Friday, July 5, 2013

Uncaged! - Exclusive Interview With Vinod Rai, Ex-CAG

Vinod Rai, former CAG, recently gave an exclusive interview to Seasonal Magazine:

If Vinod Rai was a bird, he was never caged. No cage in the country could hold him. Unlike the allegedly “caged parrots” that Supreme Court recently found issue with, here was a top bureacrat that even the mighty SC found worthy of tracking. 

But if Vinod Rai was a lion, he was indeed caged. Not by anyone, but by himself. Never giving interviews and never replying to cheap taunts of the Manish Tewari type, but always maintaining the sanctity of the post yet always remaining the newsmaker. 

Because from within that self-built cage, this lion did roar. More than a few times, sending chills through the spines of UPA and several state governments. 

The Harvard-educated man himself says that he roared only as much as former CAGs, but that a newly powerful media amplified his roars. But that is being modest. Nobody denies that Vinod Rai IAS reinvented the post of CAG, as much, if not more, as TN Seshan reinvented the role of EC. 

At the height of the media frenzy during 2G and Coal scams, BJP was not the second-biggest political party or the most feared opponent of Indian National Congress. It was a constitutional authority called Comptroller & Auditor General of India. 

Without reminding anyone, Vinod Rai reminded everyone that CAG is above a Supreme Court Judge in protocol, and that CAG is someone who can be removed from office only by impeachment in Parliament. 

Inside the Grand Old Party of India, lowly Congressmen wondered who in the world would have thought of an independent thinker like Vinod Rai for the post of CAG, which was often filled with good but tamed bureaucrats. The credit for that goes to Dr. Manmohan Singh, P Chidambaram, and Pranab Mukherjee, who were the guys obviously calling the shots back then. 

Forget lowly Congressmen, nobody can be blamed for speculating that even the all-powerful in the GOP, Sonia Gandhi, might have asked the trio from where did you find this great candidate! Such was the collateral damage that Vinod Rai inflicted upon UPA-2, by way of his scathing reports on 2G spectrum and coal mine allocation. 

Evidently, Dr. Singh and his team selected Vinod Rai for his excellent credentials. And, boy, didn’t he deliver? The PM can definitely feel proud of his selection. 

Thankfully, the likes of Ahmed Patel, Kapil Sibal, & Manish Tewari had not grown too powerful back then, to oppose his selection. Sibal’s famed ‘zero-loss’ theory in 2G went for a toss, when CBI itself claimed that the loss according to its assessment is in excess of Rs. 30,000 crore. 

The political fallout from Vinod Rai’s 2G report would have been much worse, if BJP had shown more spine to form an alternative government with new allies. Because, not only did Raja end up in jail, but Congress lost a key ally in DMK. 

It also goes to Sonia’s and Rahul’s credit that despite great temptation, they have not even once tried to discredit Vinod Rai. 

The CAG’s greatest test came when P Chidambaram and Dr. Manmohan Singh personally took it upon themselves to counter CAG’s Coal Allocation report point-by-point, the former in media, and the latter in Parliament. Even when they appeared to succeed to a great extent, it was clear that both had no plans to discredit Rai. 

Because, the CAG had fully done its homework, and even when anyone vehemently fights his conclusions like presumptive loss in 2G and under-recoveries in coal, there is no denying that Vinod Rai is not entirely wrong in his assessments. Going a step further, even his detractors would admit in private that he is more right than wrong. 

In the final analysis, any impartial observer would find that Vinod Rai was just being a proactive CAG, who utilized the full mandate given to a CAG, to make decisive comments on even sub-optimal policy implementation that can cost the nation dearly. Thanks to Rai, the role of CAG will never ever be the same again.          

Seasonal Magazine caught up with Vinod Rai recently to quiz him about carrying out a national mission with courage, integrity, and dignity. Off to Seasonal Magazine’s exclusive interview with Vinod Rai:

Courage has been a hallmark of your career, especially while you were CAG. Can courage be taught to children and youth? 

No, courage can’t be taught in the classical sense. But children and youngsters imbibe courage from their parents and teachers. Parents can teach courage at home by breaking stereotypes and letting the child pursue his dream or passion. Similarly, in schools, what is more important than subjects and formal teaching is that, teachers should help students identify and pursue their dreams. Courage will follow.

You are an IAS officer who has benefited from overseas education. Is overseas education still relevant for our aspiring leaders? 

