NOT

JUST AN ACCOUNTANT
 Published by
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I dedicate this endeavour to my parents—to my mother for giving us roots to
keep us firmly grounded, and to my dad for teaching us how to fly.
Our education was her only worldly wealth, and he was my first and only hero.
CONTENTS

Foreword
Preface

THE JOURNEY
1. Dimapur to Delhi
2. The Role of Audit
3. Media Policy
4. The CBI

FOLLIES
5. First Come, (Not) First Served: The 2G Saga
6. Sound & Fury: The PAC & JPC Saga
7. The Punjabi Wedding: Commonwealth Games 2010
8. Coal That Turned to Gold: Mine Block Allotments
9. A Slippery Deal: Gas Exploration
10. Off Course: Civil Aviation

COURSE CORRECTION
11. Excellence, Accountability & Probity
The Pursuit of Excellence
The Role of Accountability
The Role of Probity and Ethics in Public Life
Good Governance

Appendices
Acknowledgements
Index
FOREWORD

When I received Not Just an Accountant from Vinod Rai, I wondered what I
could share with readers. On going through the manuscript—which deals with
vital issues like transparency, accountability and ethics—I was convinced that
our youth had to be sensitized about these principles, and the unique quality of
righteousness—righteousness in the heart. For, as I have often said, where there
is righteousness in the heart, there is beauty in character.
Righteousness can be injected by only three great people up to the age of
seventeen—a father and a mother in a spiritual environment, and a good primary
school teacher. Can governments and institutions create good human beings?
The answer I arrive at is: no, not at all. The process has to start in homes and
schools.
I find that in countries across the globe a new paradigm is emerging—that
of transparency in functioning, not only within the government but also in
private institutions and civil society, with morality and righteousness being
fundamental principles. Not Just an Accountant draws attention to these
principles and emphasizes the importance of ethical governance in our country.
This has to be the long-term goal of all nations.
My conviction is that to weave the moral fabric of society, we need to
target energetic youth in the country. Democracy is a great gift to the people of
India. Our thoughts and actions should ensure that we use our most creative
efforts and dynamism to promote rapid economic growth. Vinod Rai has
discussed such essential issues of governance which will make our economic
growth sustainable in the long term.
Let us work to make India a great nation, with righteousness in the heart
and the pursuit of excellence in our endeavours.
Dr A.P.J. ABDUL KALAM
Former President of India
August 2014
PREFACE

Benjamin Franklin once said, ‘If you would not be forgotten as soon as you are
dead, either write something worth reading or do something worth writing.’
I do not think I have done anything worthwhile for others to write. So the
next best option was that I consider penning my thoughts and experiences, which
may be worthwhile for some to read. The decision was taken for no other reason
but for posterity to know something about the accountability of the government
towards its people. There was a moment of hesitation though, when it struck me
that my words would attract the usual vituperative utterances from those who
have the irresistible urge to be in media light. But then I found that Benjamin
Franklin had also said, ‘Anyone can criticize, condemn and complain…and most
fools do.’
It was then that I decided to persevere, regardless of the opportunity being
provided to such people. In pursuit of that decision of mine, I am going to
narrate to you a story—the story of my life, a story of how events and people
touched me in myriad, simple ways, releasing immense energies and inspiration
which I did not know existed in me. I hope my thoughts will resonate with the
people who read this book and wonder what holds them back from doing only
that much—not too much—only that much which society expects of them. It is
not a tall order. Each one of us has it in him or her to do it. Maybe your time to
seize this opportunity is yet to come. I am writing this for thousands of young
men and women who see it all happen; have the resolve and inspiration to meet
the challenge, but may not rise to the occasion when the opportunity arises and
so, sadly, may see it pass. I would, therefore, alert them to keep their radar fully
functional because there is no advance warning. Life gives only one chance—
don’t fritter it away.
Hence, I present to you this book. It is not about creating a sensation or
revealing mysteries. It is not about running down anyone or deriding the
administration. It is not about finding fault and paraphrasing audit reports of the
comptroller and auditor general (CAG).
This is a book about accountability. It is about transparency. It is about that
vital quality in society of which we seem to have created a huge deficit. It is
about ethics. It is about how a nation—which prides itself on the greatness of
Ashoka, the nobility of Akbar, the compassion of Buddha and the courage of
Gandhi—seems to have lost its moorings. It is about how we are now mired in a
whirlpool of decadence and malevolence in society, opacity in administration
and, above all, a total lack of leadership in the higher echelons. The book is
about how we have renounced excellence and settled for mediocrity as our
guiding beacon. The book seeks to reinvigorate among us, especially GenNext,
the spirit and quality for striving for the very best in every pursuit of life. It seeks
to delve deep into the conscience of the reader, provoking him into seeking a
higher order of accountability from institutions, so that the vision of the framers
of the Constitution is fulfilled. It is all about our responsibility to bequeath a
system to the coming generation which not only strives for excellence but is also
built on an edifice of probity, transparency and accountability.
We are a proud nation with an ambition to see the country become a
superpower in all spheres—economic, scientific, military, sports—and we wish
to assume leadership in international affairs. In an endeavour to look at some of
these areas, I have drawn on five case studies based on the audits done by the
officers of the Indian audit and accounts department. I have relied on them as no
study of the financial dealings of the state can be more authentic than a scrutiny
of these reports. The facts in the audit reports are unimpeachable. The
methodology is transparent, and the inferences unassailable. We may certainly
differ on the conclusions derived from these inferences, but that is a matter of
perspective.
I have no regrets whatsoever about the reports put out by the department.
We do not have to be contrite about anything that was stated in them. In fact, I
am proud of having had an opportunity to be part of a professionally sound and
totally apolitical team—a team which has commanded respect and approbation
all over the globe, a team with impeccable professional credentials, whose
findings resonate well with objective commentators in the country.
Audits were done by specialists in different areas of administration. Their
product, a labour of untiring effort, is there for all to see. In any other
dispensation, these professionals would have been applauded. In ours, they have
been called ‘untrained’. They deserve better. Maybe they had to pay for the
direction and guidance provided to them by me. But I take solace from the
thought that they are trained auditors and their audit capabilities have been
honed to such perfection that no criticism or pressure from whatever source will
detract them from the assigned task.
Till a while ago, apologists for the government were crying themselves
hoarse, putting a substantial part of the blame, if not all, on audit—nay, the CAG
—for the slowdown in economic growth and policy paralysis. They unabashedly
besmirched the robustness of the Indian economy, painting it as so fragile that a
couple of audit reports would do it irreparable damage. They did not realize that
the public did not believe them. They failed to see that their explanation was an
alibi for non-performance. It was a bogey. They did not realize that, through
their actions, they only underscored those common platitudes—the worst wheel
in the cart makes the most noise, or the empty vessel is the loudest. The noise
was made by those who realized their ways, and hence their days, were over.
In a parliamentary democracy, a government can be only as good as we
make it. If the government falters, the folly is that of the ultimate stakeholder:
‘we, the people’. Hence, if things went wrong for the country and the economy,
it was probably—in fact, most definitely—because we permitted it to drift, safe
as we were in our own insular environment, totally divorced from harsh realities.
This was a dangerous trend, as our appetite and threshold to accommodate
malfeasance and inefficiency was increasing with every general election that we
endured.
In that context, the one incident that really stirred our conscience—the
proverbial last straw on the camel’s back—was the horrific bus incident in New
Delhi involving the young lady who lost her life in December 2012. Her brave
struggle against the perpetrators of the crime and her ultimate sacrifice
awakened the somnolent conscience of a nation that had lost the capacity to
think for itself. This stirring was provoked not only by the clarion call of a frail
old man but also the despair of millions of young men and women who
spontaneously descended on the streets of Jantar Mantar and India Gate to
register their protest against and concern about the way in which the society and
the nation were headed. And what did we do? We read the signals wrong as
usual—we water-cannoned them in the month of December. This was the psyche
which, by then, revelled in shooting the messenger. It highlighted the
complacency of a nation which had completely misread the Mahatma’s message
of ‘see no evil, hear no evil, speak no evil’. It is this paradigm that I wish to
address in the book. Should we just shut our eyes at the wrongdoing and blindly
shoot the messenger who uncovers the wrong? Has this attitude become the soul
of the nation?
Through some of the case studies that I have presented, I propose to
familiarize the readers about the message that the messenger was trying to
convey. If we had read it correctly, the economy would have become more
robust, the nation better respected, and we, the people, would not have suffered
from the mood of despondency that envelopes us. We need not focus on the
delinquents, as the law will deal with them. We need to invest our energies on
how to ensure that such aberrations do not recur; that systems and, more
importantly, the people who operate the systems, work towards professional
excellence as an end.
 Today, for India, development is not an option—it is a necessity. The lives
and livelihoods of far too many people are at stake. Development cannot be
sustainable unless it is premised on an edifice of transparency, accountability
and ethical governance. Government spending needs to be done wisely. The
nation’s natural resources are finite and have to be exploited to achieve the twin
objectives of people’s welfare and the mobilization of resources. The moot point
is that it is not the maximization of resources that the CAG was talking about,
but only the mobilization. Thus while a developing country—or for that matter,
any country—has to strive to fulfil the welfare needs of its people, its schemes
and programmes directed towards such fulfilment can be successful only if it can
mobilize resources effectively. And as these resources are generally exploited by
a private partner, it is logical to exercise robust economic principles.
The issues that audit dwelt upon were of taking remedial action at the
appropriate time, for which not only audit but various other agencies such as
citizens’ groups, the media and non-governmental organizations were raising
alarm signals. The nation was crying out for a leader to emerge, take control and
ensure that there were no further slippages. Separately, there is need for the
private party partners to introspect whether entities who are in business for the
long haul need to be rent seekers or need to seek only maximization of normal
profit.
The case studies chosen are across a spectrum that portray a diversity in
failures.
The issuance of licenses for the second generation spectrum allotment
underscored procedural irregularities that were intentionally committed. Even
though the alarm bells were ringing loud and clear within and outside the
government, no one had the courage to stop the entire process from being
hijacked. Goal posts were being shifted, and every protesting department of the
government was told to stay out, with their advice being labelled as ‘out of
context’. The government was certainly not caught napping, as the design
became apparent as early as January 2006 itself, when the terms of reference
were framed for the group of ministers and spectrum pricing was sought to be
kept out of its ambit. Again, when no meeting of the group of ministers was
allowed to take place by the then minister for telecommunications, the prime
minister’s office silently acquiesced. It was only after a revision of the terms in
December 2006 that the group of ministers met.
The conduct of the Commonwealth Games was a tale of how a flawed
model of delivery of the games was designed, despite the country having seen a
different model being successful for the 1982 Asian Games. This was a clear
failure of leadership; a failure of the agencies in government, who were not
working as a cohesive whole; a failure of those entrusted with the conduct of the
games, who did not follow the well-trodden and accepted path.
The coal story is a classic example of how those entrusted with
safeguarding the nation’s natural resources allowed it to be frittered away to
agencies who were neither capable of exploiting the resources nor had the intent
to do so. In the process, they lost the licenses which were later cancelled by the
court. Power generation—the avowed objective—fell by the wayside and,
finally, it was the economy that suffered by being deprived of that critical input
which would have been the engine for growth.
The exploration of hydrocarbon is a story of a model of public-private
partnerships which does not, till this day, inspire trust or confidence in either the
production sharing contract (which regulates the partnership), or in the actions of
the government or the operator. Furthermore, it does not assure us that the
nation’s resources are indeed being exploited in the best interests of the nation.
The civil aviation story is a tragic tale of an airline which was once the
pride of the nation—its logo conveying warm and pleasant dreams of a palace in
the sky. It has now come to such a sorry pass that the salaries of its employees
were delayed for over five months. It is a saga in which generations of ministers
and CEOs could not control the downslide, and the airline continues to be a
parasite on the national exchequer.
In the last few years, the country has also been held captive by ‘cronyism’.
Cronyism extends to handing out contracts and rigging bids for the undeserving,
which has done untold harm to the economy. Agencies with inadequate domain
knowledge have cornered contracts and national finite resources. They have
muscled their way into major infrastructure projects, thereby denying the
meritorious their legitimate due. This has been a direct consequence of opacity
in government procedures, which has killed competition and the efficiency of the
market system. A number of credible voices have been raised against the
cancerous spread of this phenomenon, but remedial measures are being
sacrificed at the altar of the compulsions of coalition politics.
If public accountability is indeed the essence of democracy, why is it that
we have not been able to enforce such accountability? We repeat the same
mistakes. GenNext is fed-up and inquiring whether we continue to err by design.
Also, why do we allow less than one per cent of the population of the country,
comprising elected and selected ‘public servants’, to make themselves rulers,
while the rest of the ninety-nine per cent remain ruled? We will be called upon
to answer these queries.
I hope that ‘jan sunwai’ will soon take its toll on the wrongdoers, and that
ultimately, transparency, probity and good governance will indeed be brought
about by a determined people.
And hopefully, in my lifetime itself.
THE JOURNEY
FOLLIES
5

