ‘I agree that telecom tariff in the country are sic [ ] one of the lowest in the world. However, these may be seen i conjunction with the lower input costs and per capita income in the country.’ Doing a volte face in his next letter of 26 December to the prime minister, is needless to say2007 that the tariff in India is notheaswrites: cheap ‘It as claimed in terms of purchasing power parity and standard of living in the country since there is no tariff fixation.’ What do we believe? Telecom tariff the ‘lowest in the world’ or ‘tariff in India is not as cheap’? Contradictory statements in successive months. Let us approach the argument of teledensity. NTP 1999 had fixed a teledensity target of providing 15 telephone connections per 100 [in population], to be achieved by 2010. In September 2007, a teledensity o 18.22 had already been reached. The eleventh five-year plan had targetted 500 million connections by 2010; this

target, too, was achieved early—in September 2009. It is obviously no one’s case that we need to sit back once a target is achieved, but surely revenue mobilization, in lie of a scarce national resource being made available for private commercial exploitation where tariff is not fixed, cannot be totally overlooked. Was this data not available with the government—the PMO, the ministry of finance and even the officialdom o the DoT—to counter Raja’s consistent and constant refrain? Now let us examine Raja’s assertion that there had been ‘no single deviation or departure in the rules and procedures contemplated in all decisions taken by my ministry and as such full transparency is being 40

maintained…’ The DoT had decided to continue with the so-called existing policy of FCFS for processing applications. The minister also confirmed that a unprecedented number of applications had been received by the cut-off date of 1 October 2007. This is the date which was announced by a press release issued on 24 September 2007 after being personally approved, indeed amended, by the minister himself. However, despite making a public announcement along these lines, Raja arbitrarily advanced the cut-off date to 25 September 2007. Why? No credible explanation was offered. Thoug Raja clearly indicated this to the prime minister in his letter of 2 November 2007, the PMO chose not to object.

Why it chose not to, remains unclear. Let us go a step further. FCFS, as the term suggests, is meant to have chronological seniority. One would be surprised to learn that even this procedure, which was repeatedly reiterated to the prime minister by Raja, was given the go-by, and all applications submitted betwee March 2006 and 25 September 2007 were considered together. The applications submitted between March 2006 and 25 September 2007 were issued the LoIs simultaneously on a single day, that is, 10 January 2008, when a notice was issued through a press release giving less than an hour to collect the LoIs. Thus, not only was the goal post shifted from 1 October 2007 to 25 September 2007, but the principle for issuance of LoIs became the compliance even this date seems to haveofbee known to a date, selectand thirteen applicants in advance the issuance of the press release. The oft-repeated claims o transparency and objectivity were further put paid to whe certain applicants appeared with demand drafts o thousands of crores of rupees having been issued eve before the date of the press release.41 It was becoming clear that the minister was shooting off letters to the prime minister and others from his personal office, rather than on behalf of the department. I fact, the DoT was in the dark. My doubt was confirmed when I looked closely at the letters: while correspondence emerging from the department stated FCFS to be ‘first-

come-first-served’, that emerging under the signature o the minister (including the press release of 7 January 2008, featured in Appendix 9 with the minister’s personal corrections) mentioned FCFS as ‘first-cum-first served’ [emphasis mine]. This clearly established the fact that the department and the minister did not appear to be in sync. Let alone transparency before the world, there was no transparency between the minister’s office and the department. Or else the correction would have been made. What is even more illuminating than the correspondence between Raja and the prime minister and the press release of 7 January 2008, is the examination and notings on the files within the PMO on the letters writte by Raja, which were not made available to audit, but came into after theshow files were giveninternal by the PMOthetopublic the domain JPC. These detailed examination, but not leading to any output from the PMO to the DoT. Letters written by A. Raja were examined in the PMO and it was concluded by the joint secretary, Vini Mahajan, that there was a perceptible difference of opinion betwee the ministry of communications and the ministry of law. ccording to the ‘Transaction of Business Rules of the Government of India’, ‘cases in which a difference o opinion arises between two or more ministries and a cabinet decision is desired, shall be brought before the cabinet’.42 Officials in the PMO advised that this norm be

communicated to the ministry of communications, but the prime minister desired that a deeper examination be made of the action proposed by the DoT. This was on 7 ovember 2007. Was time being gained? Pulok Chatterji, then the additional secretary at the PMO, went into the issue in greater depth. In a note to the prime minister on 6 January 2008, he concluded that: Spectrum available to mobile operators in India is much less than in other countries. Traffic density in the larger urban areas of India is much more than in cities abroad, in terms of a unit o measurement called erlang/km2, and that it was over 75 in Mumbai as compared to 10 in Sweden and 15 in Berlin. [This measurement a average a mobile user in India indicated used his that phoneon6-7 times more than someone in Europe.] He concluded, as had the ministry of finance, that ‘ideally in a situation where spectrum is scarce, it should be auctioned’.43 By the time this note reached the prime minister, the DoT had issued licenses. A noting on 11 January by Vini Mahajan quotes the prime minister as stating that the DoT had issued licenses on that day and the prime minister wanted the note to be accordingly modified. Modified for what now? Clearly the stable doors had

been opened and the horses had bolted. What was the prime minister seeking to do with a modified note? Whe Raja had clearly indicated his intention in his 26 December letter and the PMO felt his action required a consultation in the cabinet, why was there so muc hesitation? Even after the so-called modified note was put up to the prime minister by Pulok Chatterji on 15 January, Vini Mahajan recorded that the prime minister still wanted this to be ‘informally shared with the Dept’. Informally, still? Why? Vini Mahajan went on to record that ‘[the prime minister] does not want a formal communicatio 44 How can the and wants PMO to be at arm’s length’. office of the prime minister distance itself from such major decisions? Arm’s length from the action of his ow government? s we now know, the Indian audit and accounts department conducts only external audit, which by definition is a post facto audit. The department is also very clear in its understanding that it is merely an auditing agency and does not enter the area of policy formulatio which is the sole prerogative of the executive or government. This fact has been specifically stated on the very first page of the CAG’s report on spectru allocation: […]

while

accepting

the

government’s

prerogative to formulate policy of UASL, it was felt [by audit] that an in-depth examination of implementation of such policy needed to be done. t no point was the CAG’s establishment seeking to influence, determine, advise or constitute policy formulation. The CAG merely conducted an audit to ascertain whether the laid down procedure/policy of the government had indeed been followed—which, in this case, was the government’s decision to follow the FCFS principle. In fact, the decision to give up the FCFS principle (followed in 2008) in favour of an auctio process for 3G licensing (adopted in 2010) was taken by the government itself, much before the CAG’s report appeared. The auction for 3G was completed on 31 May 2010. The CAG’s report on 2G was tabled in Parliament on 16 November 2010. So where was the question of the CAG masquerading as a player in the policy domain? Furthermore, Raja resigned as telecom minister eve before the presentation of the report.