I don’t think I have benefited much from overseas education, as I have done only my post graduation abroad. But having said that, it can’t be denied that overseas education broadens our horizons and helps us become familiar with the very best standards in the world. That advantage still holds relevant.

Your reports were perhaps more famous than your proposals. You have held a view that over 60% of government funding is now not audited by CAG, due to PPP and Panchayati Raj institutions not being audited, and that should be changed. Can you explain this proposal of yours? 

Yes, that has been one of our proposals. What prompted us to do that is pretty straightforward. The audit mandate that CAG presently has is from the CAG Act of 1971. A lot of new funding models of the government have evolved since then. Even after the 74th and 75th amendments to this Act, there have been significant new funding models like that to the Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs). Even more lately, other models like Public Private Partnerships (PPP), and Government funded schemes like National Rural Health Mission (NRHM) and Mahatma Gandhi National Rural Employee Guarantee Scheme (MGNREGS), have evolved. Significant government funds pass to these schemes, often through societies and NGOs implementing these schemes. Today, the situation is such that around 50-60% of all government funds are spent through these new models, where CAG has no automatic mandate to audit. That means we can audit these schemes only if the government requests us for it. For example, the government had requested and CAG had audited NRHM. We had also done a performance audit on MGNREGS. But without automatic mandate, all these would be out of the regular purview of CAG. That is why CAG proposed that the 1971 Act should be suitably amended.

Post your retirement, you have admitted that regarding the 2G report, only one thing can be debated which is the quantum of loss. Can you explain this view? 

Yes, the quantum of loss is definitely a subject of debate. It is not a new stand, as the original CAG report on 2G Spectrum Allocation details four different loss projections. The CBI has its own loss projection, which is something different. So, that is definitely a subject of debate. What the CAG had said is simple. Had the Government followed the 2010 policy for 3G and BWA, for the 2008 2G auction, significant revenues could have been generated. Since it was not done that way, the national exchequer suffered huge loss. Since the issue and its pricing was very complex, the CAG itself put across four estimates regarding the loss, and pointed out one as the most likely loss.

That also means, it can’t be debated whether there was loss or zero-loss?

There are two aspects to such a debate. One is whether the first-come-first-served policy was properly implemented and the loss due to a flawed implementation. CBI and the Courts have found fault with that implementation, and commented on the loss due to that. Secondly, and that is what CAG has given more weight, as that is the bigger issue, which is about whether the first-come-first-served policy in itself was wrong as the subsequent 2010 policy of auctions proved that there is immense scope for revenue generation.

Did you feel vindicated on your stand when many involved in the 2G scam including former minister A Raja was sent to jail, and all the 2G spectrum licences were cancelled by SC? 

No, you are mixing up two issues here. CBI didn’t accuse anyone including Raja because CAG said so. What they are doing is entirely different, which is pursuing the criminal aspect of it. Similarly, Supreme Court quashed the licences because of the criminal angle. CAG doesn’t have anything to do with those moves.

How will you defend your presumptive loss of Rs. 1.76 lakh crore in 2G allocation?

That are all in public documents and is widely debated in media. But the CAG thought that it was not enough. Who is there to audit the CAG? There is no one in India, as this is the country’s Supreme Audit Institution (SAI). Not even the Supreme Court can overrule a CAG report. So, CAG turned to SAIs in other countries, requesting for an audit of our reports, which is technically called a peer-review. The SAI of Australia agreed, and since they couldn’t spare the required personnel themselves, they constituted a 14-member international team, comprising of audit professionals from Australia, UK, US, Netherlands, Denmark, and Canada. This team went through not just the 2G report, but 33 of our reports. Apart from a few minor qualifications, they didn’t find any fault with any of our reports and loss assessments, including the 2G report. This international peer review together with the qualifications is also a public document available in the CAG website.

How will you justify subsequent court-directed 2G auctions failing, and mobile companies steeply raising their rates? 

That is mainly attributable to the business environments prevailing in 2008 and now. If you remember, in 2007-08, the business mood and investment climate were definitely bullish, and it was reflected also in the Sensex highs. Then the global financial crisis happened, affecting Indian markets too, but still around 2010 it seemed that the world including India would recover. That was when the 3G and BWA auctions happened. However, the situation has deteriorated further and the dull response for the 2G spectrum reflects the new economic environment.