FIRST COME, (NOT) FIRST SERVED: THE 2G SAGA

I feel somewhat sad, because I was the one who insisted that spectrum allocation should be
transparent, it should be fair, it should be equitable. I was the one who insisted that coal blocks
should be allocated on the basis of auctions.29
—Prime Minister Manmohan Singh, 3 January 2014

r Prime Minister, people wonder, if you were indeed convinced that

spectrum allocation should be transparent, what prevented you from executing
your wishes? Had you, in fact, stood steadfastly by your beliefs, the fate of UPA
II might have been different. In fact, the fate of the Indian economy itself might
have been very different.
Instead, you engaged in a routine and ‘distanced’ handling of the entire
allocation process, in spite of the fact that the then communications minister, A.
Raja, had indicated to you, in writing, the action he proposed to take. Insistence
on the process being fair could have prevented the course of events during which
canons of financial propriety were overlooked, unleashing what probably is the
biggest scam in the history of Independent India.

To get a perspective on the unfolding of this mega scam, let us briefly go

through the history of telecom in India.
Till 1994, the state was the monopoly agency providing communication
facilities in India. It was in 1994 that the government announced the National
Telecom Policy (NTP 1994) which laid out the roadmap for the future of
telecom in India by defining certain important objectives (including the
availability of telephones on demand, the provision of world-class services at
reasonable prices, etc.) and targets. Crucially, and in recognition of the fact that
the government alone could not deliver the set targets, it concluded that private
investment and the involvement of the private sector was required to bridge the
resource gap. NTP 1994 thus opened the telecom sector to private sector
participation, albeit in a phased manner, from the early 1990s.
This led to exponential sectoral growth. As of 31 March 2010, India had
621.3 million telephone connections, with wireless connections (584.3 million)
outstripping fixed lines (37 million). India has, undeniably, benefitted greatly
from the telecom revolution, with the sector growing faster than it has in any
other part of the world.

Radio waves are a form of electromagnetic radiation which, like visible light or
infrared, make up a portion of the entire spectrum. They cannot be perceived by
human eyes or ears, and they are not harmful in the environment. Depending on
their frequency (measured in hertz), radio waves can pass through solid objects
and travel long distances. This makes them useful for mobile communications,
broadcasting and many other wireless applications.30
2G is a colloquial reference to second-generation wireless telephone
technology. In view of the substantial upgrade it offered over the first
generation, which was confined basically to voice telephony, 2G licenses were
much in demand. There were three basic benefits of 2G networks:

Based on narrowband digital networks, signals were digitally encrypted

thus dramatically improving the quality of calls while also reducing the
complexity of data transmission.
These systems were significantly more efficient on the spectrum, allowing
for greater mobile phone penetration levels.
They allowed data services for mobiles, such as text messaging.

The radio frequency spectrum for this technology to transmit voice, mail, data or
broadcasting through handheld devices is finite but not consumable. In India, the
department of telecommunications (DoT), which falls within the purview of the
ministry of communications and information technology, is the custodian of the
spectrum, and responsible for its allocation. It also has the authority to issue
licenses to operators in the telecom sector.

The licensing of cellular services was done in phases. Under NTP 1994, the first
phase saw only two cellular mobile telephone services being allotted in the four
metros, based on a ‘beauty parade’31 procedure. In the second phase in
December 1995, two more services were awarded in eighteen telecom services
through a process of competitive bidding. In 1999, a revised policy, NTP 1999,
was announced, and existing operators were allowed to migrate to a revenue
sharing regime. The upfront payment was an entry fee, with the annual license
fee to be paid separately. The entry fee was fixed on the basis of the highest bid
received in the 2001 auction of licenses. It was 1,651 crore for pan-India
licenses, corresponding to circle-specific fees. The entry fee had spectrum
embedded in it. What needs to be noted in all these policy changes is that the
award of all licenses was done through a market discovery or bidding process.
In September 2003, Prime Minister Atal Bihari Vajpayee constituted a
group of ministers (GoM) on telecom issues. The resultant report of the GoM
was approved by the union cabinet in October 2003, and these recommendations
became an addendum to NTP 1999. According to this policy formulation, the
existing system of licensing was to be replaced by a unified licensing/automatic
authorization regime. In addition, the cabinet also decided to constitute a GoM to
recommend an efficient pricing formula for spectrum and for the vacation of
spectrum by the ministry of defence. This was enunciated through the terms of
reference of the GoM, issued by the cabinet secretary in February 2006
[Appendix 5].
However, the then telecommunications minister, Dayanidhi Maran,
objected to spectrum pricing being included in the terms of reference of the
GoM [Appendix 6]. He wrote to the prime minister (by then Dr Manmohan
Singh had taken over) stating that it was his ministry’s prerogative to decide on
spectrum pricing, and asked for the pricing clause to be removed from the terms
of reference of the GoM. No meeting of the GoM was held till the PMO
acquiesced. Revised terms of reference for the GoM were issued in December
2006, excluding the spectrum pricing clause [Appendix 7]. Surprisingly, no one
pointed out that this revision of the terms of reference was contrary to the
cabinet decision of October 2003, which had given an equal role to the ministry
of finance in spectrum pricing. Maran’s insistence on retaining spectrum pricing
within his own ministry came under tremendous adverse scrutiny in 2007.
It may be recalled that in the entire run-up to the issuance of licenses, DoT
stood by its viewpoint of not permitting any change in spectrum pricing, which
had been arrived at in 2001 for allocation of 2G spectrum in 2008, and blocked
attempts by the prime minister and the ministry of finance to engage in a review
of the pricing formula.

A. Raja succeeded Dayanidhi Maran as telecommunications minister in May

2007, both ministers being from the Dravida Munnetra Kazhagam (DMK) party.
It was then that the process for spectrum allocation gathered momentum. Raja
decided to continue with the internally adopted principle of first-come-first-
served (FCFS) for the allocation of spectrum: every application received at the
central registry section of the DoT would be assigned its priority based on its
date of receipt. Raja was categorical, as evident in his correspondence with the
PMO:

he would follow the FCFS process;

there would be no cap on the number of licenses in a service area;
low tariff improved the reach and spread of services;
suggestions of referring the allocation issue to the GoM were ‘totally out of
context’.

So he was seemingly candid in wanting to decide the issue himself.

