Didn't overstep mandate on 2G spectrum audit; loss was notional not actual: Former CAG Vinod Rai
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00:00 See, we did an audit and we found that by following a certain procedure, the government
00:05 was deprived of a certain amount of revenue, which we called a presumptive loss.
00:10 People have questioned the word presumptive, but the presumptive is very much a part of
00:13 the audit lexicon and it's been accepted worldwide, so no two ways about that.
00:19 But the more important thing is the perceptions.
00:23 And perceptions will be, see, when you are hauled up in the court, there's a prosecution,
00:29 there's a defence.
00:31 Prosecution will make its point and the defence will make its point.
00:34 Hello and welcome to Outlook Bibliophile.
00:44 We have with us today Mr. Vinod Rai.
00:47 Mr. Rai, through a very long and illustrious career as an administrator, as a bureaucrat,
00:55 has drawn many hats.
00:56 He's including that of India's Comptroller and Auditor General and he's also the Supreme
01:04 Court appointed Chairman of the Committee of Administrators that's looking into the
01:10 affairs of the BCCI, it's functioning.
01:15 Mr. Rai, in recent public memory, is possibly known more for his CAG reports during the
01:24 UPA tenure from 2008 to 2013.
01:30 Many even credit his reports, the CAG reports on the 2G scam or the coal block allocations
01:38 as the reasons that brought down the UPA government.
01:42 And he's done a book on his years as the CAG, which was his first book.
01:52 And now he's out with his next, which is Rethinking Good Governance.
01:59 And this is a book that comes at a crucial juncture because this is the time when we're
02:10 seeing various voices from the political spectrum, the social institutions, social activists,
02:17 talking about what very often is said a crisis of credibility in public institutions of the
02:25 day.
02:26 So let's see at what is the appraisal of various public institutions that Mr. Rai has done.
02:37 Welcome to Archibald Uphill, sir.
02:39 Thank you.
02:40 Thank you very much.
02:41 Sir, why Rethinking Good Governance?
02:45 Let me start with that.
02:48 Well, you know, good governance is the basis of any country's administrative setup.
02:54 It's only good governance which helps government to be able to deliver economic development,
03:00 to be able to deliver social welfare benefits to the public at large.
03:05 Why I've called it Rethinking Good Governance is that as countries develop, as society undergoes
03:12 a change, it's need for the public institutions of any country also to be dynamic and to be
03:18 able to adjust, adapt and fashion itself to the societal changes that are going around.
03:26 So I mean, for example, the Supreme Court has come out with certain verdicts on Article
03:31 377.
03:32 60 years back, it would not have.
03:38 The social conditions may not have accepted it so much, but that's why the Supreme Court
03:43 is also one of the institutions that I pointed out as an institution which has been able
03:49 to dynamically adjust itself.
03:51 So the sum total of all that I've tried to establish in this is that there are certain
03:56 parameters for good governance.
03:59 Every institution must possess them and every institution must be able to adjust to the
04:03 environment that is playing around.
04:06 Now, through the course of this book, Mr. Rai takes us through what, in his opinion,
04:14 should be a critique and a solution or his advice on how things should help various public
04:27 institutions come out of the kind of crisis that we're looking at.
04:33 He's looked at different institutions like the Parliament, like the RBI, the CBI, the
04:39 CBC, the CAG and sports administration bodies.
04:47 We've seen over the last five years and in fact, the last two decades or so, the Parliament,
04:55 which is your first chapter and you go at great length in analysing the functioning
05:00 of the Parliament.
05:01 There's very little of the actual work that Parliament is mandated to do of legislation
05:09 of debates and there's more of disruption.
05:12 We had during the UPA days, which possibly one could use your CAG report as the trigger
05:22 when Mr. Arun Jaitley and Mrs. Vashma Swaraj, the leaders of opposition in both houses,
05:26 said that disruption is also a form of democracy and is a tool for a vibrant democracy.
05:34 But that seems to have become more of a rule than an exception.
05:40 You may see more disruptions than actual work.
05:44 How do you see the functioning of the Parliament?
05:47 You see, why Parliament is my first chapter.
05:51 In a democracy, the most important stakeholders are the public.
05:56 The public elect their representatives and put them into Parliament.