The CAG’s performance audit process invited a lot o attention and criticism, to put it mildly, and not least for the so-called humongous figure that my team and I ‘conjured up out of nowhere’, establishing the loss to the national exchequer. There was and has been a lot o debate on why the CAG computed the potential or

presumptive loss to the national exchequer. One needn’t go further than the March 2002 auditing standards released under the signature of the then CAG V.K. Shunglu: With regard to fraudulent practice or serious financial irregularities detected during audit or examined by audit, a written report should be prepared. This report should indicate the scope of audit, main findings, total amount involved, modus operandi of the fraud or the irregularity, accountability for the same and recommendations for improvement of internal control system, fraud prevention and detection measures to safeguard against recurrence of fraud/serious financial 45

irregularity. It is clear that audit is duty bound to report on any perceived loss of revenue. It wasn’t only the fact of calculating the loss, but also the methodology of computing it that attracted widespread attention. The formula applied for computing the loss was used after requisite deliberation, and based on a logical understanding of tax laws in India The other option before the audit team was toand useabroad. mathematical or econometric modelling. Such models are premised o certain assumptions, which may or may not hold true i real life market situations and would thus be vulnerable to criticism. Hence, the modelling methodology was give

the go. Audit was also aware that too much was at stake for far too many important and influential people, and it could not take the risk of having its computation being vulnerable to the intense examination it was bound to be subjected to. It was thus decided to use data and other indicators which were already in the public domain. The parameters that were thus used were: the rate offered by S Tel, as against what the government had fixed [S Tel was one of the applicants for spectrum license]; the sale of equity of new licensees, as recorded in the stock exchange; and the rates which emerged after the 3G auction. Parameter 1: Let us accept the contention of the DoT that the FCFS procedure was then the established practice, and that it was only natural for the department to take that route. All the concerned departments, including the PMO, had objected to the entry fee of 2001 being made applicable for new operators in 2008. The DoT decided, against such advice, to charge the entry fee discovered i 2001, even for new licensees under the Unified Access Services (UAS) regime. The entry fee for a pan-India UAS license discovered in 2001 was 1,651 crore. In view o the rapid changes which had catapulted teledensity fro 3.58 in 2001 to 26.22 in 2008, the incongruity of applying that price was staring everyone in the face.

When the DoT was in the process of releasing spectrum at that price, S Tel, one of the bidding companies, wrote to the prime minister (in November 2007) volunteering to pay an additional revenue share of 6,000 crore. In a subsequent communication (dated 27 December 2007), the company enhanced this offer to 13,752 crore over a period of ten years for an allotment o 6.2 MHz. It also offered to increase its bid in the event o a counter bid. These developments occurred much before the LoIs were issued, providing ample time for the government to rethink and re-evaluate its course of action. There could have been no clearer indication of what the market could bear for allotment of spectrum. Had this price been accepted by the DoT, they would have realized 65,909 crore and as against 12,386 crore realized for 122I new licenses 35 licenses under dual technology. fact, upon finding that their offer had not being accepted, S Tel went to the Delhi High Court and got the court to direct the government to reconsider its offer. When even the reconsideration did not yield positive results, the company approached the Supreme Court. This is indicative of their seriousness to pursue their bid. They finally withdrew their bid in March 2010, when their competitors had already got their UAS licenses along with spectrum and had established their infrastructure. Very many arguments based on technicalities have been offered against this parameter being used by the

CAG. However, the entire narration of the sincere attempt by S Tel, and the substantially higher price it was offering in comparison to that fixed by the DoT, is clearly indicative of the revenue foregone by not applying a realistically benchmarked price, based on a reading o what the market could bear. Parameter 2: The total foreign direct investment (FDI) permissible to an applicant company was 74 per cent. The level of foreign investment that several new entrants, along with existing licensees, were able to attract after getting the spectrum license was exceedingly illuminating. In the case of Unitech, which had no previous experience in the telecom business, Telenor, a Norwegian company, agreed to acquire a 67.25 per cent stake for 6,120 crore. Tata Teleservices a 27.31 per Even cent Swan stake Teleco to NTT Docomo at a value sold of 12,924 crore. sold 44.73 per cent stake to Etisalat International at 3,217 crore. Is that not clearly indicative of the value the market attached to the 2G spectrum license? Even a cursory backof-the-envelope calculation will indicate that licenses which could have fetched between 8,000 to 9,000 crore were priced at 1,658 crore by DoT. Hence, one reaches the the inescapable conclusion that the revenue whic could have accrued to the national exchequer was gifted to the new licensees in the form of huge capital infusion for enriching businesses. Can the CAG then be faulted for its

commonsense conclusion? Here again, various arguments have been trotted out that this was for additional equity being infused and was not a direct profit to the licensees. gain, did this not indicate that the scrip of that company could command that price only after being awarded the spectrum license? Parameter 3: The avowed government policy of FCFS gave way to the process of auction for 3G allocation. This was completed on 31 May 2010, and fetched the government handsome revenue. The rationale or logic o this comparison as a parameter for computing loss lies i the CAG taking note of TRAI’s report of 2010, wherein it stated that 2G licensees were, in fact, offering more tha 2G capability: ‘While comparing spectral efficiency and other factors, it is fair to 46compare the existing 2.75G systems with 3G systems’. Hence, we compared the revenue accrual of 2G with that of 3G. And this brought us to the presumptive loss figure of 1.76 lakh crore. These are merely indicative figures. They convey an order o magnitude. No doubt, the media and public imaginatio were captured by this figure, and the government got fixated on it. In computing presumptive losses, we have clearly stated that while the fact of loss to the national exchequer can hardly be denied, the quantum of loss can be debated. We sincerely believe that the government itself validated our computations by debating the loss—from the now

famous ‘zero loss hypothesis’ to the mentioned by the CBI.

32,000 crore

While auditing the telecom department, two exit conferences had already been held, as against the standard practice of having only one conference. The then secretary of the telecom department, P.J. Thomas who, of course, was only a recent entrant to the department, came to see me. He expressed the concerns of his minister, and also mentioned that the minister had gone to meet the principal secretary to the prime minister on the issue. Just as a aside, I asked him why the minister chose to meet the principal secretary, and not the prime minister. Thomas’ response conveyed so much: ‘Myyou minister believes it is not enough to appease the deity, have to appease the pujari [priest] also.’ A remarkable hypothesis, isn’t it? Anyway, the sum total of that meeting in the PMO was a request for yet another exit conference, as apparently the telecom department had additional facts that it wished to apprise the audit team about. We granted the third exit conference. The department’s officials came. When asked about the new facts they wanted to apprise us about, their reply was that they had been asked to meet us, which is why they had come. They had nothing new to offer. All audits, including performance audits, are conducted by audit teams drawn from field offices. Field