To understand the process as it unfolded, let us delve into the
correspondence leading to the issuance of the letters of intent (LoI) on 10
January 2008.
2 November 2007 stands out as a red-letter day in the saga of what later
came to be referred to as the 2G scam. This day saw the start of a flurry of
correspondence32 [Appendix 8] that would change the course of India’s political
history. It started with A. Raja, then the communications and information
technology minister, writing to the prime minister to inform him that the telecom
regulatory authority of India (TRAI) had earlier recommended ‘no cap’ on the
number of licenses that could be issued in a particular service area, as a result of
which a press release was issued on 25 September 2007 and applications were
invited for telecom licenses. The last date for submitting applications was 1
October 2007. Since there were an unprecedented number of applications—575
applications had been received for 22 service areas—the ministry of
communications sought the advice of the ministry of law on how to deal with
them. The ministry of law’s advice was to refer the issue, for an appropriate
decision, to the eGoM. On this advice, Raja, in his letter to the prime minister,
emphatically wrote, ‘[the] ministry of law, instead of examining the legal
tenability of alternative procedures, suggested referring the matter to an
empowered group of ministers […] the suggestion of law ministry is totally out
of context.’33 Raja went on to inform the prime minister that the DoT had
decided to continue with the existing policy of ‘FCFS’ for processing the
applications, and advanced the cut-off date to that day itself (that is, the date
when the press release inviting applications appeared in the newspapers: 25
September 2007). He assured the prime minister that ‘the department is not
deviating from the existing procedures’.34
The prime minister responded the same day [Appendix 8]. Among other
issues, the prime minister expressed concern about ‘processing of a large number
of applications received for fresh licenses against the backdrop of inadequate
spectrum to cater to overall demand’. In a note that was enclosed with this letter,
the prime minister elaborated on the issue:
DoT has received a large number of applications for new licenses in
various telecom circles. Since spectrum is very limited, even in the
next several years all the licensees may never be able to get spectrum.
The telecom policy that had been approved by the Union Cabinet in
1999 specifically stated that new licenses would be given subject to
availability of spectrum.35
The prime minister advised Raja to consider a transparent methodology of
auctions wherever legally and technically feasible and to consider a revision of
the entry fee, which ‘is currently benchmarked on old spectrum auction figures’.
Raja sent a prompt response, within hours on the same day [Appendix 8].
He wrote, ‘The issue of auction of spectrum was considered by TRAI and the
telecom commission and was not recommended as the existing license holders
[…] have got it without any spectrum charge’. He went on to say that holding an
auction would be ‘unfair, discriminatory, arbitrary and capricious’.36 He, as it
later turned out, erroneously assured the prime minister that there was enough,
and more, spectrum available for everyone for 2G services.
Information on the DoT’s plan of action was obviously leaking out and
causing widespread concern in official circles—a foreboding that something
radically wrong was likely to happen. Some such information seems to have
reached Kamal Nath, the then commerce and industry minister. On 3 November
2007, he wrote to the prime minister stating, ‘I am writing this letter with
concern on the sudden and alarming developments in the telecom sector.’37 He
went on to add that fair play was vital for the image of India across the globe,
and that a GoM be asked to comprehensively study all the issues facing the
telecom sector.
Raja wrote to the prime minister again on 15 November 2007 [Appendix 8].
Referring to the concerns expressed by Kamal Nath, which had been brought to
his notice by the prime minister, he assured the prime minister that:
 […] in the last six months, Indian industry, including the telecom
sector, has shown good growth [.…] 7 million subscribers are being
added per month and quarterly results of these companies have shown
one of the best results ever which is also reflected in the increasing
share prices of these companies on the Indian Stock Exchanges. […]
Since the department has decided to continue with the existing policy
[FCFS] for processing of applications, the suggestion of Shri Kamal
Nath for setting up of GOM is out of context.
In an obviously sarcastic reference to what had been mentioned by Kamal Nath
in his letter to the prime minister, Raja adds, ‘I would also like to clarify that I
am equally concerned about the image of India across the globe and assure you
that all decisions taken by me will be guided by the larger interest of the public,
competition and [the] growth of telecom sector’.
The prime minister responded to this letter on 21 November 2007
[Appendix 8]. This letter has to be noted for its wording, and hence is
reproduced.
21 November 2007
Dear Shri Raja,
I have received your letter of 15 November, 2007 regarding the recent
developments in the telecom sector.
With warm regards.
Yours sincerely,
Manmohan Singh
The scene then shifts to 26 December 2007, when Raja again wrote to the prime
minister [Appendix 8]. Referring to his letter of 2 November and subsequent
discussions which he had had with the prime minister and the then external
affairs minister, Pranab Mukherjee, Raja categorically stated:
As I have already promised to you, my efforts in this sector are
intended to give lower tariff to the consumers and to bring higher
teledensity in the country, more specifically in the rural areas. It is
needless to say that tariff in India is not as cheap as claimed in terms
of purchasing power parity and standard of living of the country since
there is no tariff fixation. In these circumstances, the discussions with
the external affairs minister and solicitor general of India have further
enlightened me to take a pre-emptive and pro-active decision on these
 issues as per the guidelines and rules framed there under to avoid any
further confusions and delay.38
At the end of the enclosure attached to the letter, he stated:
Since the file for issue of LoI to all eligible applicants was approved
by me on 2-11-2007, it is proposed to implement the decision without
further delay and without any departure from existing guidelines.
Unbelievably, the prime minister chose to ignore the red flags of deviation from
policy, and questionable facts and figures offered by the minister. His response,
on 3 January 2008, was remarkable for its content. I reproduce it merely to bring
home the point of the distanced dealing of the issue [Appendix 8]. He wrote:
3 January 2008
Dear Shri Raja,
I have received your letter of 26 December, 2007 regarding recent
developments in the telecom sector.
With warm regards.
Yours sincerely,
Manmohan Singh
A template response (see the prime minister’s letter of 21 November 2007,
reproduced earlier) if there ever was one, and that too, to an issue which shook
the government and the country. Those were identically worded letters; only the
dates are different.

It is obvious from the exchange of these letters that the prime minister was
indeed aware of Raja’s intentions as far back as November/December 2007. He
chose, for reasons which can only be speculated, to ignore the warning signals.
He failed to direct his minister to follow his advice, the counsel of the ministries
of law and finance, and the commerce minister Kamal Nath’s suggestion that the
issue be brought to a GoM for threadbare discussion.
Why, and under what compulsion, did the prime minister allow Raja to
have his way, which permitted a finite national resource to be gifted at a
throwaway price to private companies—private companies that, going by the
minister’s own admission, were ‘enjoying the best results […] which was also
reflected in their increasing share prices’? If only Prime Minister Manmohan
Singh had responded differently; if only he had instead said—‘I have received
your letter of 26 December 2007. Please do not take any precipitate action till we
or the GoM have discussed this.’ Such a letter would have changed the course of
UPA II. It is for this reason that I have, at the outset, asserted that had the prime
minister insisted on transparency, as he claimed on 3 January 2014, the course of
political history of this county would have been different. But more on this later.
There were strong interjections from the ministry of finance that clearly felt
that applying a price determined in 2001, without indexation, was inappropriate.
However, this was brushed aside. Giving finite spectrum to a private party for
commercial exploitation, even if it enhances teledensity, requires a balance
between revenue generation and achieving social objectives. It needs to be
emphasized that even the tenth five-year plan document on spectrum policy
mentions that ‘pricing needs to be based on relative demand and supply over
space and time in a dynamic manner, [with] opportunity cost to reflect the
relative scarcity of the resource in a given situation.’39 Thus, the action of the
DoT to take a price discovered in 2001, when the sector was still nascent, and
apply it after a passage of seven years in spite of changes in market conditions,
and in the face of contrary advice from the PMO and the ministries of finance
and law, certainly does not pass any test of transparency.
The DoT constantly emphasized that its decision was taken to serve the
twin objectives of providing cheap telephony and deeper teledensity. In fact,
Raja, in his letter to the prime minister on 15 November 2007 writes: ‘I agree
that telecom tariff in the country are [sic] one of the lowest in the world.
However, these may be seen in conjunction with the lower input costs and per
capita income in the country.’ Doing a volte face in his next letter of 26
December 2007 to the prime minister, he writes: ‘It is needless to say that the
tariff in India is not as cheap as claimed in terms of purchasing power parity and
standard of living in the country since there is no tariff fixation.’ What do we
believe? Telecom tariff the ‘lowest in the world’ or ‘tariff in India is not as
cheap’? Contradictory statements in successive months.
Let us approach the argument of teledensity. NTP 1999 had fixed a
teledensity target of providing 15 telephone connections per 100 [in population],
to be achieved by 2010. In September 2007, a teledensity of 18.22 had already
been reached. The eleventh five-year plan had targetted 500 million connections
by 2010; this target, too, was achieved early—in September 2009. It is obviously
no one’s case that we need to sit back once a target is achieved, but surely
revenue mobilization, in lieu of a scarce national resource being made available
for private commercial exploitation where tariff is not fixed, cannot be totally
overlooked.
Was this data not available with the government—the PMO, the ministry of
finance and even the officialdom of the DoT—to counter Raja’s consistent and
constant refrain?
Now let us examine Raja’s assertion that there had been ‘no single
deviation or departure in the rules and procedures contemplated in all decisions
taken by my ministry and as such full transparency is being maintained…’40 The
DoT had decided to continue with the so-called existing policy of FCFS for
processing applications. The minister also confirmed that an unprecedented
number of applications had been received by the cut-off date of 1 October 2007.
This is the date which was announced by a press release issued on 24 September
2007 after being personally approved, indeed amended, by the minister himself.
However, despite making a public announcement along these lines, Raja
arbitrarily advanced the cut-off date to 25 September 2007. Why? No credible
explanation was offered. Though Raja clearly indicated this to the prime minister
in his letter of 2 November 2007, the PMO chose not to object. Why it chose not
to, remains unclear.
Let us go a step further. FCFS, as the term suggests, is meant to have
chronological seniority. One would be surprised to learn that even this
procedure, which was repeatedly reiterated to the prime minister by Raja, was
given the go-by, and all applications submitted between March 2006 and 25
September 2007 were considered together. The applications submitted between
March 2006 and 25 September 2007 were issued the LoIs simultaneously on a
single day, that is, 10 January 2008, when a notice was issued through a press
release giving less than an hour to collect the LoIs. Thus, not only was the goal
post shifted from 1 October 2007 to 25 September 2007, but the principle for
issuance of LoIs became the compliance date, and even this date seems to have
been known to a select thirteen applicants in advance of the issuance of the press
release. The oft-repeated claims of transparency and objectivity were further put
paid to when certain applicants appeared with demand drafts of thousands of
crores of rupees having been issued even before the date of the press release.41
It was becoming clear that the minister was shooting off letters to the prime
minister and others from his personal office, rather than on behalf of the
department. In fact, the DoT was in the dark. My doubt was confirmed when I
looked closely at the letters: while correspondence emerging from the
department stated FCFS to be ‘first-come-first-served’, that emerging under the
signature of the minister (including the press release of 7 January 2008, featured
in Appendix 9 with the minister’s personal corrections) mentioned FCFS as
‘first-cum-first served’ [emphasis mine]. This clearly established the fact that the
department and the minister did not appear to be in sync. Let alone transparency
before the world, there was no transparency between the minister’s office and
the department. Or else the correction would have been made.
What is even more illuminating than the correspondence between Raja and
the prime minister and the press release of 7 January 2008, is the examination
and notings on the files within the PMO on the letters written by Raja, which
were not made available to audit, but came into the public domain after the files
were given by the PMO to the JPC. These show detailed internal examination,
but not leading to any output from the PMO to the DoT.
Letters written by A. Raja were examined in the PMO and it was concluded
by the joint secretary, Vini Mahajan, that there was a perceptible difference of
opinion between the ministry of communications and the ministry of law.
According to the ‘Transaction of Business Rules of the Government of India’,
‘cases in which a difference of opinion arises between two or more ministries
and a cabinet decision is desired, shall be brought before the cabinet’.42 Officials
in the PMO advised that this norm be communicated to the ministry of
communications, but the prime minister desired that a deeper examination be
made of the action proposed by the DoT. This was on 7 November 2007. Was
time being gained?
Pulok Chatterji, then the additional secretary at the PMO, went into the
issue in greater depth. In a note to the prime minister on 6 January 2008, he
concluded that:

Spectrum available to mobile operators in India is much less than in other

countries.
Traffic density in the larger urban areas of India is much more than in cities
abroad, in terms of a unit of measurement called erlang/km2, and that it was
over 75 in Mumbai as compared to 10 in Sweden and 15 in Berlin. [This
measurement indicated that on an average a mobile user in India used his
phone 6-7 times more than someone in Europe.]