06:02 And those parliamentarians then legislate on behalf of the public.
06:07 So it's absolutely incumbent upon those parliamentarians to be able to be responsive to public needs.
06:14 And how can they do that?
06:16 Now they can do that by discussions, debate within the Parliament.
06:20 Now any institution, in this case take the Parliament, is not known or recognized merely
06:28 by the architecture of the building within which it sits.
06:32 The institution is known better by the kind of people who populate that institution and
06:38 the people who then function as per the mandate of that institution.
06:43 Now, so let's take the case of the Parliament.
06:47 Number one, the track record of the people who are elected and come into Parliament.
06:52 Number two, the capacity, their capacity to be able to debate issues to the depth at which
06:58 they could go.
07:00 And then after debate, come to a consensus, or not necessarily come to a consensus, but
07:05 by majority, come to a decision which is the sum total, the nichod as we say in Hindi,
07:13 of the crux of the matter.
07:16 And that's the way they deliver to the public whatever is the issue.
07:20 Now my feeling is that if you are doing disruptions, the public is not getting the benefit of debate.
07:29 And that's why the example that I've drawn in this book is that just about the most important
07:34 document that any government brings about in a year is the budget document.
07:41 And the budget document, there are pluses and minuses in it, there's a pros and cons
07:46 in it.
07:47 There is a very healthy debate which goes on for about 20 odd days on that budget document.
07:51 And I, as a stakeholder, as a man in the public, need to be told about what my parliamentarian
07:59 is discussing about that budget document.
08:02 And I am denied the benefit of that debate when a disruption takes place.
08:07 And that's why I think disruptions are not the most healthy thing as far as parliament
08:13 is concerned.
08:14 You call the CAG the fifth pillar of democracy in your book.
08:17 Now of course you've been the CAG yourself.
08:21 Your reports, particularly on the spectrum scam, and you've gone again in greater detail
08:28 in the book, you mention how Dr. Manmohan Singh, I mean three that I can immediately
08:36 recall, Dr. Manmohan Singh, Mr. Sharad Pawar and Mr. Veera Pamoly, if I'm right, how they
08:43 possibly misinterpreted the mandate of the CAG.
08:48 Because one big question mark that was raised by the then government was that you had overstepped
08:54 your mandate as the CAG while talking about the loss, or the notional loss as you mentioned,
09:02 to the exchequer in the allocation of spectrum.
09:06 What exactly is the mandate?
09:08 And did you overstep your mandate?
09:10 Okay.
09:11 See, what we were being questioned for was whether we had the mandate to do a performance
09:18 audit.
09:19 Okay.
09:20 Now a performance audit is by definition a step more than the conventional type of financial
09:28 or transactional audit that is done.
09:32 And it's of more recent origin.
09:37 Performance audit must have started about maybe '95 or thereabouts.
09:41 Conventional audits have been in position for a long period of time.
09:45 Now performance audit goes a step further in the sense, and just to take an example,
09:50 suppose the accountant general was doing a performance audit of say, let me call it the
09:56 midday meal scheme.
09:57 Right.
09:58 You've heard of it?
09:59 Yeah.
10:00 So, if he were to do a conventional audit, he would go and check how much was the money
10:04 allotted to that scheme, 100 rupees.
10:08 Whether the 100 rupees has been properly spent under the right heads, accounted for in the
10:14 ledger, and finally, after the expenditure has been done, whether your utilization certificate
10:20 has been provided to the agency head or not.
10:23 If all that has been done, he'd be content.
10:26 But if the same accountant general was doing a performance audit of the midday meal scheme,
10:32 then he will go one step further and find out what is the objective of the midday meal
10:37 scheme.
10:38 The objective is to increase the nutritional content within any one child.
10:45 Number two, to ensure that dropouts from the school are much less.
10:52 Because if you give a midday meal scheme, it's an attraction for the child to come to
10:55 school.
10:56 To check whether more girl childs are being recruited or not.
11:00 I mean, these are just two or three examples that I've taken, the objectives are much more.
11:03 Now, he will check each one of those objectives, whether they have been fulfilled by the expenditure
11:08 of that 100 rupees or not.