offices in the case of state governments are those of the accountants general (audit) in state capitals. In the central government establishment, the principal directors of audit are located in significant places. In the case of post and telecom audits, there is an independent office headed by a director general ranked officer in Delhi. This office constitutes the audit team and conducts audits of either government departments or public sector enterprises under the post and telecommunications ministry through the branch office which is also located in Delhi. The practice is as follows—audit memos are issued after perusing files; once a response to these memos is received, a draft report is prepared by the branch office and sent to the director general’s office. He then verifies the draft and after hisreport own assessments, additions andHere, deletions, sendsmaking the draft to the CAG headquarters. it is examined by a team headed by a director general and the the deputy CAG. Only after this does it reach the CAG’s desk. This procedure was followed to a T for the 2G spectrum audit. The audit of the DoT was conducted by a three-member team of the Delhi branch office of the director general of audit, post and telecommunications [DG (P&T)]. After completing the audit, they submitted a draft report to the DG on 20 April 2010. Among other issues, this report carried a loss figure of 48,374 crore. The DG (P&T) did his own independent study of the draft

and, on 31 May 2010, submitted his report to the headquarters. In his report, the DG (P&T) revised the figure of loss of revenue as estimated by his branch office to 2,645 crore. He mentioned various figures in his draft report and covering letter. Some of these were reasoned out but others were not adequately supported by arguments and documents. The conclusions arrived at by the DG were based only on the audit of the DoT. The DG had drawn attention to a computation made by him on the voluntary offer of S Tel, as per which the loss of revenue to the government would have been 65,725 crore. He had however not included this in his report as he felt the offer had been withdrawn in the High Court. On verification by the headquarters, it was learnt that the offer had actually been withdrawn by S Tel two years later, afterinthe LoIs had been issued, in March 2010, andmuch that too the Supreme Court. Hence, in final computations made, this figure was retained as it was a clear and unequivocal representation of the price that spectrum could command. Using the third parameter, the DG also compared 3G rates with 2G rates and arrived at a figure of 1.02 lak crore. He had, however, not included this in his report o the understanding that TRAI had not recommended charges for spectrum roll out, other than entry fee. However, while not recommending an auction, TRAI (in August 2007) had clearly stated: ‘In today’s dynamism and unprecedented growth of telecom sector, the entry fee determined in 2001

is also not the realistic price for obtaining a license. Perhaps it needs to be reassessed by a market mechanism’.47 The DG’s audit obviously was incomplete because he was not privy to advice by departments such as finance, law and the PMO, having only seen the files of the DoT. He had thus recommended that the headquarters may ascertain the views of the CVC, CBI, ministries of finance, law and company affairs, and TRAI to arrive at a comprehensive picture. The earlier report of the DG (P&T) was thus updated using these parameters and additional inputs which had not been available to the DG when he submitted his first draft on 31 May 2007. The DG, R.P. Singh, himself forwarded this report to the secretary (telecommunications) on 19 July 2007. This draft report, issued under R.P. Singh’s signature, states: If the price of S Tel is used as [an] indicator of market valuation of 6.2 MHz of 2G spectrum at that time, value in respect of all 122 licenses works out to 65,725 crore as against 9,013 crore collected by DoT. Added to this is the value of new licenses for dual technology of 24,591 crore, totalling 90,316 crore. He went on to state:

If price is calculated at 3G rates, which can also be taken as one of the indicators for assessing the value of 2G spectrum […] the value works out to 1,11,511 crore against the 9,013 crore realized by the DoT. [Added to it is the value of dual technology and spectrum beyond contracted quantity of 6.2 MHz to arrive at 1,76,379 crore in the draft report itself.] Any loss ascertained while attempting to value the spectrum can only be ‘presumptive’ given the fact that there are varied determinants like its scarcity value, the nature of competition, business plans envisaged, etc which, in a market condition, would throw up the actual price at a given time […] Its presumptive based in on chapter various 5 available indicators, asvalue, indicated ranged between 90,000 crore and 1,40,000 crore. In addition, the value of additional spectrum allotted beyond the contractual amount to existing nine operators, based on the 3G rates worked out to 36,729 crore.48 I must add that at this stage R.P. Singh certainly did not express reservations in the content of the report that he was transmitting to the DoT. The perusal of the files of the ministry of finance had provided us with very surprising inputs. That ministry was consistently questioning the sanctity of continuing with a

price determined way back in 2001 without any indexatio or current valuation. This viewpoint of the ministry o finance had found resonance among the officials of the DoT. The member (finance) and the secretary had concurred with the view. But Raja disagreed and very vehemently too. This is what he recorded: […] officers have neither up to date knowledge of UAS guidelines nor have bothered to go through [the] file [.…] These types of continuous confusions observed on the file whoever be the officer concerned does not show any legitimacy and integrity but only their vested interest [.…] the matter of entry fee has been deliberated in the department, several times in the light of the various guidelines issued by the department and recommendations of TRAI and accordingly [a] decision was taken that entry fee need not be revised. 49 Vested interests, Mr Raja? The DoT responded to R.P. Singh’s draft. These responses considered andonincorporated by 2010, R.P. Singh. He were then sent his report 28 September which contained the potential losses as they have appeared in the final report. After that, the report was referred for peer review before a committee of five DG level officers. There were detailed deliberations and the

final version was then put up before the deputy CAG and the ‘bond copy’, as it is called, before the CAG. After the bond copy is signed by the CAG, no one ca make corrections in the report without his approval. It is then printed and sent to government with the DG signing and the CAG countersigning. As mentioned earlier, this procedure was followed to the T in this case too. It is not often that CAG reports having such significant discoveries find their way into Parliament. Before putting out such startling conclusions one did deliberate for days. Issues such as whether the department was on firm ground in its findings, facts and figures repeatedly dogged us. What would be the reactions and the consequences? Obviously there would be a backlash. Would we be able to sustain ourselves that and the our professional point of view? I mustinstate most categorically content the department is superb. The officers are apolitical; their factual findings have been uncontested. We decided to take the plunge, as not doing so would have left all of us with a lifetime of remorse and guilt. What we had not factored i was the personal backlash that it brought forth. But then, it is a fact of life—if someone is hit, he will hit back only at his own level. We are not in the least repentant of our actions. The final report was presented to Parliament on 16 ovember 2010. That day, coincidentally, marked 150 years of the CAG’s existence. We had scheduled a major

event at Vigyan Bhawan. The president of India and the prime minister were to participate. A reception was scheduled in the evening at the CAG’s official residence. For the evening reception, the prime minister regretted the invite, as did the president. This was the only reception at the CAG’s residence in any departmental officer’s memory, and that too, for a rare event. The president and the prime minister attend annual receptions at the residences of the directors of the intelligence bureau and the CBI every year. Surely, the Indian audit and accounts department could also do with some encouragement? The prime minister arrived for the function at Vigya Bhawan. He expressed to me his disagreements regarding our conclusions in the report. I mumbled my usual defence. He for. was visibly upset. Silence from my side was called

