Caged in by the CAG?

Apr 29 2014, 03:00 IST
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SummaryThe CAG needs a dose of self-denial. Otherwise, it will needlessly interfere in sectors where it has no business to be

The Supreme Court has set a disconcerting precedent by permitting the Comptroller and Auditor General (CAG) to audit private telecom companies. The divide between the public and private spheres was blurred over 20 years ago by the public-private partnership (PPP) model but, now, a government agency has been allowed to vault over the ruins of the intervening fortifications. It follows that any business which licenses or benefits from a scarce common good is open to public audit since the state is the final owner of all such goods. Besides, any company which transfers to government a portion or derivative of accruals must also be open to audit, to set at rest fears of under-reporting. Can individual taxation be read as the share of personal accruals due to government? Just asking.

While industry is irritated by the Supreme Court directive and the costs it will impose, there have been far too many instances of possible collusion between political authority and corporate interests in the distribution of resources. After scams in the allocation of 2G spectrum and coal blocks, neither party has the moral right to raise a din. Meanwhile, the joke that the CAG wants to audit your child’s pocket money has an uncomfortable ring to it, suggesting that, in the future, the limits of the CAG’s reach will have to be set.

Ideally, this should develop naturally in the course of usage, and the CAG may be prescribed a dose of self-denial. While the body may not be too keen to probe the pockets of children, there are other areas that it may wish to be unenthusiastic about, in its own interest. The office has become incredibly political over the last decade and needs to regain the image of a disinterested appraiser. Otherwise, it may find itself caught up in the politics of growth and development which will become ever more important as India seeks the stature of the third biggest economy after China and the US. That would be a quick and dirty way to become irrelevant.

For instance, the CAG should stay well clear of organisations in research and development. R&D and the intellectual properties it generates are important for fast-growing economies, like the UK in the age of steam and the US during the Cold War. India, which used to be R&D-poor, has recently begun to spend on research and even aspires to be a space power. While the private

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