He concluded, as had the ministry of finance, that ‘ideally in a situation where

spectrum is scarce, it should be auctioned’.43 By the time this note reached the
prime minister, the DoT had issued licenses. A noting on 11 January by Vini
Mahajan quotes the prime minister as stating that the DoT had issued licenses on
that day and the prime minister wanted the note to be accordingly modified.
Modified for what now? Clearly the stable doors had been opened and the
horses had bolted. What was the prime minister seeking to do with a modified
note? When Raja had clearly indicated his intention in his 26 December letter
and the PMO felt his action required a consultation in the cabinet, why was there
so much hesitation? Even after the so-called modified note was put up to the
prime minister by Pulok Chatterji on 15 January, Vini Mahajan recorded that the
prime minister still wanted this to be ‘informally shared with the Dept’.
Informally, still? Why? Vini Mahajan went on to record that ‘[the prime
minister] does not want a formal communication and wants PMO to be at arm’s
length’.44 How can the office of the prime minister distance itself from such
major decisions? Arm’s length from the action of his own government?

As we now know, the Indian audit and accounts department conducts only
external audit, which by definition is a post facto audit. The department is also
very clear in its understanding that it is merely an auditing agency and does not
enter the area of policy formulation which is the sole prerogative of the
executive or government. This fact has been specifically stated on the very first
page of the CAG’s report on spectrum allocation:
[…] while accepting the government’s prerogative to formulate policy
of UASL, it was felt [by audit] that an in-depth examination of
implementation of such policy needed to be done.
At no point was the CAG’s establishment seeking to influence, determine,
advise or constitute policy formulation. The CAG merely conducted an audit to
ascertain whether the laid down procedure/policy of the government had indeed
been followed—which, in this case, was the government’s decision to follow the
FCFS principle. In fact, the decision to give up the FCFS principle (followed in
2008) in favour of an auction process for 3G licensing (adopted in 2010) was
taken by the government itself, much before the CAG’s report appeared. The
auction for 3G was completed on 31 May 2010. The CAG’s report on 2G was
tabled in Parliament on 16 November 2010. So where was the question of the
CAG masquerading as a player in the policy domain? Furthermore, Raja
resigned as telecom minister even before the presentation of the report.

The CAG’s performance audit process invited a lot of attention and criticism, to
put it mildly, and not least for the so-called humongous figure that my team and
I ‘conjured up out of nowhere’, establishing the loss to the national exchequer.
There was and has been a lot of debate on why the CAG computed the potential
or presumptive loss to the national exchequer. One needn’t go further than the
March 2002 auditing standards released under the signature of the then CAG
V.K. Shunglu:
With regard to fraudulent practice or serious financial irregularities
detected during audit or examined by audit, a written report should be
prepared. This report should indicate the scope of audit, main findings,
total amount involved, modus operandi of the fraud or the irregularity,
accountability for the same and recommendations for improvement of
internal control system, fraud prevention and detection measures to
safeguard against recurrence of fraud/serious financial irregularity.45
It is clear that audit is duty bound to report on any perceived loss of revenue.
It wasn’t only the fact of calculating the loss, but also the methodology of
computing it that attracted widespread attention. The formula applied for
computing the loss was used after requisite deliberation, and based on a logical
understanding of tax laws in India and abroad. The other option before the audit
team was to use mathematical or econometric modelling. Such models are
premised on certain assumptions, which may or may not hold true in real life
market situations and would thus be vulnerable to criticism. Hence, the
modelling methodology was given the go. Audit was also aware that too much
was at stake for far too many important and influential people, and it could not
take the risk of having its computation being vulnerable to the intense
examination it was bound to be subjected to. It was thus decided to use data and
other indicators which were already in the public domain. The parameters that
were thus used were:

the rate offered by S Tel, as against what the government had fixed [S Tel
was one of the applicants for spectrum license];
the sale of equity of new licensees, as recorded in the stock exchange; and
the rates which emerged after the 3G auction.

Parameter 1: Let us accept the contention of the DoT that the FCFS procedure
was then the established practice, and that it was only natural for the department
to take that route. All the concerned departments, including the PMO, had
objected to the entry fee of 2001 being made applicable for new operators in
2008. The DoT decided, against such advice, to charge the entry fee discovered
in 2001, even for new licensees under the Unified Access Services (UAS)
regime. The entry fee for a pan-India UAS license discovered in 2001 was
1,651 crore. In view of the rapid changes which had catapulted teledensity from
3.58 in 2001 to 26.22 in 2008, the incongruity of applying that price was staring
everyone in the face.
When the DoT was in the process of releasing spectrum at that price, S Tel,
one of the bidding companies, wrote to the prime minister (in November 2007)
volunteering to pay an additional revenue share of 6,000 crore. In a subsequent
communication (dated 27 December 2007), the company enhanced this offer to
13,752 crore over a period of ten years for an allotment of 6.2 MHz. It also
offered to increase its bid in the event of a counter bid. These developments
occurred much before the LoIs were issued, providing ample time for the
government to rethink and re-evaluate its course of action.
There could have been no clearer indication of what the market could bear
for allotment of spectrum. Had this price been accepted by the DoT, they would
have realized 65,909 crore as against 12,386 crore realized for 122 new
licenses and 35 licenses under dual technology. In fact, upon finding that their
offer had not being accepted, S Tel went to the Delhi High Court and got the
court to direct the government to reconsider its offer. When even the
reconsideration did not yield positive results, the company approached the
Supreme Court. This is indicative of their seriousness to pursue their bid. They
finally withdrew their bid in March 2010, when their competitors had already
got their UAS licenses along with spectrum and had established their
infrastructure.
Very many arguments based on technicalities have been offered against this
parameter being used by the CAG. However, the entire narration of the sincere
attempt by S Tel, and the substantially higher price it was offering in comparison
to that fixed by the DoT, is clearly indicative of the revenue foregone by not
applying a realistically benchmarked price, based on a reading of what the
market could bear.
Parameter 2: The total foreign direct investment (FDI) permissible to an
applicant company was 74 per cent. The level of foreign investment that several
new entrants, along with existing licensees, were able to attract after getting the
spectrum license was exceedingly illuminating. In the case of Unitech, which
had no previous experience in the telecom business, Telenor, a Norwegian
company, agreed to acquire a 67.25 per cent stake for 6,120 crore. Tata
Teleservices sold a 27.31 per cent stake to NTT Docomo at a value of 12,924
crore. Even Swan Telecom sold 44.73 per cent stake to Etisalat International at
3,217 crore.
Is that not clearly indicative of the value the market attached to the 2G
spectrum license? Even a cursory back-of-the-envelope calculation will indicate
that licenses which could have fetched between 8,000 to 9,000 crore were
priced at 1,658 crore by DoT. Hence, one reaches the the inescapable
conclusion that the revenue which could have accrued to the national exchequer
was gifted to the new licensees in the form of huge capital infusion for enriching
businesses. Can the CAG then be faulted for its commonsense conclusion? Here
again, various arguments have been trotted out that this was for additional equity
being infused and was not a direct profit to the licensees. Again, did this not
indicate that the scrip of that company could command that price only after
being awarded the spectrum license?
Parameter 3: The avowed government policy of FCFS gave way to the
process of auction for 3G allocation. This was completed on 31 May 2010, and
fetched the government handsome revenue. The rationale or logic of this
comparison as a parameter for computing loss lies in the CAG taking note of
TRAI’s report of 2010, wherein it stated that 2G licensees were, in fact, offering
more than 2G capability: ‘While comparing spectral efficiency and other factors,
it is fair to compare the existing 2.75G systems with 3G systems’.46 Hence, we
compared the revenue accrual of 2G with that of 3G. And this brought us to the
presumptive loss figure of 1.76 lakh crore. These are merely indicative figures.
They convey an order of magnitude. No doubt, the media and public imagination
were captured by this figure, and the government got fixated on it.
In computing presumptive losses, we have clearly stated that while the fact
of loss to the national exchequer can hardly be denied, the quantum of loss can
be debated. We sincerely believe that the government itself validated our
computations by debating the loss—from the now famous ‘zero loss hypothesis’
to the 32,000 crore mentioned by the CBI.

