CAG Vinod Rai: Some Don’t Take Our Reports Seriously

Image: Amit Verma

Vinod Rai, Comptroller and Auditor General

Vinod Rai
Designation: Comptroller and Auditor General
Age: 62
Education: Masters in Economics, Delhi School of Economics. Masters in Public Administration, Harvard University, USA.
Career: Secretary in the finance ministry. Director on several boards including State Bank of India, IDBI Bank, Life Insurance Corporation and Infrastructure Development and Finance Company of India
Interests: Tennis, cricket and mountaineering

What is your assessment of the audits that you have started doing for Public Private Partnership projects?
It is at the request of the government that we have begun to audit PPPs. Our Audit Act is of 1971 and there was no mention of PPPs, NGOs or Panchayati Raj Institutions and other special societies in it. The Act does not give us a legal mandate to audit societies, Panchayat Raj Institutions [PRIs] or PPP partners. But now around 50 percent of planned funds are going through PPPs, PRIs and societies. So the Planning Commission felt that there should be a Parliamentary oversight of these expenditures as well. As of now they are being audited by chartered accountants and thus they never make it to the Parliament. So the MP who has approved the budget does not get to know how the money was spent.

We have not done PPPs in a big way yet. We have put out guidelines for these projects. We have started out with auditing some NHAI [National Highway Authority of India] projects. We are very new entrants to this but in future we will be getting into PPPs. The three oil exploration projects given to Reliance Industries, British Gas and Cairn are being audited by us. This is because a public good has been given to them for exploration. Another project that the government has asked us to audit is 2G. We are going in for a repeal of the existing Act and a new Act is already with the government and we hope it will be placed before the Parliament in the Winter Session.

Will there be any change in the essential character of the CAG with the repeal of the existing Act?
CAG will continue to be an oversight body which reports to the Parliament. But, we are now engaging with the government much more closely and concurrently. We are more in dialogue now. The officers now do an entry conference, which means we share our audit guidelines with the ministry and get their feedback, which we try to incorporate in our guidelines. In the subsequent exit conference, we share our findings with them. If the ministry wants to react to our observations, we want to give them a chance.
 
Recently, law minister Veerappa Moily had criticised the CAG for its inability to forewarn the government about some of the recent scams. How do you react to the minister’s charge?
 I don’t want to make any comment on an observation made by a minister. He is entitled to his views. Every ministry has an internal audit mechanism of their own. That is the one that is concurrent. We are external auditors and we do the audits only post the event. There is a clear distinction here. We report to Parliament and internal audit reports to the head of the institution.

As far as external audit is concerned, we are covering all the areas. The government asked us to get into oil exploration, 2G and NREGA [National Rural Employment Guarantee Act]. We did a report last year on preparedness for the Commonwealth Games last year.

We gave pre-emptive advice then and see how true it has turned out to be. We covered the different stages of preparedness of the stadiums. Each infrastructure item, we indicated was 20 percent or 30 percent ready. Some departments have taken these reports seriously, some may not be taking them seriously. NREGA is one programme that has been improved tremendously by the audits.

There has been some criticism of the audit reports that you have prepared on the Armed Forces. Some senior officers have pointed out that these reports could compromise national security.
If you see the reports of audit institutions in the UK, the US or Australia, you will find that the reports are absolutely the same. The report that we placed before the Parliament in August was a study done in May 2008. So any finding that we place before the Parliament is more than two years old. So it has no relevance [from a strategic viewpoint] today. However, the significance of the exercise is in auditing the processes [and identifying the flaws]. Internationally, it is the same practice. These reports are seriously dated. There is no question of giving away a secret that the enemy can use today.
 
What are the new areas that figure in your audit plans?
We are now trying to engage more in social audits. In water pollution, for instance, there are lots of NGOs that are trying to recharge the groundwater and such. When we go for an audit for these kinds of things, now we put out an advertisement asking for information on local knowledge. Suppose we go to Haryana to do an audit on water conservation, and a social action group gets in touch with us, we tie up with them and they give us information on the problems on the ground. I have got around 500 mails from such groups who have volunteered information.

In rural health, for instance, we found that doctors and medicines were not available and equipment was not being ordered in time. The problem with these programmes is always at the implementation level. There is a lack of oversight on the ground and that is showing in the poor delivery systems.