Breaching boundaries

The court's ruling allowing CAG audit of private companies sets the stage for institutional overreach.

The biggest concern touched off by the Delhi High Court judgment permitting a CAG audit of private telecom companies has to do not so much with the violation of their privacy but the change or dilution in the objective of the CAG. If the government received Rs 2,000 crore from the telecom companies but reported

Rs 1,000 crore to Parliament, for instance, the matter would fall within the CAG's jurisdiction. But cheating or violation of contractual obligation should be dealt with by investigative agencies or contract law, not by the CAG. The government needs to arrive at better contracts and audit requirements in the contracts instead of burdening the CAG.

In interpreting the law to allow the CAG to audit telecom companies, the court states: "The rule and the section fit perfectly into the constitutional scheme of every rupee flowing into the Consolidated Fund of India, by way of revenue, to be audited by the Comptroller and Auditor General of India." Before celebrating this as a victory of transparency and a blow to crony capitalism, however, we should pause and ask why the CAG was created and whether it has a clear and defined objective. The primary mandate of the CAG is to find accounting violations of the government of India, to prevent the government from making expenditure under false pretenses or not recording income accurately. All money due to the government of India goes to the Consolidated Fund. Does this not include all taxes collected by the government? Could an implication of this judgment be, then, that the government may appoint the CAG to audit every taxpayer who pays, or is liable to pay, any tax to the government?

Through the CAG, Parliament can keep a check over whether the executive is making expenditures the legislature has not approved of. The Indian government's accounts are in very bad shape. We are yet to move to a double entry book-keeping system. Moving the attention of the CAG to actions of private companies may afford some glee in the short term, but it may well prove to be harmful in the long run.

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