11:10 Now, quite often it happens in performance audit that you are looking into the sub-optimality
11:19 of that delivery scheme, or delivery of that, the implementation of that scheme.
11:24 And hence you tend to comment upon it.
11:27 And that's why performance audit at times gets onto the wrong side of the executive.
11:33 And that's why people have commented upon it.
11:36 But your case is that performance audit is very much within the mandate of the CAG.
11:42 Okay, I should have clarified that in the beginning.
11:44 It's a yes, performance audit is within the mandate.
11:49 The audit mandate of the CAG, which is a statute, mentions it.
11:55 But more importantly and more recently is that the government and the finance department
12:00 itself on 16th June 2006 has issued a government order.
12:07 And that is made applicable to all the departments of government, ministries of government, that
12:12 the CAG is empowered to do performance audit.
12:17 And when the CAG decides to do performance audit, please cooperate with that audit process.
12:23 Did you get cooperation when you were doing your audit?
12:25 100%, no doubt in my mind about that.
12:28 So that's why I was very surprised when people were questioning it.
12:33 The doubt that arises in people's mind is, well, the CAG unearthed a scam.
12:39 Why did he not scam, interfere when the scam was unfolding?
12:44 See because that's the difference.
12:46 The difference in perception is, you know, the CAG's audit is a post-factual audit.
12:53 One day event is over, the records have been set, the accounts have been closed, then the
12:56 CAG comes into audit.
12:58 Whereas if it has to be checked in between, there is a process called internal audit.
13:04 And internal audit is run by a government department itself.
13:08 That internal audit people always mistake with the CAG's audit.
13:12 Just to clarify for someone who does not possibly understand auditing or how governments and
13:17 their units function.
13:20 When you explain it this way, it feels like, you know, a CAG auditing some scheme or some
13:30 allocation by the government is actually quite pointless because by the time you highlight
13:37 a lapse, the lapse has already happened.
13:41 So should there be a mechanism where while things are happening, an independent body,
13:49 a constitutionally autonomous body, tells the government that you're going wrong here
13:55 and set things right?
13:59 That's exactly what happens.
14:01 See in 192 countries of the world today, there are the auditors general.
14:07 They're called by different names.
14:09 All of them do what is known as an external audit, which is post facto.
14:13 But one of the very strengths of a good administration is that internal audit procedures must be
14:23 very strong.
14:24 And internal audit is, I won't call it as autonomous as the CAG is, but also is autonomous
14:30 within the department because the internal auditor reports directly to the head of the
14:35 agency.
14:36 He doesn't report through a hierarchy.
14:39 He reports directly.
14:40 And it is his job to very concurrently point out if things are going out of sync, if things
14:46 are going out of track.
14:48 And that's why these two types of audits have been introduced.
14:51 Then the CAG's external audit comes in to make course corrections.
14:56 It's far more intensive, of course, that audit.
14:59 That well, you've had the midday meal scheme, as we were discussing, the following Adele
15:04 Lacunae scene in it, he makes recommendations how that Lacunae can be taken care of, improved
15:13 upon in the next phase of that peri-scheme.
15:16 So that audit has been put in place to upgrade the quality of administration.
15:24 You mentioned also in the 2G report, as well as the other audits that you've done, that
15:31 this was a notional loss of 1.76 lakh crore.
15:36 The perception, however, that was created and it's still there in many sections was
15:41 that responsible people in the government, including ministers like Mr. E. Raja, pocketed
15:47 1.76 lakh crore.
15:50 And much of the debate in Parliament also circled around how people were making money
15:58 and this notional loss was an actual loss.
16:01 Would you want to set the record straight?
16:03 It's like this.
16:04 And then we also had Mr. Kapil Sibal saying there was zero loss.
16:09 That's exactly what I was coming to.
16:11 See, we did an audit and we found that by following a certain procedure, the government
16:17 was deprived of a certain amount of revenue, which we called a presumptive loss.
16:21 People have questioned the word presumptive, but the presumptive is very much a part of
16:24 the audit lexicon and it's been accepted worldwide.
16:28 So no two ways about that.
16:30 But the more important thing is the perceptions.
16:35 And perceptions will be, see, when you are hauled up in the court, there is a prosecution,
16:41 there is a defense.
16:43 Prosecution will make its point and the defense will make its own point.
