Two vital questions agitating the minds of the stakeholders and the officers of the CAG’s organization which have not been addressed by successive governments are:
(a) Whether the CAG should not be a professional and proficient in his job which is of technical nature demanding specialist skill in public auditing and accounting?
(b) Whether there is an inherent conflict of interest in appointing a generalist IAS administrator who heads several ministries in the Central and the State governments?
The Union Government has so far carefully skirted these questions and has been appointing generalist IAS officers without following any transparent procedure. This is probably done deliberately because the government in power does not want a powerful CAG and has always wanted a yes man. Unfortunately, the Supreme Court, which took active interest in the case of appointment of CVC, Director, CBI etc., has chosen to ignore this issue whenever it was brought to their notice.
These issues were raised by H D Shourie, founder of ‘Common Cause’, an organisation for just and fair Public Administration, through a Public Interest Litigation (PIL), but without success. When the twelfth CAG (Shashi Kant Sharma) was appointed in May 2013, a PIL was again filed in the Supreme Court which rejected it.
A similar petition had been pending in Delhi High Court for a long time but was finally disposed of without any verdict. While the Supreme Court did not wish to enter the domain of the PM’s executive powers, it could certainly question the transparency of the procedure.
The arguments of the litigants for a transparent procedure and the need for appointment of a non-controversial professional without having conflict of interest are quite logical and deserved consideration.
In almost all democratic countries in the world, the Auditor General is appointed from professionals specialising in Auditing and Financial Management because the work of the Auditor General is treated everywhere as a technical job. It is in India that the Government has deluded itself with the idea that a generalist can function better than a specialist and hold any post in the Government. This has created considerable credibility gap vis-à-vis Auditor Generals of the advanced countries.
In international forums, the Auditor General of India, howsoever a stoic look he may assume and however proud he may be of the expertise of his officers, cannot command the same respect as is commanded by the technically sound Auditor Generals of advanced democracies like Canada, France, Germany, Japan, Israel, UK, and USA. Therefore, it is ridiculous to argue in favour of appointment of a generalist as the CAG of India. In fact, it is a mockery perpetrated on a Constitutional position.
The second issue, apart from the question of transparency, raised in the Public Interest Litigation by ‘Common Cause’ was the existence of ‘conflict of interest.’IAS officers work for the State as well as for the Central Government, and at senior levels, they head several Departments in the State as well as at the Centre. They become an integral part of the political system and are responsible for policy making and implementation of various schemes and programmes. Here lies the problem.
How could a CAG who had been responsible for the implementation of projects, schemes and programmes including highvalue acquisitions of the government, conduct effective audit of the same and report against himself? As for example, a CAG who had earlier been working as Defence Secretary would be directly or vicariously responsible for all acts of omissions and commissions in the management of several multi-billion-dollar contracts for purchase of military hardware. How can the same person be expected to carry out an honest audit of his own previous actions, and criticise his own policies and decisions (taken along with his political bosses) and report on those decisions to the Parliament?
Is it to be assumed that the Defence Secretary cannot be blamed for any of the scams occurring in defence deals during his tenure? This is absurd. Defence Audit has been one of most important and vital areas of CAG’s Audit not only because of the magnitude of the deals, but also because of their implications on national security. Therefore, there is an obvious ‘conflict of interest’ in appointing a CAG who had worked as Defence Secretary. Similar would be the situation if any of the Secretaries to Government of India is appointed as the CAG. This bitter truth does not dawn on the government, or it conveniently chooses to close its eyes on this aspect. The government of the day, irrespective of the party affiliation, is too blind to listen to the rational voice of intellectuals and to retreat from feudalistic patronage predilections. Among the liberal democracies of the world, India is the only one where the CAG is still appointed from among generalists without following a transparent procedure and this is being quietly done by all governments despite serious recommendations to the contrary. In 2000, Prime Minister Atal Behari Bajpayee constituted the high-powered National Commission to Review the Working of the Constitution (NCRWC) to bring about fundamental changes in the body politic. The 11-Member Commission was headed by a former Chief Justice of the Supreme Court, Justice M N Venkatachaliah and included B P Jeevan Reddy, Chairman of the Law Commission, R S Sarkaria, former Judge of the Supreme Court, K Punnayya, former Judge of Andhra Pradesh High Court, Soli Sorabjee, Attorney General of India, K Parasaran, former Attorney General of India, Subhash C Kashyap, former Secretary General of Lok Sabha, C R Irani, Chief Editor & Managing Director of The Statesman, Abid Hussain, former Ambassador of India to USA, Sumitra Kulkarni, former Member of Parliament and P A Sangma, former Speaker of Lok Sabha.
The Commission in its Report submitted to the Government in 2002 recommended a multi-member Board for CAGs organisation: An Audit Board should be constituted for better discharge of the vital function of public audit, but the number of members to be appointed, the manner of their appointment and removal and other related matters should be dealt with by appropriate legislation, keeping in view the need for ensuring independent functioning of the Board. The Commission recommended that under the present system, the appointment of CAG should be done in consultation with the Speaker of Lok Sabha and the Chairman of the Public Accounts Committee.
The Commission also recommended devolution of more powers to the State Accountant General to enable him to act like the Auditor General of a State. New hopes were aroused about reforms in the CAG’s organisation. However, the successor UPA government consigned this important report to the archives as they did with Veerappa Moily’s Administrative Reforms Commission’s seminal report on ‘Ethics in Governance.’
While the Judicial system in the country is crying for reform, similar reform in the CAG’s organization is overdue. First, it must be made a Multi-Member Body like the Audit Commission of Japan because of the vastness of the country, enormous increase in government budgets, plans and programmes, and the unitary control of the Central and State audits and accounts.
In the States, the designation of Accountant General may continue for the accounting functions but the designation of Accountant General (Audit), which is an anathema, should be changed to ‘State Auditor General’ because he is the de facto Auditor General of the State. This can be done without amending the Constitution.
Secondly, the Auditor General must be an expert in Auditing, Accounting and Financial Management and this should be made a condition in the recruitment rules.
Thirdly, the Auditor General must be appointed in a transparent manner through a Collegium consisting of Prime Minister, Speaker of Lok Sabha, Chairman of the Public Accounts Committee, and the Leader of the Opposition.
Alternatively, since he is equated with a Judge of the Supreme Court, the existing Supreme Court Collegium can be requested to act as the search committee for recommending a name for the new CAG. Finally, as we have followed the British Parliamentary system, the Auditor General (CAG) of India should likewise be made an Officer of the Parliament with the right to speak in Parliament and defend his reports. This will not only give the Auditor General his due place in the Constitution but also will help strengthen our democracy.