While auditing the telecom department, two exit conferences had already been
held, as against the standard practice of having only one conference. The then
secretary of the telecom department, P.J. Thomas who, of course, was only a
recent entrant to the department, came to see me. He expressed the concerns of
his minister, and also mentioned that the minister had gone to meet the principal
secretary to the prime minister on the issue. Just as an aside, I asked him why the
minister chose to meet the principal secretary, and not the prime minister.
Thomas’ response conveyed so much: ‘My minister believes it is not enough to
appease the deity, you have to appease the pujari [priest] also.’ A remarkable
hypothesis, isn’t it?
Anyway, the sum total of that meeting in the PMO was a request for yet
another exit conference, as apparently the telecom department had additional
facts that it wished to apprise the audit team about. We granted the third exit
conference. The department’s officials came. When asked about the new facts
they wanted to apprise us about, their reply was that they had been asked to meet
us, which is why they had come. They had nothing new to offer.
All audits, including performance audits, are conducted by audit teams
drawn from field offices. Field offices in the case of state governments are those
of the accountants general (audit) in state capitals. In the central government
establishment, the principal directors of audit are located in significant places. In
the case of post and telecom audits, there is an independent office headed by a
director general ranked officer in Delhi. This office constitutes the audit team
and conducts audits of either government departments or public sector
enterprises under the post and telecommunications ministry through the branch
office which is also located in Delhi. The practice is as follows—audit memos
are issued after perusing files; once a response to these memos is received, a
draft report is prepared by the branch office and sent to the director general’s
office. He then verifies the draft and after making his own assessments, additions
and deletions, sends the draft report to the CAG headquarters. Here, it is
examined by a team headed by a director general and then the deputy CAG.
Only after this does it reach the CAG’s desk.
This procedure was followed to a T for the 2G spectrum audit. The audit of
the DoT was conducted by a three-member team of the Delhi branch office of
the director general of audit, post and telecommunications [DG (P&T)]. After
completing the audit, they submitted a draft report to the DG on 20 April 2010.
Among other issues, this report carried a loss figure of 48,374 crore. The DG
(P&T) did his own independent study of the draft and, on 31 May 2010,
submitted his report to the headquarters. In his report, the DG (P&T) revised the
figure of loss of revenue as estimated by his branch office to 2,645 crore. He
mentioned various figures in his draft report and covering letter. Some of these
were reasoned out but others were not adequately supported by arguments and
documents. The conclusions arrived at by the DG were based only on the audit
of the DoT. The DG had drawn attention to a computation made by him on the
voluntary offer of S Tel, as per which the loss of revenue to the government
would have been 65,725 crore. He had however not included this in his report
as he felt the offer had been withdrawn in the High Court. On verification by the
headquarters, it was learnt that the offer had actually been withdrawn by S Tel
two years later, much after the LoIs had been issued, in March 2010, and that too
in the Supreme Court. Hence, in final computations made, this figure was
retained as it was a clear and unequivocal representation of the price that
spectrum could command.
Using the third parameter, the DG also compared 3G rates with 2G rates
and arrived at a figure of 1.02 lakh crore. He had, however, not included this in
his report on the understanding that TRAI had not recommended charges for
spectrum roll out, other than entry fee. However, while not recommending an
auction, TRAI (in August 2007) had clearly stated: ‘In today’s dynamism and
unprecedented growth of telecom sector, the entry fee determined in 2001 is also
not the realistic price for obtaining a license. Perhaps it needs to be reassessed by
a market mechanism’.47
The DG’s audit obviously was incomplete because he was not privy to
advice by departments such as finance, law and the PMO, having only seen the
files of the DoT. He had thus recommended that the headquarters may ascertain
the views of the CVC, CBI, ministries of finance, law and company affairs, and
TRAI to arrive at a comprehensive picture.
The earlier report of the DG (P&T) was thus updated using these
parameters and additional inputs which had not been available to the DG when
he submitted his first draft on 31 May 2007. The DG, R.P. Singh, himself
forwarded this report to the secretary (telecommunications) on 19 July 2007.
This draft report, issued under R.P. Singh’s signature, states:
If the price of S Tel is used as [an] indicator of market valuation of 6.2
MHz of 2G spectrum at that time, value in respect of all 122 licenses
works out to 65,725 crore as against 9,013 crore collected by DoT.
Added to this is the value of new licenses for dual technology of
24,591 crore, totalling 90,316 crore.
He went on to state:
If price is calculated at 3G rates, which can also be taken as one of the
indicators for assessing the value of 2G spectrum […] the value works
out to 1,11,511 crore against the 9,013 crore realized by the DoT.
[Added to it is the value of dual technology and spectrum beyond
contracted quantity of 6.2 MHz to arrive at 1,76,379 crore in the draft
report itself.] Any loss ascertained while attempting to value the
spectrum can only be ‘presumptive’ given the fact that there are varied
determinants like its scarcity value, the nature of competition, business
plans envisaged, etc which, in a market condition, would throw up the
actual price at a given time […] Its presumptive value, based on
various available indicators, as indicated in chapter 5 ranged between
90,000 crore and 1,40,000 crore. In addition, the value of additional
 spectrum allotted beyond the contractual amount to existing nine
operators, based on the 3G rates worked out to 36,729 crore.48
I must add that at this stage R.P. Singh certainly did not express reservations in
the content of the report that he was transmitting to the DoT.
The perusal of the files of the ministry of finance had provided us with very
surprising inputs. That ministry was consistently questioning the sanctity of
continuing with a price determined way back in 2001 without any indexation or
current valuation. This viewpoint of the ministry of finance had found resonance
among the officials of the DoT. The member (finance) and the secretary had
concurred with the view. But Raja disagreed and very vehemently too. This is
what he recorded:
[…] officers have neither up to date knowledge of UAS guidelines nor
have bothered to go through [the] file [.…] These types of continuous
confusions observed on the file whoever be the officer concerned does
not show any legitimacy and integrity but only their vested interest [.
…] the matter of entry fee has been deliberated in the department,
several times in the light of the various guidelines issued by the
department and recommendations of TRAI and accordingly [a]
decision was taken that entry fee need not be revised.49
Vested interests, Mr Raja?
The DoT responded to R.P. Singh’s draft. These responses were considered
and incorporated by R.P. Singh. He then sent his report on 28 September 2010,
which contained the potential losses as they have appeared in the final report.
After that, the report was referred for peer review before a committee of five DG
level officers. There were detailed deliberations and the final version was then
put up before the deputy CAG and the ‘bond copy’, as it is called, before the
CAG.
After the bond copy is signed by the CAG, no one can make corrections in
the report without his approval. It is then printed and sent to government with
the DG signing and the CAG countersigning. As mentioned earlier, this
procedure was followed to the T in this case too.
It is not often that CAG reports having such significant discoveries find
their way into Parliament. Before putting out such startling conclusions one did
deliberate for days. Issues such as whether the department was on firm ground in
its findings, facts and figures repeatedly dogged us. What would be the reactions
and the consequences? Obviously there would be a backlash. Would we be able
to sustain ourselves and our point of view? I must state most categorically that
the professional content in the department is superb. The officers are apolitical;
their factual findings have been uncontested. We decided to take the plunge, as
not doing so would have left all of us with a lifetime of remorse and guilt. What
we had not factored in was the personal backlash that it brought forth. But then,
it is a fact of life—if someone is hit, he will hit back only at his own level. We
are not in the least repentant of our actions.
The final report was presented to Parliament on 16 November 2010. That
day, coincidentally, marked 150 years of the CAG’s existence. We had
scheduled a major event at Vigyan Bhawan. The president of India and the prime
minister were to participate. A reception was scheduled in the evening at the
CAG’s official residence. For the evening reception, the prime minister regretted
the invite, as did the president. This was the only reception at the CAG’s
residence in any departmental officer’s memory, and that too, for a rare event.
The president and the prime minister attend annual receptions at the residences
of the directors of the intelligence bureau and the CBI every year. Surely, the
Indian audit and accounts department could also do with some encouragement?
The prime minister arrived for the function at Vigyan Bhawan. He
expressed to me his disagreements regarding our conclusions in the report. I
mumbled my usual defence. He was visibly upset. Silence from my side was
called for.

The fact that the Supreme Court cancelled all 122 licenses is now history. The
auction, as per the directions of the Supreme Court, was conducted in November
2012. Only 17,343 crore was received as the bid amount from sale of spectrum
in eighteen circles and a one-time fee. Newspapers reported that the government
was indeed gleeful that the auction had flopped. Debunking allegations that the
government was celebrating the failure of the auction to substantiate its zero loss
theory, Sibal said, ‘We are sad with the situation. But the government is
confident of garnering 40,000 crore from spectrum sales as auction will
continue for the unsold circles till March [2013] end’.50 However, the
photographs that appeared in the papers when the three ministers held a press
conference said it all. One quote read: ‘Poor response to 2G auction shows
policy making should be left to the government’ (Kapil Sibal, information
technology and communications minister). Another said: ‘The 2G scam of 1.76
lakh crore is a myth’ (P. Chidambaram, finance minister).51
Soon the government completed about thirty rounds of eauction for the
allocation of 2G licenses for 900 and 1800 MHz in the four circles that had
received no bids in the earlier auction. The amount the government netted was
61,162 crore—close to the figure of 67,000 crore indicated by the CAG, and
one-and-a-half times beyond the government’s anticipation (as mentioned by
Sibal). Yet, there was no excitement that the government had got a huge amount
which would help plug its burgeoning fiscal deficit. There was no press
conference by ministers to announce this huge amount the auction had
mobilized. It was left to a lowly bureaucrat, telecommunications secretary M.F.
Farooqui, to state:
[…] the government will get at least an estimated amount of 18,200
crore this fiscal (out of the total bid amount of 61,162 crore), much
higher than the budget estimate of 11,300 crore.52
There was no celebration or glee being displayed this time around, despite the
huge support to the ways and means position.
After the auction, all newspaper headlines carried similar reports. ‘Auction
Shows Transparency Pays,’ The Times of India said on 15 February 2014. The
Pioneer went on to report:
Former CAG Vinod Rai and his team had the last laugh on Thursday
when the ten-day-long 2G spectrum auction ended by fetching
61,162-crore to the public exchequer. This whopping figure of the 2G
auction is much above the three-year-old 3G auction rates.53
It may be recalled that the CAG report was presented to Parliament on 16
November 2010. The telecom minister changed and Kapil Sibal took over. On 7
January 2011, he held a press conference propounding the now famous
hypothesis of ‘zero loss’. In this press conference, while he agreed with the CAG
that the rules and procedures had been ignored and goal posts shifted, he
disagreed on the loss figure.
Commenting on this press conference of 7 January 2011, in an editorial
titled ‘Zero Credibility’,54 T.N. Ninan concluded:
If we focus on the reality that the whole country can see, and not the
technicalities of government policy-making that Mr Sibal focused on,
the issue that remains to be debated is the quantum of loss to the
government. Mr Sibal questions the CAG’s figure of 1.76 lakh crore
on the perfectly valid argument that you cannot take a 2010 price and
apply it to a 2008 situation. But that is what the government itself did,
when it took a 2001 price and applied it in 2008, though the telecom
 scene had been transformed in between. As it happens, the CAG has
more than one figure of revenue loss. Several commentators have also
come up with numbers, which run into tens of thousands of crores.
And because of the aberrant manner in which Mr Raja handed out
these substantial gifts, it became the largest scam in our history. So
when Mr Sibal claims zero loss, I’m afraid he carries zero credibility.
How true, Mr Ninan!
I have dwelt, indeed laboured on this particular case study, as it was the
first in the unfolding of a series of misguided actions of a government that
seemed to have forgotten its oath to preserve and protect the interests of the
nation. It was not as if the primus inter pares or other members of the cabinet
were not aware of what was happening; indeed, the whole nation was seized of
it. Why then was the saga allowed to unfold? From day one, the attempt was to
live in denial, to shoot the messenger, and if this wasn’t possible, to puncture the
credibility of an organization that had withstood all possible scrutiny for 150
years. The now (in)famous conference, propounding the equally (in)famous
‘zero loss’ hypothesis was a precise attempt at doing just this—proclaiming that
there was no malfeasance, and that the CAG had erred. Save a few committed
journalists and fellow travellers—who could be counted on the fingers of one
hand—none bought the myth.
This is a story that reflects a lack of probity. This is a story of the total
bankruptcy of any pretense of morality. This is a story of the misguided belief
that the underlying objective of all action is to remain in power, and keep a
coalition secure—the nation and its people be damned.
Hence, this is a story worth narrating.