16:46 See, so even if, let me take an extreme case, there's a murder.
16:51 The person who's been accused of that murder will try to defend himself.
16:57 So public debate, public perceptions all tend to go around what is the rough indications
17:06 that are seen.
17:07 It's nothing to do with the actual auditing process itself.
17:12 People pick it up depending upon which side of the political strata they fall, number
17:18 one.
17:19 Number two, what suits them?
17:21 But as CAG, because you were obviously privy and you were seeing the kind of allegations
17:29 and counter allegations that were being bandied about and the perception that was gaining
17:34 ground that people who were ministers, who were office bearers were pocketing this money.
17:43 Was there ever an initiative from the government towards you, to you, or did you ever think
17:49 that you should set the record straight once again or with greater clarity for the people
17:54 that it's not that these people are making money and pocketing money, it's a presumptive
18:00 loss and the government could have made better fortunes by following a certain procedure?
18:05 It was not for us to get out into public domain and explain this to the extent that we could,
18:10 we did within close circles.
18:12 But when this kind of a debate starts, media takes it up, parliament takes it up, it's
18:19 best debated in the parliament.
18:22 So that's why I go back to the first issue by which you started, that if you disrupt
18:28 parliament 10 days of no debate, public is no wiser.
18:32 If this issue had been debated, one of the sides would come forward and say, look, 176,000
18:38 crores have not been pocketed, as you say, by somebody, but it is a revenue foregone
18:43 in some ways.
18:44 So that debate makes things clearer to the common man.
18:49 It will come out in televisions, it will come out in newspapers, it will come out in vernacular,
18:55 which people read and then it clarifies their thinking.
18:59 And that's where it should be debated.
19:01 Your current assignment is one that is possibly more interesting to a lot many people than
19:06 your CAG reports, because as you also point out in your book that cricket is like religion
19:11 in this country.
19:13 What is the, you know, if one is to ask you to do your own appraisal of how the Committee
19:22 of Administrators has improved cricket or cricket administration in this country, what
19:27 would you say you are most proud of?
19:30 It has definitely improved cricket administration.
19:34 I don't take the credit for it.
19:37 The credit goes to the Supreme Court, because lots of people have questioned why should
19:42 the Supreme Court waste its time to get into cricket kind of things, where far more important
19:47 things going around it.
19:48 But see, the very issue that you mentioned, if cricket is a religion and a hundred crore
19:54 people are interested in it, then well, the perceptions of a hundred crore people matter.
20:00 So when cricket administration was going awry, when allegations were levelled, when reports
20:09 came out, investigations were done and a public interest litigation was filed in the court,
20:15 it was incumbent upon the court, they had no option but to get into it.
20:18 And the court found that there was no proper governance structure, there was no transparent
20:26 procedures and the collection machinery, the devolution machinery for funds being given
20:33 out were not properly documented in some ways.
20:37 So the court came out with an entire procedure and asked us to implement it.
20:45 And I think it has been done very well, in the sense now there is a regular Chief Executive
20:52 Officer, there is a regular Chief Financial Officer, which were not there earlier.
20:57 There are experts at the general manager level, they work in different silos and these silos
21:02 then synergise on top.
21:05 There's a National Cricket Academy which has been well populated.
21:08 So I sincerely believe that the interference of the court has done a real amount of good,
21:17 huge amount of good to cricket administration in the country and also ensured that there
21:24 were certain section of cricket administrators who were managing BCCI over a long period
21:30 of time, 15 years, 20 years.
21:33 And good corporate governance dictates that after 5 years, maybe 10 years, you move on,
21:39 pass on the mantle to somebody else.
21:41 You take on the role of a mentor, you take on the role of a patron and you let younger,
21:48 fresher blood come and start managing it.
21:51 Maybe that fresher blood is much more dynamic than you, much more innovative.
21:55 And I think that has been the singular contribution of the Supreme Court in the new BCCI constitution.
22:03 So this is just a gist of what the book has and do get your copies, Rethinking Good Governance
22:13 by Mr. Vinod Rath.
22:14 Thank you.
22:15 Thank you very much.
22:15 Thank you.
22:16 Thank you.
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22:22 Thank you.
22:23 (upbeat music)
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