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BW Businessworld

Faults & Faultlines

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After giving Anna Hazare cause to ignite the fires of indignation against poor governance in the hearts of the people, the Comptroller and Auditor General (CAG) is not stopping for a breather. Media coverage of two performance audit reports by the CAG — one on the hydrocarbon production sharing contracts of the Ministry of Petroleum and Natural Gas, and another of the Ministry of Civil Aviation — have faulted the government for being slack in enforcing production sharing contract (PSC) terms on Reliance Industries, while the other says the civil aviation ministry was as slack in negotiating purchase terms of aircraft. The CAG is becoming another heroic figure fighting possible government corruption and inefficiency.

Now, the CAG is being portrayed as an extraordinarily diligent policeman rather than just as an accountant; there is little doubt that the CAG is doing a stellar job, but the risk of greater expectations could one day come back to haunt it. The agency conducts three kinds of audit: financial, that assesses whether government spending is efficient; performance, that looks at whether the objectives of policy were met, and compliance that analyses whether procedures, regulations and policies were implemented in letter and spirit.

These CAG reports may have mixed up the messages from all three, giving the impression we have a government that is corrupt at worst, or inefficient at best. There appears to be no margin for the use of discretionary powers by ministers or civil servants, and ends up defining the government as one of two evils. The tenor of the messages suggests a big risk for the CAG itself: that of overreach.

(This story was published in Businessworld Issue Dated 19-09-2011)