CAG, Credit and Credibility

The Comptroller and Auditor General of India (CAG) has tabled "accounting" reports in Parliament, and blamed the government of India, and Prime Minister Manmohan Singh, for condoning and encouraging corruption to the tune of several trillion rupees. But its "accounting" has justifiably raised the question: Who would you trust more, the CAG or Manmohan Singh? Those opting for the former, but still believing in a false objectivity, conclude: in the end, despite the warts and faults, we, the citizens of India, would end up thanking the CAG for doing much more good than bad. This article is about the documentation of two firm conclusions: I trust the CAG a lot less than the PM. It is a case of not that I trust Manmohan Singh, but that I trust the CAG even less. Second, what the CAG has achieved, by consistently playing to the base galleries (and the opposition parties?), is to lose a considerable amount of credibility. Hence, the second conclusion of the CAG being more good than bad is nave, and misplaced.

When the CAG first came out with its draft report on Coalgate, it claimed that the government had lost Rs 10.7 trillion one lakh crore is equal to one trillion, and one trillion rupees is approximately equal to $20 billion; so

Rs 10.7 trillion is equal to $214 billion. When it was pointed out that this number exceeded the total income and corporate tax collection, the CAG hastily clarified the benefits accrued over 25 years, not one year. But then should the benefits not be discounted?

Credibility in question 1: The draft CAG report on coal (the one leaked to friendly TRP channels) was completed in April. This draft report, as is the final report tabled last week, pertains to allocations of coal reserves made to private and public sector firms, circa 2006. The corruption loss was estimated by the CAG to be Rs 10.7 trillion, of which the private sector share was 47 per cent, or Rs 5 trillion. In the latest report, this estimate of private sector corruption loss has been reduced to Rs 1.87 trillion, or by two-thirds.

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