The fact that the Supreme Court cancelled all 122 licenses is now history. The auction, as per the directions of the Supreme Court, was conducted in November 2012. Only 17,343 crore was received as the bid amount from sale o spectrum in eighteen circles and a one-time fee. ewspapers reported that the government was indeed gleeful that the auction had flopped. Debunking allegations that the government was celebrating the failure of the auction to substantiate its zero loss theory, Sibal said, ‘We

are sad with the situation. But the government is confident of garnering 40,000 crore from spectrum sales as auctio will continue for the unsold circles till March [2013] end’.50 However, the photographs that appeared in the papers when the three ministers held a press conference said it all. One quote read: ‘Poor response to 2G auctio shows policy making should be left to the government’ (Kapil Sibal, information technology and communications minister). Another said: ‘The 2G scam of 1.76 lakh crore 51 is a myth’ (P. Chidambaram, finance minister). Soon the government completed about thirty rounds o e-auction for the allocation of 2G licenses for 900 and 1800 MHz in the four circles that had received no bids i the earlier auction. The amount the government netted was 61,162 crore—close to the figure of 67,000 crore indicated by the CAG, and one-and-a-half times beyond the government’s anticipation (as mentioned by Sibal). Yet, there was no excitement that the government had got a huge amount which would help plug its burgeoning fiscal deficit. There was no press conference by ministers to announce this huge amount the auction had mobilized. It was left to a lowly bureaucrat, telecommunications secretary M.F. Farooqui, to state: […] the government will get at least an estimated amount of 18,200 crore this fiscal (out of the total bid amount of 61,162 crore), much higher

than the budget estimate of 11,300 crore.52 There was no celebration or glee being displayed this time around, despite the huge support to the ways and means position. After the auction, all newspaper headlines carried similar reports. ‘Auction Shows Transparency Pays,’The

Times of India said on 15 February 2014. The Pioneer went on to report: Former CAG Vinod Rai and his team had the last laugh on Thursday when the ten-day-long 2G spectrum auction ended by fetching 61,162crore to the public exchequer. This whopping figure of the 2G auction is much above the threeyear-old 3G auction rates.53 It may be recalled that the CAG report was presented to Parliament on 16 November 2010. The telecom minister changed and Kapil Sibal took over. On 7 January 2011, he held a press conference propounding the now famous hypothesis of ‘zero loss’. In this press conference, while he agreed withand thegoal CAG that shifted, the rulesheand procedures had been ignored posts disagreed on the loss figure. Commenting on this press conference of 7 January 2011, in an editorial titled ‘Zero Credibility’,54 T.N. inan concluded:

If we focus on the reality that the whole country can see, and not the technicalities of government policy-making that Mr Sibal focused on, the issue that remains to be debated is the quantum of loss to the government. Mr Sibal questions the CAG’s figure of 1.76 lakh crore on the perfectly valid argument that you cannot take a 2010 price and apply it to a 2008 situation. But that is what the government itself did, when it took a 2001 price and applied it in 2008, though the telecom scene had been transformed in between. As it happens, the CAG has more than one figure of revenue loss. Several commentators have also come up with numbers, which run into tens of thousands of crores. And because thethese aberrant manner in which Mr Raja handedofout substantial gifts, it became the largest scam in our history. So when Mr Sibal claims zero loss, I’m afraid he carries zero credibility. How true, Mr Ninan! I have dwelt, indeed laboured on this particular case study, as it was the first in the unfolding of a series o misguided actions of a government that seemed to have forgotten its oath to preserve and protect the interests o the nation. It was not as if the primus inter pares or other members of the cabinet were not aware of what was happening; indeed, the whole nation was seized of it. Why

then was the saga allowed to unfold? From day one, the attempt was to live in denial, to shoot the messenger, and if this wasn’t possible, to puncture the credibility of a organization that had withstood all possible scrutiny for 150 years. The now (in)famous conference, propounding the equally (in)famous ‘zero loss’ hypothesis was a precise attempt at doing just this—proclaiming that there was no malfeasance, and that the CAG had erred. Save a few committed journalists and fellow travellers—who could be counted on the fingers of one hand—none bought the myth. This is a story that reflects a lack of probity. This is a story of the total bankruptcy of any pretense of morality. This is a story of the misguided belief that the underlying objective of all actionnation is to and remain in power, and keep a coalition secure—the its people be damned. Hence, this is a story worth narrating.

————————— 29See ‘History Will Be Kinder to Me than the Media, Says Manmohan’, The indu , 3 January 2014. 30Groupe in Speciale Mobile Association , , accessed on 5 July 2014.

31A beauty parade would fix the price of spectrum to ensure optimal utilization by awarding it to the user(s) scoring the highest points against pre-set criteria. 32All letters are in the public domain, having been released by the PMO itself. 33See ‘Manmohan Singh-Raja Correspondence on 2G Spectrum’,The Hindu , in , accessed on 28 July 2014. 34Ibid. 35Ibid. 36Ibid. 37See, ‘Parallel Report in the Form of Dissent Note on the Report of the JPC: Gurudas Dasgupta,’ The Communist Party of India , 8 October 2013, in , accessed on 5 August 2014. 38See ‘Manmohan Singh-Raja Correspondence on 2G Spectrum’,The Hindu , in , accessed on 28 July 2014. 39See Tenth Five-Year Plan, 2002-2007 , in , accessed on 11 July 2014. 60Appu Esthose Suresh, ‘Loss Figure Not Mine: R.P. Singh Told JPC Same’, The Indian Express , 24 November 2012. 61Maneesh Chhibber, ‘CAG’s Latest Ambition: Let Us Audit the Padma Awards Now’, The Indian Express , 4 October 2011. 62D.S. Madhumathi and Thomas K. Thomas, ‘CAG Goes After Another Spectrum Deal’, The Hindu Business Line , 7 February 2011.

7

THE PUNJABI WEDDING: COMMONWEALTH GAMES 2010 Prithviraj Chavan who was then the Minister of State in the PMO, also initially alerted me that I should be careful about releasing funds for the Commonwealth Games. The present CEC, S.Y. Quraishi, who was my secretary in the sports ministry also 63 shared my concerns against wasteful expenditure in the CWG.

—Mani Shankar Aiyar, former petroleum and natural gas minister The CAG report is outdated—it is six to seven months old .64

—Sheila Dikshit, former chief minister of Delhi

he government hosted the XIX Commonwealt Games (CWG) in New Delhi from 3-14 October 2010. It was a prestigious event, the largest-ever sporting activity in the country, with about 5,000 foreig

athletes and 2,000 officials participating. The games were conducted flawlessly. India got its highest-ever medal tally, of 101 medals—thirty-eight gold, twenty-seve silver and thirty-six bronze. The organization of the games was a mammot exercise involving coordination between ninetee different agencies, so as to ready the infrastructure needed to conduct the grand event. However, despite the fact that the contracts to host the games were signed in Marc 2003, there were a large number of reports as late as 2009 regarding tardy progress. While the agencies involved i the preparations attempted to dispel the fears, the voices of skepticism multiplied, and counter-claims were flying in the media and in Parliament. We were obviously reading these reports, which were appearing with disturbing regularity. I would share my concerns regarding these stories with my officers every other day. Apart from being auditors by profession, quite a few of us were keen sportspersons—so the successful hosting of the games was dear to us. One weekend, after the usual game of tennis, we got into a serious discussio regarding the tardy preparations. We thought it was our bounden duty to study the situation and advise the government with an objective report on the state o preparedness of the different agencies for conducting the games. We put together a very professional and capable team, led by K.R. Sriram, the principal director of audit.

