Sucheta Dalal :Super CAG
Sucheta Dalal

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Super CAG  

June 2, 2010


The CAG’s request to be allowed to audit independent regulatory bodies raises interesting possibilities

The Comptroller and Auditor General (CAG) of India, which audits the government receipts and expenditure, recently bowled a neat googly at several of India’s independent regulators. It has asked for the right to oversee decisions taken by regulators that do not have tribunals to hear appeals against their decisions. CAG Vinod Rai said that this would cover nearly 15 regulators including the IRDA (Insurance Regulatory and Development Authority) and the Petroleum and Natural Gas Regulatory Board. CAG has also asked for access to the accounts of non-governmental organisations that distribute government funds.

The CAG’s request has raised the interesting issue about whether its writ could be extended to other areas as well. Most public-sector companies are constantly lobbying to wriggle out of a CAG audit. CAG auditors are accused of being bean counters who invariably fail to see the larger picture or the exigency of speed or demands of competition. On the other hand, CAG has routinely brought out horror stories of how various government departments indulge in grossly wasteful expenditure at the cost of the taxpayer. Unfortunately, the media is often reluctant to highlight or follow-up these cases and it is completely unclear about whether GAG’s criticism/indictment leads to corrective action or penalties.

Having said that, CAG’s demand to extend its writ raises interesting possibilities. For instance, will there ever be a discussion about having the Reserve Bank of India’s (RBI) accounts audited? Indeed, as India’s monetary authority, RBI has always been held beyond any outside audit of its accounts. However, rebel officers at RBI have, over the years, told us many tales of the lavish and wasteful administrative expenses; the massive spending on lectures and programmes and the mind-boggling payments made for guest lectures, especially by celebrity economists. There is a clear case to separate the RBI’s internal administrative machinery and have it externally audited by CAG—after all, it has nothing to do with its role as a monetary authority.

However, it is unlikely that anybody but CAG will ever raise the possibility of a partial audit of the Reserve Bank, because of the sheer power of the RBI governor’s office. Prime minister Manmohan Singh has been a former RBI governor; C Rangarajan, another former governor, is the PM’s powerful advisor; one governor has been given a berth in the Rajya Sabha and is now heading a committee to decide on the listing of bourses. More importantly, almost every finance secretary has coveted the RBI governor’s job and would, hence, do nothing to curtail its powers or introduce oversight over any of its functions. Sucheta Dalal



-- Sucheta Dalal