—————————
29See ‘History Will Be Kinder to Me than the Media, Says Manmohan’, The Hindu, 3 January 2014.
30Groupe Speciale Mobile Association, in <http://www.gsma.com/spectrum/what-is-spectrum/>, accessed
on 5 July 2014.
31A beauty parade would fix the price of spectrum to ensure optimal utilization by awarding it to the
user(s) scoring the highest points against pre-set criteria.
32All letters are in the public domain, having been released by the PMO itself.
33See ‘Manmohan Singh-Raja Correspondence on 2G Spectrum’, The Hindu, in
<http://www.thehindu.com/multimedia/archive/00415/Manmohan-Raja_corre_415319a.pdf>, accessed on
28 July 2014.
34Ibid.
35Ibid.
36Ibid.
37See, ‘Parallel Report in the Form of Dissent Note on the Report of the JPC: Gurudas Dasgupta,’ The
Communist Party of India, 8 October 2013, in <http://www.communistparty.in/2013/10/parallel-report-in-
form-of-dissent-note.html>, accessed on 5 August 2014.
38See ‘Manmohan Singh-Raja Correspondence on 2G Spectrum’, The Hindu, in
<http://www.thehindu.com/multimedia/archive/00415/Manmohan-Raja_corre_415319a.pdf>, accessed on
28 July 2014.
39See Tenth Five-Year Plan, 2002-2007, in
<http://planningcommission.nic.in/plans/planrel/fiveyr/10th/volume2/v2_ch8_5.pdf>, accessed on 28 July
2014.
40Letter of Raja to the prime minister dated 2 November 2007.
41Audit has reproduced in its report the case of a demand draft (DD) issued in favour of M/s Volga
Properties Pvt Ltd for 315.46 crore on 24 December 2007, that is, much before 7 January 2008. Also M/s
Swan Telecom had a bank guarantee of 50 crore provided by Punjab National Bank on 6 November 2007
and updated on 10 January 2008 in Mumbai.
42See ‘PAC Critical of PMO’s Functioning’, The Hindu, 29 April 2011.
43See Shalini Singh, ‘Newspapers Show PMO Analysed and Agreed with Raja’s Actions Before 2G
Scam’, The Hindu, 6 May 2014.
44See Shalini Singh, ‘Within 2 Weeks of the 2G Scam, PM wanted “Arm’s Length” from Raja’, The
Hindu, 19 March 2013.
45See Auditing Standards, 2nd Edition, 2002, in
<http://www.cag.gov.in/html/auditing_standards_ch4.htm>, accessed on 9 May 2014.
46‘Performance Audit Report on the Issue of Licences and Allocation of 2G Spectrum by the Department
of Telecommunications’, CAG, in <http://cag.gov.in/html/reports/civil/2010-11_19PA/chap5.pdf>,
accessed on 9 May 2014.
47See ‘Performance Audit Report on the Issue of Licences and Allocation of 2G Spectrum by the
Department of Telecommunications’, The Hindu, in
<http://www.thehindu.com/multimedia/archive/00288/Chapter_5_288338a.pdf>, accessed on 28 July 2014.
48Draft Report of the DG (P&T), 19 July 2007.
49Performance Audit Report on the Issue of Licences and Allocation of 2G Spectrum by the Department of
Telecommunications and Information Technology’, Report of the Comptroller and Auditor General of
India, No. 199, 2010-2011, p. 26.
50‘Govt Blames CAG for Flop 2G Auction’, Deccan Herald, 17 November 2012.
51‘Govt Still Hopes to Earn 40K Cr from 2G Spectrum Sale This Year’, Business Standard, 17 November
2012.
52See ‘Government to Make At Least 16,000 Crore in FY14 from Spectrum Auction’, The Economic
Times, 8 February 2014.
53‘CAG Vindicated, Cong’s “Zero Loss” Claim Busted’, The Pioneer, 15 February 2014.
54T.N. Ninan, ‘Zero Credibility’, Business Standard, 15 January 2011.
6

SOUND & FURY: THE PAC & JPC SAGA

When you have senior people like the CAG making such solemn statements that have no basis, should
I call it presumptive malice, or just carelessness?55

—Kapil Sibal
Did the CAG overstep the mark? To a neutral analyst, the conclusion is inevitable: the CAG must be
complimented for doing a stellar job in pointing out many systemic flaws. In the long run, the CAG
reports will make the government stronger, not weaker. 56

—Sukumar Mukhopadhyay hese are the routine comments that have

appeared in the press on audits that we have done. I need not give my opinion. It
would obviously be biased, as much as that of any government functionary. It
would nevertheless be worthwhile to ask: on what basis can ‘malice’ be
attributed to the CAG statements (or reports)? But more on that later.
The placement of the spectrum audit report in Parliament triggered a storm
in both houses. It was expected. The views were divided along party lines. This
was also expected. Parliament did not function for the entire winter session in
2010. The opposition demanded that a JPC be constituted to look into the
‘scam’. The government was not prepared to give in. The stand taken by both
was inexplicable. It was not clear what the opposition would be able to establish
through the JPC as the PAC could not even have its report tabled in Parliament.
On the other hand, considering the way precious Parliament time was being
wasted, the government would have to give in.
Finally, the JPC was set up in March 2011. Immediately afterwards, I wrote
to the chairperson offering our cooperation in providing any clarification,
background information or assistance that the committee may want. This was
against the backdrop of our experience of the PAC discussing the 2G report.
Here, a word on the CAG’s role and position in the PAC would be of
immense use to the reader. The PAC comprises twenty-two members, fifteen
from the Lok Sabha and seven from the Rajya Sabha. They are elected for a year
and they elect a chairperson, who is traditionally from the main opposition party.
The PAC is advised by the CAG—who, though not a member, has been
described as an ‘adjunct’. The CAG always sits to the right of the chairman and
on the same side as that of the aforementioned MPs. The officers of the
department who are summoned from time to time sit on the opposite side and are
termed as ‘witnesses’. Ordinarily, the CAG and his officers brief the committee
in advance, before the arrival of government witnesses, and then the CAG sits
quietly as a mute spectator, merely passing a chit or two to the chairman, if so
required.
In the briefing to explain the 2G audit report to the PAC, our experience
was rather strange. R.P. Singh, the DG (P&T) who had prepared the report,
made a PowerPoint presentation and explained all its myriad aspects. Then
members sought clarifications. The process that followed has been best
described by newspapers the next morning: ‘PAC Grills CAG’. (Though the
deliberations of the PAC are meant to be secret, and the chairman specifically
draws the attention of all participants to this fact at the beginning of each
meeting, the details invariably find their way into the press next morning.)
Members of the treasury benches spared no efforts to punch holes in the CAG
findings. I have attended PAC meetings both in the state and the centre, but
never have I seen the accountant general or the CAG being faulted for the
findings, and that too with the kind of virulence that was observed in that
meeting. Our findings were well-founded. Despite the intense questions that
followed, we held ground. Our facts were invincible.
The attempt of the treasury benches was merely to protect the different
personalities involved in the decision making process—in fact, to defend the
indefensible. This is something the members themselves acknowledged at the
lunch following the meeting. Their mandate was to offer resistance, which they
did valiantly. Their approach was: the troublemakers were not Raja, the DoT, the
telecom commission, the PMO, the ministry of finance, or the ministry of law—
it was the CAG who was at fault. I have never seen the PAC so clearly divided
along party lines and this was repeatedly commented upon by the chairman and
some members during the meeting.
It may be recalled that the PAC for 2010-2011 was constituted in April
2010. The chairman, Murli Manohar Joshi, wanted to know the stage of our
audits for 2G. I informed him that we were in the process of conducting the audit
and perhaps we could place the report in the monsoon session of Parliament. He
had his own information and views about the 2G allotment process and was not
willing to wait for our audit to be completed. Parliamentary procedure permitted
the PAC to conduct suo motu examination, and Joshi commenced collecting
evidence without our report. The PAC commenced their suo motu meetings on
30 June 2010 itself—which was a good four-and-a-half months before the
CAG’s report made it to Parliament. He held six meetings even before the report
was tabled in the house. Since the CAG is tradition bound to attend all PAC
meetings, my officers and I attended them. The chairman and members
examined witnesses from the telecommunications department, ministry of
finance, etc. In fact, they had their own interpretations and calculations of loss.
In one of the meetings, the then finance secretary, Ashok Chawla, was
closely questioned by the members as to why the ministry had not computed the
loss to the exchequer in the allocation procedure which had taken place. The
finance secretary (very rightly so) informed them that the ministry of finance did
not have the wherewithal to compute such losses. In fact, since all this is now
out in public domain, I can narrate that a ruling party MP observed that when the
ministry of finance had calculated losses in the SEZ policy (introduced by the
ministry of commerce) at 1.25 lakh crore or so, it was strange that the ministry
was professing helplessness in the calculation of these losses. He commented
that if the loss was a hundred crore rupees or less, maybe the government would
not care at his level, but the country was voicing its concerns over the loss in
thousands of crores! The discussion of this issue was very animated, and was
surprisingly on pure merit of the case, without partisan inputs due to political
affiliations. This was carried informally to the lunch table. The MP was firm
about the validity of his argument and insisted that the issue was not whether the
transaction of Swan was legal; the issue was that if 20 per cent to 40 per cent of
the shares were to be valued, and there was to be a price bid for a certain
amount, then even a tenth class student would be able to calculate that if the bid
was for 1,500 or 1,600 and he sold 50 per cent of this amount, the loss would
be assessed at 70,000 crore. He called it a black-and-white case as the
company’s shares had been valued on the basis of the price bid. He went on to
reiterate that it was obvious how much the government of India could have
secured by transparent bidding and asserted that even a section officer in the
government would be able to make this computation.
Now if an MP, and of the ruling party, makes such a strong assertion,
obviously the audit department has to take cognizance of that parameter for
computation. Not only so, another MP, a lawyer, asked an interesting question—
if it was known that a scarce national resource could fetch its true value by
competitive bidding, why was there no action by the ministry of finance between
2001 and 2010? He faulted the ministry of finance on the grounds that when so
much noise was being made for the faulty basis of collecting revenue from the
sale of spectrum, the ministry was expected to react proactively to defend the
revenues of the government. These discussions were taking place before the
CAG had firmed its audit observations; the CAG was privy to the exchange.
Could we, thus, ignore these comments in our report? I have elaborated on this
as such comments were being made before the CAG’s report had been placed in
Parliament—very objective comments, and absolutely on target. They
methodically and systematically analysed the issue and put forth views in a
transparent and theoretically sound manner.
We then switch to the very same MPs who were asked to discuss the CAG
report after it was presented to Parliament, and on which, at their request, a
presentation was made by DG R.P. Singh. The aim was to offer a better
understanding of the ‘technicalities’ in the report. By then, the battle lines were
drawn. The MPs tore into the CAG’s findings. Congress MPs walked up to me
during lunch time and said, ‘We have to ensure that the prime minister’s name
does not get dragged into this,’ adding, ‘What you people presented appears so
reasonable, but what do we do?’ Such are the ways of parliamentary democracy
as practised by some.
The moot question is this: now that we had computed loss of revenue on the
infusion of foreign equity in lieu of shares, why were we being faulted? Could
there be one set of views within the PAC, and another set against the CAG in
public, on the assumption that the secrecy of deliberations of parliamentary
committees would act as a shield? Gross double standards, are these not?