We were clear that this was not an audit under Article 151 of the Constitution, but merely a study designed to assist the government with an objective assessment of the stage of preparedness. This would provide practical and assistance to the administration, and help the government take remedial measures and effect mid-course corrections for those projects woefully behind schedule. Towards this objective, audit conducted the field work between March and May 2009, and brought out the report in July 2009, after holding the exit conference wit various stakeholders that month itself. I would like to emphasize that the exit conference was in July and that the report was submitted in the same month; hence our findings were totally up-to-date in terms of the physical status of different projects. Rather than appreciating the useful inputs provided to them and identifying the high risk areas in terms o progress, the government became defensive and started picking holes in the report. While I could understand suc statements emanating from officials trying to cover their inadequacies, I was really disappointed when the chie minister of Delhi echoed similar sentiments stridently, saying that our report was outdated and that the projects were, in fact, on track.65 I wondered why a public leader of her stature would jeopardize the reputation of her city, and the pride of the nation, merely to condone the sloppy work of some officials.

It did not end there. As several agencies of the government were involved, the cabinet secretary designated different officers with the responsibility o replying to the deficiencies highlighted in the report. Little did they realize that we were not seeking responses to our observations. The entire exercise was to assist them i identifying the weak spots. If they felt things were on trac and we were off track, they could have ignored our study and moved on. While India and the rest of the Commonwealth saw one deadline disappear after another, and desperately waited for reassuring voices from the government, M.S. Gill, the sports minister at that time, made a most distressing statement. Organizing the games, he said, was like a ‘Punjabi wedding’—things would be done at thehosting last moment, but all would be done well. Describing the preparations for the games as jugaad, the minister, continued with the wedding analogy, saying that ‘you keep collecting ladoos [sweets] and flowers till midnight, but early morning you get the garlands and ladoos and hope the baraat [wedding party] is happy.’66 The minister was living in a make-believe world, totally oblivious to ground realities, and worst of all, applauding one of the most regrettable aspects of our psyche—jugaad. We were shocked to hear him speak thus, and just to rejig my memory, I went back to our report. What did it say? The Aquatic Complex, the completion date for whic

was October 2009, was only 42 per cent complete. The Siri Fort Sports Complex, again a competition venue, was to be completed by December 2009; yet at the time o filing the study report, it was only 46 per cent complete. The Yamuna Sports Complex for archery and table tennis, which had to be completed by December 2009, was only 7 per cent and 46 per cent complete for the respective games. This level of preparedness has to be compared wit that of the city of London for the 2012 Olympics. Londo had achieved 74 per cent completion for the 2012 event i 2009. The idea guiding this was that at least two years ahead of the Olympics, different venues would be available for training, familiarization and for the testing o facilities. fare ready in comparison? We were hoping to How have did our we spaces by the morning of 3 October 2010, the date of the inaugural ceremony, very much like a Punjabi baraat. Professionalism? No. The government, from its highest echelons, was not just prescribing jugaad but applauding it too. The organization of the games was no doubt a mammoth exercise. There were seventeen venues to be readied and tested to Olympic standards. Thirty-one agencies had a variety of roles and responsibilities; evidently, a well-knit coordinating arrangement had to be in place. Amongst the agencies were the Delhi Development Authority (DDA) headed by the lieutenant

governor of Delhi, the state public works department (PWD) headed by the chief minister of Delhi, and the central public works department (CPWD) controlled by the ministry of urban development. The ministry of sports was the nodal agency. The organizing committee, headed by Suresh Kalmadi, the chairperson, had the ultimate responsibility for conducting the games. While these elaborate arrangements looked tidy on paper, the mai problem was that each institution was headed by a chie who zealously guarded his turf. There was no overarching body which could put all the pieces together.

It is instructive to go back in history to understand the creation committee indeed, the ‘birth’ of of thethe XIXorganizing CWG in India. It was and, in May 2003 that the Indian Olympic Association (IOA) submitted a formal bid to the Commonwealth Games Federation (CGF). After the the Government of India, the lieutenant governor o Delhi, and chief minister of Delhi gave guarantees to underwrite any shortfall between revenue and expenditure in September 2003, the CGF voted to allot the XIX CWG to Delhi. The Host City Contract was signed in November 2003. The May 2003 bid document had detailed the nature of the organizing committee as a non-profit, governmentowned and registered society; the executive board was to have a chairman, a government appointee, and the vice

chairman would be the IOA president. Very categorical. Most mysteriously, in the course of the CAG’s performance audit subsequent to the games being completed, the audit team discovered an ‘updated’ bid document which was datelined December 2003. No one could explain the source of this document, given that the bid had been made in May 2003 and the Host City Contract signed in November 2003, one month before this ‘updated’ bid document. There was no logic or relevance to an ‘updated’ bid document. Its irrelevance notwithstanding, the document was significant in that there was a marked difference in the nature and structure of the organizing committee from what appeared in the May 2003 document: while the srcinal document described the organizing committee as being a government-owned registered society, the ‘updated’ document showed it as a non-government registered society. Moreover, whereas the former document had indicated that the chairma would be a government appointee, and the vice chairma would be the IOA president, the latter document omitted any references to the chairman necessarily being a government appointee or the vice chairman being the president of the IOA. No one took responsibility for this document. And yet it turned out to be the foundation for the final organizational structure—the most credible document. In fact, this document formed the basis of a letter that

Suresh Kalmadi, president of IOA, wrote to the prime minister on 23 October 2004, stating that the then sports minister, the late Sunil Dutt, did not have the correct perspective on the role of the IOA in the games. He also observed that the games had been allotted to the IOA and, as such, the association was responsible for ensuring the successful conduct of the games. Extending this logic, Kalmadi went on to apprise the prime minister that the organizing committee had to be formed by the IOA and approved by the general assembly of the IOA. The prime minister chaired the first meeting of the GoM—a core group constituted under the late Arjun Singh, the former human resource development minister, to coordinate the work related to the organization of the games—on 25 October next day, wrote to the prime minister 2004. again The suggesting thatKalmadi he (Kalmadi) should chair the organizing committee, and that the sports minister could chair the ‘steering committee’—a totally new creation. Sunil Dutt wrote to the prime minister expressing surprise at Kalmadi’s assertions.67 Even more interestingly, he expressed opposition to the minutes of the GoM of 25 October 2004, asserting that the minutes of this GoM meeting did not fully reflect the trend of the discussions.68 His assertion was found to be true since, as per government procedure, draft minutes of the Go minutes has to be submitted by the ministry; what came

back from the cabinet secretariat after being approved by the prime minister was divergent. In December 2004, the PMO wrote to the ministry o 69 had bee sports stating that ‘institutional arrangements’ evolved for the conduct of the games and that Sures Kalmadi should be the chair of the organizing committee and the executive board. This was endorsed by the Go meeting of January 2005. On 10 February 2005, the organizing committee was registered under the Societies Registration Act of 1860, with Suresh Kalmadi as the chairman by name, and not as the president of the IOA. Suresh Kalmadi had arrived.

