Great cleansing act

In the long run, the CAG reports will make government stronger, not weaker: it will be forced to ask the right questions.

There is a danger that the real point of the three recent CAG reports, especially on coal and the Delhi airport will be lost in a cloud of obfuscation, denial and defensiveness. The reports are raising deep and fundamental questions about governance. Taken together they amount to an incontrovertible indictment of government. It is important that we do not lose sight of the core issues. To get to them, put aside red herrings in the debate. Grant the fact that in a democracy, making trade-offs between different policy choices should remain the prerogative of democratically elected governments. Not going for an auction of natural resources is not, in itself, a crime. For argument's sake, let us grant that in many instances there is a case to be made that it is not necessary. Let us also grant that in the case of coal allocations, at any rate, many parties across the political spectrum seemed to agree with the government's method of allocation, so the complicity is non-partisan. In a parliamentary system, the CAG is not the last word.

Doubtless the CAG's methodology for computing "losses" needs to be subject to scrutiny and debate. The difficulty is that calculations of losses are always endogenous to assumptions you make about pricing and so it easy to say, "Ah, these are just assumptions." The problem is that the same applies to any denial of losses, where we just assume them away as this government has done umpteen times. Some of the CAG's assumptions may be questioned as unreasonable; but they are not more unreasonable than the ones made by those giving the government a free pass. There's no two ways: the loss is substantial. It is also bizarre for defenders of government to use the fact that the CAG revised its estimate of the downward losses after the draft report against its credibility. Such revisions are common and are evidence that the institution takes into account replies of government. But the strength of the report is that the indictment of the government will survive even a further downward revision in numbers. It shows a policy made in extraordinary bad faith.

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