A two-member bench of the Delhi high court Monday opened the gates for audit of five private telecom firms by the Comptroller and Auditor-General (CAG).
Telecom stocks are down, and industry chambers predictably unhappy. FICCI, for example, has fears that this is tantamount to opening the books of private companies to Government auditors.
A similar fear is cited after Delhi Chief Minister Arvind Kejriwal, backed by lieutenant Governor Najeeb Jung, have made a case for CAG audit of power companies.
The fears aren’t unfounded. Unlike an audit by a private auditor, CAG audits aren’t concerned about billing. The “audit paras” that they throw up are stark and there are ready takers for them in the media. Some do, as they should, become feedstock for vigilance cases.
But those who are feeling crying wolf about a CAG probe need to be told that when you do business with the Government, scrutiny by the State’s auditor is part of the deal.
Take telecom. The license condition hinged on the concerned telco sharing a portion of its revenue. Any Government, therefore, should be assuring the citizen that revenue figures aren’t depressed. Also, that consequent loss to the Consolidated Fund of India is zero.
Who else can assure us that but CAG, the Government’s auditor and servant of the consolidated fundIJ
The complaint by power companies is even weaker. Allegations of under-disclosure of revenues need to be settled from time to time. Also, wouldn’t tariffs, which affects you and me, stand on firmer ground once the facts tumble outIJ If it emerges that no fudging was involved, all the better!
Which brings us to three larger points involved:
1. The CAG must read Monday’s order by the HC in letter and spirit and no go overboard. The mandate in the instant case is limited to ascertaining of revenues, not the entire parcel of duties envisaged for the auditor when the CAG Act was passed way back in 1971. Also, the agency should invest in skill development so that its officials understand sectoral nuances.
2. Industry bodies like FICCI and babus bemoaning enhanced CAG intervention must be asked – why should any bonafide actor and follower of the precepts of legality have anything to fearIJ Wouldn’t more transparency ensure lower rent-seeking and tariffsIJ Wouldn’t that translate into higher efficiency and systemic credibilityIJ Also, don’t they open their books to the income tax department alreadyIJ
3. The outgoing Manmohan Singh Government can do yeoman’s service to kick start the process of putting projects under public-private partnership (PPP) under similar scrutiny. This isn’t as politically naïve as it would seem. Those in the highways sector have been audited for over a year and the reports haven’t been received yet. But the results will help create a cleaner environment for the next phase of economic reforms.
Before demitting office, Vinod Rai, the former CAG, had made a case for audits on Panchayati Raj institutions and all Government-funded NGOs. This is a worthwhile suggestion, as the Act in 1971 was in response to a substantially different model of governance where role of the private sector, NGOs, PPP, and revenue-sharing was minimal.
In the interim, an independent evaluation office, under noted economist Ajay Chibber, has also started functioning. We hear that Chibber’s initial mandates include the public distribution system and the Mahatma Gandhi National Rural Employment Guarantee Programme.
Both CAG and the evaluation office are supposed to work for the similar strategic objectives, is there a way they can emulate Bhupathi and leander (when in their prime, not now!) so that the audit-evaluation space bats neither for the private sector, nor even the Government, but the tax payerIJ
(The columnist is CEO & Co-Founder, India Strategy Group, Hammurabi & Solomon Consulting. Tweets@throhitbansal)