Regarding the coal mining report, the former Coal India Chairman while appreciating you for several points, had also remarked that not all types of coal mines should have been considered equal, and that maybe the only flaw in your report. How do you view this? 

We have indeed considered three different types of mines, and considered only extractable reserves as against coal in situ. CAG’s central viewpoint in the Coal Allocation Report is that despite the government agreeing in-principle that competitive bidding is the better route for revenue generation, they continued with the prevailing allocation scheme through a screening committee. The Government says executing that change was difficult in a time-bound manner for that round of auctions. CAG found that to be very inefficient on their part.

Despite your firm stand that you didn't meddle in policy matters, there has been a perception that it has been partly so, due to your integrity and aptitude for good policy. For example, both in the 2G and Coal reports, what you are really saying is that a different policy would have been better. How will you counter it? 

Where has the CAG proposed policy? Can anyone show it in any of our reports? I have been repeating this question to all those who question me on this. What the CAG has mentioned as a better policy is not our policy, but the own policy of the government. In the 2G report, what the CAG has basically said is that if you had followed your own policy of auctions as was subsequently done in 3G, a huge loss in potential revenue to the exchequer could have been avoided in 2G. Similarly, in the Coal report, what CAG has said is that if the Government had followed its own decision to do competitive bidding, much more revenue could have been generated.

But, still both are policy issues…

Of course they are. The only difference is that the policy was not proposed by CAG. The auditor was referring to Government’s own policies, which were not implemented, which resulted in huge presumptive losses.

Agreed. But can the CAG comment on policy issues?

Why not? CAG is fully entitled to comment on what is called sub-optimal policy implementation. Such less-than-desired policies are a big way in which Governments lose money. SAIs the world over, including in India, have the mandate to comment on sub-optimal policies followed by the executive.

Including, making assessments of presumptive losses?

Yes. Presumptive loss is widely calculated the world over by SAIs. It is there in the international auditing parlance and is used even by the IMF. Even in India, the Direct Tax Code speaks about presumptive income and presumptive gains which are liable for taxation. So, this is not a new concept at all.

The other allegation has been that your reports are only based on hindsight. How will you counter it?

There is no need to counter it, because it is not an allegation, but a fact. Public Audits the world over are done post-event, and SAIs have only hindsight to rely on. Even if on hindsight, the CAG says there were losses due to sub-optimal policy or its execution, what is wrong in that?

You have noted that executive-auditor relations are adversarial in nature. But have you ever thought that, may be due to the sensational headlines of your reports, many Congress/UPA voters too have ended up suspecting you for a bias? 

The CAG has never put any sensational headlines. That is the role played by media. CAG reports are dense and very technical in nature. They are public documents that are dissected very minutely by all concerned. CAG can’t harbour a bias, and I am of the firm conviction that we have never been biased in our reports.

How will you account for portions of CAG reports getting leaked, before getting tabled in Parliament?

First of all, let me categorically assure you that those are not leaks at all. CAG too is under the Right to Information (RTI) Act. When journalists or activists started applying for specific information in our reports-under-progress through the RTI route, we resisted initially. There are  basically two divisions at CAG, one involving the day-to-day working or administration of CAG, and the other our audit process with the final output being our reports. The CAG had no issues about sharing the former, but the latter we felt that it is a privilege of the Parliament. But the Central Information Commissioner (CIC) directed us to share even details in our reports to all RTI applicants. So, we raised this issue with PM and FM. But after consideration, they too felt that the whole of CAG including our audit process and reports should remain under RTI. So, they are not leakages at all, but what we have legally shared under the RTI Act.

Is there any fallout to this government decision?

Well, not really. It is good for transparency. The only fallout is that sometimes finer details in the audit process can be quoted in media, out-of-context. To give you a quick example, we might ask an officer 100 audit queries. He might give 100 answers too, and what happens if we are fully satisfied with 70 of his answers? As far as CAG is concerned, only 30 concerns remain, and only they will find their place in the final CAG report on that issue. But through RTI anybody can access all the 100 queries as well as their answers, and quote them out-of-context in media or elsewhere. That is the main risk.   

You have recently made an interesting observation that Government must be seen to be supporting enterprises, and not entrepreneurs. Can you explain this? 

Due to national interests, government should be supporting various sectors. Let us say automotive is one such sector now. There are various enterprises in it like Maruti Suzuki, Hyundai, Tata, Mahindra, Toyota, and lots more. When government decides to support such a sector, all enterprises in it should be equally supported without fear or favour. Problems start when some entrepreneurs are selectively favoured over others.