Let me explain the model of governance formulated to deliver the games. The organizing committee, the ape body, had 484 members (though this number was later reduced to 454), with Kalmadi heading it. Twenty-three sub-committees were carved out of the organizing committee to extend advice in functional areas. There was another eighteen-member executive board of the organizing committee. This had only two government nominees, and Kalmadi chaired it. The day-to-day financial and administrative decisions were taken by yet another body, the executive management committee, chaired by Kalmadi, which had as members Randhir Singh, Lalit Bhanot (secretary general) and A.K. Mattoo

(treasurer). The organizing committee thus became a parallel nongovernmental entity with no accountability to the government or concomitant controls to ensure propriety and transparency, despite full funding from the government. This, in fact, proved to be its undoing, as subsequent events revealed. It is strange that we did not refer to the institutional structures which had successfully delivered the Asia Games in 1982. The 1982 Asian Games had a special organizing committee, with a cabinet minister level perso heading it (Buta Singh). This was not only the nodal coordinating body but also had overriding powers over other agencies to ensure a holistic approach. None of the glitches went through seem to have affected the 1982 CWG Asian 2010 Games. The other case in point is the conduct of the Melbourne CWG 2006. A large Indian contingent— comprising, among others, officials of the central and state (Delhi) government and the IOA secretary—visited Melbourne to make an on-the-spot study of their governance structure. The regional government of Victoria was made responsible for the overall supervision and conduct of CWG 2006 through a specifically formed cabinet sub-committee, drawn from key departments, and chaired by the prime minister. There was a specially appointed minister for the CWG (Justin Madden), and he

was responsible for administering the Commonwealt Games Arrangements Act 2001. Under the Act, he had wide-ranging powers for the planning and the delivery o the games infrastructure which included venues, project orders and crowd management. This clearly established the fact that the games were the sole responsibility of the government and a clear hierarchical and unitary structure was created for its management. It is rather surprising that the huge Indian contingent of 139 people who went to study this did not come back and report these facts to their parent departments. Most importantly, it was only to help the government in this regard that we took the initiative for the study report in July 2009. The purpose of the study was to give specific recommendations—considering the complexity and multiplicity of activities and the different claims and counter-claims of the participating departments, there was a need to rethink the entire governance model for the timely delivery of the games. There was no attempt to criticize or find fault. The objective was to help the government in its endeavour to stage a world-class CWG which would do India and Indians all over the globe proud. On the first page of the report, it has been specifically mentioned: We hope that the report, which has been prepared by us as independent auditors with an arm’s-

length approach from the implementing agencies, will serve as a checklist and a ready reckoner to benchmark further progress toward preparing the infrastructure and in staging the games […] Much time has been lost and it is imperative to move forward with the new found sense of urgency tempered by the realization that crashing of timelines and bunching of decisions carry with it the heightened risk of compromising transparency, accountability and structural safety of the venues.70 Despite such warnings, with twelve days to go for the games, a suspension pedestrian overbridge near Jawaharlal Nehru Stadium, the main venue, collapsed. n intriguing event in the CWG saga was the appointment of a high level committee on 15 October 2010 (the games ended on 14 October 2010) to examine irregularities, i any, that had been committed by any agency. This came o the back of an atmosphere rife with allegations o wrongdoing. Every activity invited adverse notice. The electronic media made a certain toilet in the Games Village—and the organizing committee’s Lalit Bhanot’s statement that the standards of hygiene in India are different71—famous across the globe, to drive home the country’s unpreparedness. Possibly to downplay suc

allegations and to quell the groundswell on the very morrow of the closing ceremony of the games, the constitution of a high level committee, with its chairma having the status of Supreme Court judge, was announced by the government, to examine the ‘weaknesses i management, alleged misappropriation, irregularities, wasteful expenditure and wrongdoing in the conduct of the games’72 and recommend action. The chair of the committee was a former CAG, V.K. Shunglu. This is rather strange because, on the one hand, the government was crying hoarse about the excesses of the three Cs—the CAG, the CVC and the CBI—and, on the other hand, it was getting a probe done obviously in addition to what the CAG would do—thus scoring a self-goal. I distinctly remember ringing up the cabinet secretary, K.M. Chandrasekhar, to ascertain if what the papers were saying was indeed true. Chandrasekhar, at home due to a foot ailment, evinced no information. The argument that the committee would deliver its findings earlier than the CAG audit also didn’t hold water, as the CAG audits had telescoped the timespan and were appearing rather fast. ny further collapsing of time would not be fair to the audited entities as they would not get a fair opportunity to respond to the queries against them. In fact, we did submit our report, all of its 743 pages, by about February 2011. But that is not the issue. The cabinet secretary wrote to me on 23 April 2011,

enclosing extracts of the recommendation of the chairma of the high level committee as sent to the prime minister, addressing the oversight mechanism for the games. The extract enclosed was pertaining to the CAG. One of the observations was: CAG by statute was obligated to audit the expenditure of the CWG. This expenditure was incurred by government entities, eg, CPWD, DDA, etc, and the OC [organizing committee]. CAG reports from 2004 to 2009 did not display significant material on the entities. Even though by that date all contracting had been completed, considerable expenditure had been incurred and a great deal of wrongdoing, which has now been elucidated, had taken place. CAG did not audit the OC even though he was obligated to do so by Section 14 of the Act, declined to do so in 2007 when the government following a Cabinet decision requested him to take up this work, and commenced audit at the end of 2008 under Section 21 which was inappropriate. It is another matter that the audit, commenced in NovemberDecember 2008, remained incomplete to this date. Clearly there has been a failure of audit.73 So added to all the politicians who were happily criticizing the CAG, here was a former CAG faulting his

two successors; an executive appointed committee taking potshots at a constitutional body. Or was he meant to do so —hit at the credibility of the CAG who had, by then, come out with the 2G report? It is a different matter that the high level committee was factually inaccurate on the various audits of the organizing committee, the history and results of whic incidentally have been covered on the first page of a 743page report, in chapter three, ‘The Audit Approach’. But that is still not the issue. The enclosure of recommendations of the high level committee sent to the prime minister and forwarded for my comments by the cabinet secretary also had the following recommendation, inter alia. CAG organization is a monocracy no longer conducive to efficiency, outcome and accountability. A three member body would obtain greater transparency in its operations. One member should possess professional accounting qualifications, CA or its transnational equivalent. This should not seem to exclude an Indian Audits and Accounts Service officer from the triumvirate, who has wide exposure to finance, audit and accounts and best international practices in these areas. CAG accounts should be audited by a professional auditor appointed by the Public Accounts Committee.

This was a very interesting recommendation—just the thing that the likes of V. Narayanasamy, minister of state i the PMO, was reported to be partial to: ‘Making the CAG a multi-member body, as recommended by the V.K. Shunglu Committee, is under the active consideration o the government’.74 He even publicly stated that the recommendation had been presented to a committee o secretaries. What was a high level committee doing— constituted to report on the conduct of the CWG— dabbling with recommendations on the structure of the CAG, regarding which the Constitution (in Article 148) is very clear: ‘there shall be a CAG’ [emphasis mine]? And where did the question of the CAG’s accounts being audited arise from? We set about preparing our reply to the recommendation. One of the best features of the government is its remarkable capacity to retain, access and manage institutional memory—efficient even in the pre-digital era. Government files throw light on the deepest of mysteries. It was recalled that the national commission to review the working of the Constitution, popularly known as the ‘Justice Venkatachalia commission’ had also made some references to such a suggestion in 2001. The CAG had examined the suggestio and given its response. This response was dug out to facilitate a seamless and consistent response. Our position was that, globally, there are different

models of unitary or multi-member bodies of supreme audit institutions. While the professional qualifications o the member(s) of the multi-member audit bodies differ from agency to agency, the common thread running across multi-member bodies is that they are empowered wit quasi-judicial powers of audit and adjudication. This is the provision prevalent in democracies with multi-member audit bodies such as France, Korea, Norway, Japan, Portugal and Spain. Commonwealth countries following the Westminster model of parliamentary democracy such a Canada, UK, Australia and New Zealand have single member audit bodies. The US Government Accountability Office is also single member. They have the right to approach a court of law for enforcement of audit rights suchWe as access documents. pointedtoout to the government that models such as the one in France sit as quasi-judicial bodies (cour des comptes) and, besides having the power to summo records or undertake physical verification, they are empowered to take punitive action. The audit office is assisted by a public prosecutor, advocate general and advocates who are also magistrates. Hence, the multimember body, with a chief called the ‘premier president’ of the cour des comptes, has far-reaching powers, including the right to punish erring officials. This applies to Norway, Spain and Korea too. In fact, the auditor general of Austria, though having monocratic status, also

has the power to take punitive action. In Japan, the supreme audit institution includes a board of audit, whic is multi-member, with a chairman; they, too, have wideranging powers. We thus left the decision to the government after apprising them of the models prevalent in different global urisdictions. If the government were to adopt a multimember body, they had to bestow it with concomitant wide-ranging powers—powers that the present CAG does not possess. It was also pointed out that the CAG is presently assisted by a multi-member collegium of five deputy comptrollers and auditors general who are professionally qualified and rich in experience. The government was also informed that, in September 2001—in response to the queries from theof the Justice Venkatachaliah commission—with the approval the CAG, V.K. Shunglu, a similar response was sent. Obviously it was decided to continue with the monocracy. How the situation, environment, government functioning and other parameters had changed, prompting a fres recommendation, were not known. Even as Narayanasamy gave great publicity to the recommendation of the high level committee, early ovember 2012 brought forth a huge number of statements decrying the attempts of the government to dilute the CAG’s powers. I did not enter the media space for any o these issues, but the moot point is that making the

institution multi-member does not in any way dilute its powers. We have the classic example of the electio commission, which was made multi-member post T.N. Seshan, the tenth chief election commissioner of India. I politicians and political parties generally fear any agency, it is, in fact, only the election commission. Even today, issues such as new bank licenses, gas price hikes, or the appointment of a new chief of naval staff get referred to the election commission if an election is in the horizon. Hence, making the CAG’s office multi-member and entrusting it with the concomitant powers that go with suc a model would have given the institution the muscle that it woefully lacks today. However, seeing the groundswell of opinion from all corners, the11government decided to recant the process. By November 2012, Narayanasamy cameentire out with the usual denial of being misquoted or quoted out o context by stating, ‘I did not say so [to make the CAG a multi-member body]. In fact, I was not specifically asked about CAG […] There appears to have been a 75 unsuccessful attempt to put words in my mouth.’ By December 2012, the government had done a complete one-eighty-degree turn. Replying to a question i Parliament on the appointment process of the CAG, the ministry of finance stated: There is no urgent concern about CAG being partisan or working in favour of the government

or a particular political party. As [the] custodian of public purse, [the] CAG has played the role of a vanguard in reporting on financial irregularities, irrespective of the government in power.76 Matters went a step further. To counter a possible perception in the Supreme Court on the independence o the information commission—of which, some members were recently-retired government officials—the attorney general stated, ‘We have a CAG who was a former finance secretary. Can it be said that he is loyal to the government?’77 The issue of the structure of the CAG appeared to have been laid But what was the clinching factor accounting for totherest. government’s change of heart? The outcry against a perceived attempt at dilution? Not really. The dominating factor motivating their U-turn was the rather late realization that the Constitution (Article 148) stated: ‘There shall be a Comptroller and Auditor General of India’ [emphasis mine]. Hence making it multi-member would require a constitutional amendment, which in tur would require a two-third majority in Parliament. This would have been impossible for the government. This provision is distinct, quite unlike the provision for the election commission, for which Article 324(2) of the Constitution reads: ‘The Election Commission shall

consist of the Chief Election Commissioner and suc number of other Election Commissioners, if any, as the President may from time to time fix […]’ This realizatio was echoed by Narayanasamy when he stated that ‘any change in the CAG’s basic functioning would require a amendment to the Constitution, which was not even on the government’s agenda’.78 Well stated, Narayanasamy. At least the limitations were realized, albeit rather late. As regards the suggestion by the high level committee to have the accounts of the CAG audited by a chartered accountant appointed by the PAC, the suggestion in itsel was preposterous. The CAG is the supreme audit institution in the country. A direct analogy would be that o the Supreme Court, the highest court in the land. So the suggestion was tantamount to a lower court being appointed by Parliament to audit the judgements delivered by the Supreme Court. In any case, the department explained to the cabinet secretary that the only items o expenditure incurred by the CAG through the department’s own budget were salary, travelling allowance and office expenditure. Budgetary devolutions towards buildings and construction lay within the CPWD’s budget which, in any case, gets audited. The CAG does not deliver any other governmental scheme or project. Thus there is hardly any sizeable expenditure. Even so, Article 151 of the Constitution vests the power of audit in relation to accounts (including the accounts of the CAG and his

department) with the CAG. Entrustment of the audit of the CAG’s accounts to any other authority would be ultra vires of a constitutional provision. This interpretation was upheld by the attorney general at the time of framing of the CAG’s (Duties, Powers and Conditions of Service) Act 1971, popularly referred to as the Audit Act. I was conscious that questions such as ‘who audits the auditors’ would arise. We were sensitive to this issue and, in any case, in the interest of transparency, it would be a healthy tradition to have our processes and procedures audited by a peer agency. Since, the CAG is the supreme audit institution in the country, we decided to request any other equally competent supreme audit institution to audit or peer review us. We thus asked the auditors general o USA, UK,toAustria and Australia if they could response our request, the national audit‘audit’ officeus.oI ustralia agreed to lead an international peer review tea of thirteen persons, comprising five of their auditors—two from Canada, two from Denmark, two from the etherlands and two from the USA. This team spent about seven months on the job, and even visited some of our state-level offices, and gave its final report in October 2012. This report was uploaded on our website immediately. It is in the public domain. We have accepted and acted upon all the recommendations. I sincerely feel there cannot be any other paradigm of transparency or healthier practices.