You have gone on record stating that you didn't face any covert political pressure. Are you being just politically correct, or can the nation believe that the PMO and FMO didn't pressurize you at all? Or are you subtly referring to overt pressure? 

No, I am not being politically correct at all. There was absolutely no covert political pressure from any quarters, including PMO and FMO. The government has been very fair towards CAG.

But there was obviously overt pressure through media…

I don’t consider it as overt pressure at all. The auditor-executive relation is always adversarial, and ideally should remain adversarial too. Because, basically auditors are trying to find faults in their strategy and execution. And it has always been adversarial the world over, and in this nation too. The only difference now is that media is much more active now, and so such things get highlighted.  

But didn’t JPC Chairman PC Chacko as well as Congress leaders like  Manish Tewari clearly overstep basic protocols through media? 

CAG’s role is to place our reports before the Public Accounts Committee (PAC) of Parliament. Thereafter what PAC does with our report is not really CAG’s concern though we assist in their investigations, if we are requested for it. Similarly, we have also assisted the Joint Parliamentary Committee (JPC) in its investigations as per their request. We have clarified whatever we have been asked for by JPC. It is not right on my part to comment on JPC Chairman’s words outside of that role. Regarding the comments of other political leaders, well, they are exercising their freedom of speech.

How do you assess the integrity of top executives like Dr. Manmohan Singh and P Chidambaram?

No, I shouldn’t comment on them at all. It is not proper.

Though you mention that CAG’s responsibility ends on submitting the report to PAC, do governments at both Centre and States, really take corrective measures based on CAG’s reports, or implement your recommendations? 

The answer is yes, to a large extent. Though it is not our duty to monitor whether changes are being made according to our reports, we do see numerous changes happen. Even from the hotly contested telecom spectrum and coal allocation reports, Government did implement many suggested corrective measures.

But in Uttarakhand it was being reported that the calamity happened because CAG’s reports were ignored… 

We can’t say that, as it is a natural calamity. It is true that through three of our reports, we had raised some concerns regarding the development model of the state that gave great thrust to power generation through hydroelectric projects as well as tourism promotion. CAG pointed out that it should be done with keeping ecology in mind. Some corrective measures were taken, but not all of the recommendations were implemented.    

Despite opposition's stand, you have said that the process of appointing the CAG is a very fair and transparent process. How do you assess the selection and potential of Shashi Kant Sharma? 

The process of appointing the CAG is indeed a very fair and transparent process. I have high regard for Shashi Kant Sharma. He has got an impeccable track-record. He is well qualified and experienced for the job, and has high integrity. If someone had asked me to select a CAG, I would have chosen him.

Don’t you think the selection process of CAG can’t be further fine-tuned?

Well, the government did ask for CAG’s opinion on this, sometime back. And what we replied is that the selection process can be made even more perfect if the collegium approach followed in the selection process of Central Vigilance Commissioner (CVC) is followed here too. I think that is the very best process in India.

Any specific proposal that you would like to see implemented for bettering the functioning of CAG?

There are many, but I would mention just one that readily comes to my mind. Suppose the CAG asks a senior officer in government regarding details of, say, his overseas tours for last year. He may give, or he may give only on repeated reminders, or he may not give at all. But if the same question is asked by any citizen of this country through RTI, within one month the citizen will get an answer. We have asked the government to give at least that kind of power to CAG in querying officers.

You have kept your fans guessing by saying on one occasion that joining a political party is not a sin, and on another occasion that you have been apolitical all your life. Can the nation expect a political role from you?

No, that comment was just a joke. I have always been apolitical in my life, and plan to remain so. Politics is not just my cup of tea.

So, that brings us to your future plans. Anything specific in mind?

It has been less than two months since my retirement. Let me rest for a while! I think I have some strengths in finance and auditing. So, if anything interesting and challenging turns up in those fields in the private sector, I might give it a try.

What would be your advice to young IAS officers?

Always play by the rules of the game. That is very important in this profession if any IAS officer wants to be a high achiever.

How would you advise young people who look upon you as a role model?

Always aim for the very best, the gold medal. Never aim for being the second-best or third best. Whatever be your profession, plan and work hard to be the very best in that.

What radical change or development would you like to see in the country?

I don’t think the country needs any radical change or development. All the necessary systems and processes are largely in place. What is needed is just all people walking the talk.

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