I do not propose to dwell at any length on our findings while auditing the different projects of the CWG, as they are dealt with in detail in the 743-page report submitted to the government within six months of the completion of the games. However, the modus operandi was significant, i that it left much to be desired. Mismanagement and the flouting of governmental norms appeared to have been the norm. Let’s look through a few vignettes which are representative of the entire problem. The IOA bid of May 2003 estimated an all-inclusive cost of 1,200 crore. As against this, the budget estimate in 2010 was 18,532 crore. And this excluded the Delhi Metro RailAirport Corporation (DMRC), the Delhi International Limited (DIAL) and others. The organizing committee consistently projected the games as revenue neutral, if not as revenue surplus. This argument was trotted out to justify the independence and financial autonomy of the organizing committee. It’s a different matter that the organizing committee’s revenue projections were seriously flawed. In March 2007, the revenue projected was 900 crore, and in July 2008 it was enhanced to 1,780 crore. There was no robust basis for this projection, other than possibly increasing the revenue projections so as to match the rapidly increasing operating expenditure—all in an effort to

seemingly justify the financial autonomy of the organizing committee. The revenue actually realized was 173.96 crore. Sponsorship revenue had been projected at 960 crore; 375 crore was realized, and that too when two-thirds of this was contributed by the public sector enterprises following a government directive to them to take up sponsorship. The organizing committee had projected 300 crore from donations/raffle; the realization was 0.99 crore. The organizing committee was responsible for tendering the catering services in the Games Village as well as the various sporting venues. The processing of the contracts meandered, taking over fourteen months. The chairma cancelled the first tender, a single This bid, was against the recommendation of his own officials. despite the single bid document being opened on the verbal instructions of the chairman. Re-tendering happened i June 2010. Transparency, quality and economy became casualties. The preparation of the venues was similarly haphazard. Various projects, including the Shivaji Stadium, could not be completed on time. When completed, this stadiu has an east-west orientation, as against the prescribed north-south orientation. Many projects lagged so far behind schedule that they had to be delinked from the staging of the games.

The CAG’s performance audit concluded that the organization of the games was negatively impacted by inexplicable delays in decision making, which put pressure on timelines, thereby creating artificial alarm and urgency and a misplaced sense of emergency. This obviously necessitated exemptions from laid-dow governance processes. Contracting procedures became a casualty. Many contracts were entertained on single financial bids, and some even on a nomination basis. This led to an elimination of competition. Consequently, the economy of expenditure and all hopes of protecting the government’s financial interests were thrown to the winds. The inescapable conclusion would be that this was, i fact, the intended objective. An article in theHindustan

Times sums up the situation: A year later, and nine months after the Games, government auditors and financial investigators were staring at possibly thousands of crores of public money that went down the drain or vanished from the books of Kalmadi’s seat of power: the organizing committee. But in its final audit report of the Games—one of its most thorough probes—tabled in Parliament on Friday, the CAG said it had sounded an alarm about the Games long before anyone sniffed any foulplay. In a report submitted to the Centre in July 2009, the CAG had said, ‘There was a need to rethink

the governance model for the Games Project.’ The study report, which is not really a financial audit like the present one, could not have been more explicit. But no one listened. That’s not all. Kalmadi and Co. had organized the Youth Commonwealth Games in Pune in 2008. In that too, the CAG had found unmistakable signs of fishy dealings. But again, everyone turned a blind eye. The 743-page report goes through every shred of evidence across 33 departments in the central and state governments in Delhi and Maharashtra. In the end it pulls no punches in naming the high and mighty at all levels—be it Delhi Chief Minister Sheila Dikshit or even PM Manmohan Singh—along with the now-jailed Suresh Kalmadi […] 79 The unfortunate tragedy is that despite the detailed and obvious highlighting of flaws, irregularities and certai obvious acts of mala fide, there didn’t appear to be any credible attempt to establish accountability. It will be a great travesty of justice if the big fish get away and only some lowly engineers and officers land up in the CBI net. There will be no deterrence. No demonstration effect. No learning from past mistakes. No good practice absorbed and no established model of governance which can deliver a similar event smoothly next time around. Unfortunately, the whole CWG project was premised

on a bedrock of obfuscation, lies and misdirected representation designed primarily for personal projectio and aggrandizement. From day one, it was the messenger who was being placed in the dock. From day one, the rogue elements were being propped up. What was the signal being sent? The signal was that the malfeasant acts of a coterie would be allowed to go unchecked; the leadership would shut its eyes to the shenanigans and machinations of a few who had been entrusted the prestige of the nation. Once this message emerged, the others also oined the party.

————————— 63In an interview to NDTV, 4 July 2011. 64Commenting on the study report of the CAG on its preparedness for the Commonwealth Games, 2010. See ‘CAG Report 6-7 Months Old: Dikshit on Games 2010’, 14 September 2009, in NDTV, , accessed on 29 April 2014. 65See ‘No Need to Panic, Games on Track: Sheila Dikshit on Delhi Games’, DTV, 31 July 2010. 66See Rajdeep Sardesai, ‘Organising CWG is Like a Punjabi Wedding’, BNLive , 30 July 2010, in http://ibnlive.in.com/news/organising-cwg-is-like-a< punjabi-wedding/127870-5-23.html>, accessed on 29 April 2014. 67See ‘CWG Scam: M.S. Gill, Sunil Dutt Has Warned PM on Suresh

Kalmadi’, India Today , 4 July 2011, in http://indiatoday.intoday.in/story/cwg< scam-ms-gill-sunil-dutt-warned-pm-on-suresh-kalmadi/1/143659.htm l>, accessed on 30 April 2014. 68See ‘Performance Audit Report’, in CAG, , accessed on 12 July 2014. 69See ‘PMO Appointed Kalmadi Despite Sports Minister’s Objections: CAG’,

NA, 5 August 2011, in http://www.dnaindia.com/sport/report-pmo< appointed-kalmadi-despite-sports-ministers-objections-cag-1572851 >, accessed on 30 May 2014. 70See CWG, in