R.P. Singh was a valued teammate. He met me often and we conversed more as
colleagues than as CAG and DG. We discussed his move from Chandigarh to
Delhi to facilitate the marriage of his daughters—this transfer had been granted.
He even discussed strained personal relations with some of his seniors. What
was unexpected, therefore, was for him to claim that he was being compelled to
draw conclusions which were unacceptable to him. I do not think he can ever
make that claim, and in fairness to him, he has not made the claim that I ever
pressured him or that if there was ever pressure on him from any other quarter he
brought it to my notice.
I need to dwell a while on the statements of DG (P&T) R.P. Singh. He
conducted the audit on schedule and in his first draft report of 31 May 2010, had,
for reasons adduced by him, assailed his branch officers’ assessment of the loss
of 48,374 crore and refixed it at 2,645 crore based on indexation. For very
obvious reasons, the government and all those in favour of the government, who
were critical of the CAG’s assessment, never questioned his actions, or the fact
that he overruled his subordinate officer in the same way in which the CAG
headquarter office overruled the DG (P&T). R.P. Singh, after retirement, seemed
to have second thoughts about the report which he had signed and submitted. He
challenged his own findings and made much about being forced to approve a
report which he claimed was thrust on him. Fair enough. Anybody can have a
change of heart and conscience pangs.
But what did he say? Firstly, that the CAG’s report preparation was
influenced by the chairman of the PAC, Murli Manohar Joshi. Various
newspapers have quoted R.P. Singh on 24 November 2012 of having said this.
Indeed everyone who is anyone in the UPA picked this up and turned against the
CAG and the chairman of the PAC. The Indian Express ran the report as their
lead on the first page. Fortunately, by the next day, R.P. Singh corrected himself
and stated that it was not Joshi but a ‘PAC member’ who suggested a formula to
compute the loss.57 This was a U-turn,58 but a factually correct statement, as we
have seen in the preceding paragraphs. R.P. Singh, on a prominent TV channel,
clarified that he had not seen any evidence of the chairman influencing the
report.59 That then settled the issue.
On 24 April 2012, all newspapers had prominently reported that R.P. Singh
had told the JPC that the loss figures in the report were not his and in any case
‘no one can work out the actual loss and calculating presumptive loss would be
bringing in the individual element of judgment which is questionable’.60 This
statement is strange. I only hope that R.P. Singh didn’t actually say it. I say this
as it is well known that in his first draft report R.P. Singh had mentioned various
figures. He mentioned impact due to non-revision of the price based on the
voluntary offer of an operator to be 65,725 crore. He erroneously believed that
the operator withdrew the offer in the High Court when it was withdrawn in the
Supreme Court and that too two years later. He mentioned that if 2G rates were
to be pegged to the rates discovered through auction for 3G spectrum in May
2010, the impact would be 1,02,497 crore considering the price of 6.2 MHz of
spectrum as base. Additionally, his report included an amount of 36,729 crore
calculated on the total additional 2G spectrum beyond 6.2 MHz. This calculation
was based on 3G auction rates. So how can it be argued that 3G rates can be
used for one computation and not another? He then went on to mention a figure
of 2,645 crore based on the cost inflation index.
He thus covered the entire gamut. He used cost inflation and 3G auction
rates. Soon his report was examined at length and inputs from the ministry of
finance and other departments were taken. The new computation brought out the
following criteria:
This was the draft report of the DG (P&T) dated 19 July 2012, which was
issued to the DoT and the ministry of finance. I’d like to assert that R.P. Singh
didn’t demur while issuing this report.
Based on inputs from other departments, his final draft report contained the
following computation:

This final draft report was sent by R.P. Singh on 28 September 2010 to the
headquarters. Yet there was no objection, no protest, no voicing of any
disagreement. Having cleared all scrutiny, the CAG signed the bond copy, and
the processes that followed were merely mechanical; the printing of the report
and then the signing, first by the DG, and then the countersigning by the CAG.
This was also done without any protest.
Meetings of the JPC were another revelation. As mentioned earlier, I had
written to the chairman offering assistance of the department in the deliberations
of the JPC. This offer was accepted and we were invited for the first meeting.
We reached the Parliament annex, where the meeting was to be held, before the
appointed time. We were asked to wait a while as the JPC was involved in
internal discussions. We waited. And we waited. An official conveyed the
chairman’s request to wait a while more. We did. After over an hour, we sought
some tea from the service which had been laid out for the staff. We were told
that it could not be served till the JPC came out. Parliament officialdom at its
best. We were ushered in about an hour-and-a-half later. The chairman was
gracious and apologized for keeping us waiting. It was only the next day that we
learnt from the media that there was heated deliberation about whether the CAG
was to be seated with no ‘witness’ board in front of him or otherwise.
Thankfully, when we walked in, there was no ‘witness’ board in front of us. We
made a presentation. There was no interest in it. Members were out to disprove
every word of what we had written in the report. The discussions, ironically,
were along partisan lines. The questions asked and the observations made were
hilarious at times, and on occasion, so full of insinuation that it was difficult to
maintain one’s composure. What was remarkable was that members were
happier believing all that R.P. Singh had stated in the media, rather than what the
CAG and his team of officers from the department had to say.
One learned member in his opening statement stated that he had closely
read the articles in the Constitution pertaining to the CAG, and also the DPC Act
1971, and did not find clauses which empowered us to conduct the kind of audit
that we were conducting. We could not believe our ears; if the learned member’s
views were to be believed, we had been conducting audit, and performance audit
in particular, with no statutory backing for decades! Since I have separately dealt
with this issue earlier in the book, I do not propose to discuss our mandate once
more. It should be sufficient to state that the CAG has been empowered, under
Section 23 of the DPC Act, as the sole agency to decide the scope and extent of
audit.
The JPC report as also the deliberations got hijacked along party lines. No
recommendations to remedy the situation have emerged. The entire exercise, it is
widely believed, ended up damaging the credibility of the most important
institution in a democracy—the Parliament. It was left to the courts to take a
final call, which is bound to evoke responses of activism. But when some pillar
of democratic functioning cedes space, some other institution will move in to fill
the gap.

Let it not be anyone’s case that there is no scope for discussion, or indeed
dissent, in the department. As the CAG, I had followed an open door policy;
officers did not even have to take prior appointment. They were at liberty to
walk in and discuss all issues, official and personal. Consultation and consensus
building was the hallmark of the department. Major issues were always
discussed in the senior management meetings, which were religiously held every
month. Opinions were freely aired. Hence, the question of a colleague not being
able to voice an opinion is totally contrary to the position in the headquarters. I
am not in the least suggesting that the CAG did not exercise his judgement or
discretion. Yes, it was exercised, but invariably after reasons were recorded in
writing. If an oral opinion was expressed by an officer and did not meet with
support, the officer would be personally informed of the grounds for not
accepting his viewpoint.
I should cite a couple of instances in support of my assertion. On 4 October
2011, I was aghast to see on the first page of The Indian Express the following
headline: ‘CAG’s Latest Ambition: Let Us Audit the Padma Awards Now’.61
The report mentioned that the CAG had sought documents from the ministry of
home affairs (MHA) to facilitate an audit of the Padma Awards. The MHA had
declined to make these records available and had the backing in this decision of
the highest law officers in the government; besides, the files had been seen by P.
Chidambaram, the home minister, himself a legal luminary. The news item went
on to mention that the ‘CAG’ had a copy of the rules governing conferment of
the awards; that the ‘CAG’ sought a brief note on the procedures for selection;
that the ‘CAG’ persisted with his request. The trend in the media in recent times
is to label all draft reports, even at the state level, as CAG reports—though the
poor CAG or his officers in the headquarters do not even have a whiff of such
reports in the early stages! In this case too, the poor CAG was learning of the
proposed audit for the first time from the newspapers. I was shocked. Besides
holding the opinion that we were wasting our time on an issue such as this one, I
was astonished that so much correspondence had taken place and that no one had
brought this to my notice.
A word on the audit procedure. The field officer for auditing the
government of India offices in Delhi is the director general of audit, central
expenditure (DGACE), Delhi. He prepares his audit plan and, after discussions
with the concerned deputy CAG, implements it. There are about 104 such field
offices conducting audits round the year. It is thus only natural that the CAG will
not have knowledge of all the audits in progress at any point of time, as about
3,000 audit parties are typically conducting audits in different locations of the
country. The news reporter, who referred to the many transgressions of the
‘CAG’, was totally incorrect, as no correspondence from the audit office
mentioned the CAG. They were all from the office of the DGACE. It is another
thing that the DGACE is a subordinate office of the CAG.
I made haste to my office that morning, and asked for the files on this issue.
There were obviously no files of this nature in the headquarters. They were
procured from the office of the DGACE. I was further astonished to find that the
DGACE had repeatedly corresponded with the home secretary on the issue and
even asserted his authority to see the documents. The home secretary, instead of
picking up the phone and speaking to the CAG or the deputy CAG to sort out the
issue, launched an exercise in file ‘fattening’, seeking the opinion of attorneys
and what not! I gave oral instructions to stop the audit exercise forthwith. Later,
after perusing all the records, on 7 October 2011 I noted the following:
I am surprised so much of thought, effort and correspondence has been
undertaken on what I would term a ‘non issue’.
We need to get our priorities right. On the one hand, we complain
of shortage of staff and inadequate manpower to conduct regular audit.
On the other hand we delve into a realm where ab initio our mandate
can be contested. I feel this has been rightly contested by the MHA. I
am also surprised that correspondence has been undertaken with the
Secretary, Home on an issue which at best can be peripheral for the
audit establishment.
Are we not required to chase the rupee? Is there not enough
expenditure in other sectors requiring our attention? Are there not
enough amounts of procedural irregularities which need our urgent
attention and advice? If there are: at this point of time, I would feel
that we need not fritter our human resources on issues which cannot be
defined as ‘core issues’.
The police commissioner not facilitating an audit of Delhi police
on the request of the MHA is not an activity which can be compared
with our taking suo moto action to audit ‘management of Padma
Awards’. The former is an issue on which the writ of the MHA did not
run. At no point of time do I want our ‘turf’ to be questioned. In this
case: it has been. We may be on grounds which can be contested.
I also feel that before we write letters to officials such as
secretaries to major ministries of the central government, a prior
consultation with the headquarters is essential.
On a perusal of the file, I would suggest that we do not waste any
more time in legal examination or otherwise of this issue and commit
our scarce resources to procedural and expenditure irregularities of a
higher magnitude.
Vinod Rai
The audit process was, of course, stopped that day itself, but the DGACE wrote
back the following:

Office of the Director General of Audit,

Central Expenditure, New Delhi 110002.
Sub: Audit of Management of Padma Awards and Compliance Audit
of Provisions of Indian Telegraph Act/Rules for interception and
monitoring of telephone messages

1. The Indian Express newspaper carried 2 reports in its issues dated 4th October 2011 and 5th October
2011 on the actions taken by this Office relating to the Audit of the Management of Padma Awards.
These media reports conveyed an impression that the acts of this office were capricious and arbitrary.
2. Subsequently, this office received your d.o. no 1/RC/F-134/Padma Awards/2011 dated 11th October
2011 on this subject, which appears to be based on these media reports.
3. The media reports cast aspersions on the functioning of this office. As a result, the following
clarifications are placed below:
a) The documents sought from the ministry of home were based on the mandate contained in
Para 44 of the Regulations of Audit and Accounts 2007. These regulations have the force of
law. In our view, the text of this provision relating to the scope of Compliance audit is clear
and unambiguous (copy enclosed). Further, the Department has carried out several compliance
audits on topics that are non-financial in nature. Keeping in view the clarity of these
provisions and existing Departmental practices, any narrow interpretation, should now be
suitably reflected in Para 44 of the Audit Regulation. This will ensure that field offices take
appropriate action and that any disagreements are avoided ab-initio.
b) The topic was selected keeping in view its high level of sensitivity. This is a vital
parameter in topic selection. Further, there is little doubt that the Padma Awards embody high
value. Extensive background work was carried out before selecting the topic. The matter of
Padma Awards has also drawn the attention of the Supreme Court and Parliament. In fact, the
Supreme Court had observed, at one stage, that the Govt. Guidelines on the Padma Awards are
amenable to abuse and are wholly unsatisfactory.
c) This topic was included in the Annual Audit plan of this office as a thrust area and was
approved by Headquarters.
d) It would be pertinent to mention that the compliance audit of Indian Telegraph Act/Rules
for interception and monitoring of telephones messages had also been taken up on the basis of
the above mentioned Audit Regulation. Copies of relevant correspondence and minutes of the
meeting with Home Secretary, were communicated to Headquarters. All correspondence on
this subject has been classified as ‘Secret.’ We have no reason to believe that Headquarters did
not support our action in this regard.
It is in this context that the Padma Awards audit was actively pursued, since it too constituted
a compliance audit. As a result, the actions of this office have been documented.
e) Finally, our correspondence and meetings with the ministry of home have been courteous
and carefully calibrated. Matters were taken up with the Home Secretary only after exhausting
 other channels.
4. Please let me know if you need clarification on any part of the preceding text.
5. Keeping in view the adverse media publicity on this subject, I would request that this U.O. is also
seen by C&AG.

Roy Mathrani
Director General (CE)

In all fairness, the DGACE had exercised his judgement and gone ahead to
conduct the audit. After being told that it was the CAG’s opinion that he should
not proceed into the audit he wrote back to put forward his case. Perfectly
correct. In fact, Roy Mathrani, the then DGACE, discussed this issue with me
and I explained to him the need for us to prioritize the use of our scarce human
resources in the most optimal way. It would thus be a total travesty of truth if
one was to ever maintain that opinions within the department are not freely
expressed.
Let me briefly present another very interesting case. It may be recalled that
the Devas Antrix S-band spectrum issue attracted huge media attention. The
Hindu Business Line carried the following story: ‘CAG Goes After Another
Spectrum Deal’.62 This was another headline which made me sit up. The article
claimed that preliminary audit reports had established a loss of 2 lakh crore in
the deal. This was an audit being undertaken by the Bangalore branch office of
the principal director of audit (scientific department). I happened to be travelling
to Bangalore a few days later and discussed the audit query with the concerned
officer. The senior audit officer who conducted the audit meticulously explained
the process to me and on being questioned on the ostensible loss figures plainly
told me that he was well within his powers to do so! It is a different story that on
closer examination of that audit report in the headquarters we felt that the loss
figure had no basis, and hence dropped it.
If the viewpoint of certain sections of the JPC—who were aghast that the
CAG overruled the DG (P&T)’s figures of potential loss—were to be acceded
to, the CAG should not have exercised his discretion in dropping this
observation. No one raised a voice when the CAG overruled his subordinate
office in the Devas Antrix case. Why?
In yet another remarkable case, the principal director of audit (economic
and service ministries), while conducting an audit of an Ultra Mega Power
Project (UMPP), faulted the change of commercial conditions of Sasan UMPP.
His audit memo to the ministry of power quantified the quantum of financial
benefits based on the successful bidder to be 1,80,731 crore over twenty-five
years. This audit memo also found its way to the press. During the finalization of
the report in the headquarters, this financial benefit could be justified to only
29,033 crore. The principal director was upset that his viewpoint had not
prevailed. Not only so, he recorded his disagreement strongly.
Would you still insist on believing that the department does not permit
dissent? We appeared before the JPC over four sessions. We tried our best to
clarify every viewpoint that they were objectively willing to seek clarity for. The
PAC or the JPC could accept, reject or give their own recommendations on the
report. It is another matter, and that will be dealt with separately in the book, that
neither the PAC nor the JPC could prepare a unanimous report and present it to
the Parliament. That is an issue of empowering institutions of accountability and
ensuring that they are transparent and objective in their functioning.




—————————
55Joji Thomas Philip and Samanwaya Rautray, ‘CAG Statements: Carelessness or Presumptive Malice,
Asks Kapil Sibal’, The Economic Times, 27 May 2013.
56‘Did the CAG Overstep the Mark?’, Business Standard, 12 May 2013.
57See Karan Thapar, ‘Not Defending Govt on 2G Report; No Connection with the UPA, Says R.P. Singh’,
IBNLive, 25 November 2012, in <http://ibnlive.in.com/news/not-defending-govt-on-2g-report-no-
connection-with-the-upa-says-rp-singh/307362-37-64.html>, accessed on 11 July 2014.
58‘R.P. Singh Does Joshi U-Turn’, The Pioneer, 26 November 2012.
59See, Karan Thapar, ‘Not Defending Government on 2G Report: R.P. Singh’, IBNLive, 25 November
2012, in <http://m.ibnlive.com/news/not-defending-government-on-2g-report-rp-singh/307362-8.html>,
accessed on 11 July 2014.
60Appu Esthose Suresh, ‘Loss Figure Not Mine: R.P. Singh Told JPC Same’, The Indian Express, 24
November 2012.
61Maneesh Chhibber, ‘CAG’s Latest Ambition: Let Us Audit the Padma Awards Now’, The Indian
Express, 4 October 2011.
62D.S. Madhumathi and Thomas K. Thomas, ‘CAG Goes After Another Spectrum Deal’, The Hindu
Business Line, 7 February 2011.
7

THE PUNJABI WEDDING: COMMONWEALTH

GAMES 2010

Prithviraj Chavan who was then the Minister of State in the PMO, also initially alerted me that I
should be careful about releasing funds for the Commonwealth Games. The present CEC, S.Y.
Quraishi, who was my secretary in the sports ministry also shared my concerns against wasteful
expenditure in the CWG.63

—Mani Shankar Aiyar, former petroleum and natural gas minister

The CAG report is outdated—it is six to seven months old.64

—Sheila Dikshit, former chief minister of Delhi

he government hosted the XIX Commonwealth Games (CWG) in New

Delhi from 3-14 October 2010. It was a prestigious event, the largest-ever
sporting activity in the country, with about 5,000 foreign athletes and 2,000
officials participating. The games were conducted flawlessly. India got its
highest-ever medal tally, of 101 medals—thirty-eight gold, twenty-seven silver
and thirty-six bronze.
The organization of the games was a mammoth exercise involving
coordination between nineteen different agencies, so as to ready the
infrastructure needed to conduct the grand event. However, despite the fact that
the contracts to host the games were signed in March 2003, there were a large
number of reports as late as 2009 regarding tardy progress. While the agencies
involved in the preparations attempted to dispel the fears, the voices of
skepticism multiplied, and counter-claims were flying in the media and in
Parliament.
We were obviously reading these reports, which were appearing with
disturbing regularity. I would share my concerns regarding these stories with my
officers every other day. Apart from being auditors by profession, quite a few of
us were keen sportspersons—so the successful hosting of the games was dear to
us. One weekend, after the usual game of tennis, we got into a serious discussion
regarding the tardy preparations. We thought it was our bounden duty to study
the situation and advise the government with an objective report on the state of
preparedness of the different agencies for conducting the games. We put together
a very professional and capable team, led by K.R. Sriram, the principal director
of audit. We were clear that this was not an audit under Article 151 of the
Constitution, but merely a study designed to assist the government with an
objective assessment of the stage of preparedness. This would provide practical
and assistance to the administration, and help the government take remedial
measures and effect mid-course corrections for those projects woefully behind
schedule.
Towards this objective, audit conducted the field work between March and
May 2009, and brought out the report in July 2009, after holding the exit
conference with various stakeholders that month itself. I would like to emphasize
that the exit conference was in July and that the report was submitted in the same
month; hence our findings were totally up-to-date in terms of the physical status
of different projects.
Rather than appreciating the useful inputs provided to them and identifying
the high risk areas in terms of progress, the government became defensive and
started picking holes in the report. While I could understand such statements
emanating from officials trying to cover their inadequacies, I was really
disappointed when the chief minister of Delhi echoed similar sentiments
stridently, saying that our report was outdated and that the projects were, in fact,
on track.65 I wondered why a public leader of her stature would jeopardize the
reputation of her city, and the pride of the nation, merely to condone the sloppy
work of some officials.
It did not end there. As several agencies of the government were involved,
the cabinet secretary designated different officers with the responsibility of
replying to the deficiencies highlighted in the report. Little did they realize that
we were not seeking responses to our observations. The entire exercise was to
assist them in identifying the weak spots. If they felt things were on track and we
were off track, they could have ignored our study and moved on.
While India and the rest of the Commonwealth saw one deadline disappear
after another, and desperately waited for reassuring voices from the government,
M.S. Gill, the sports minister at that time, made a most distressing statement.
Organizing the games, he said, was like hosting a ‘Punjabi wedding’—things
would be done at the last moment, but all would be done well. Describing the
preparations for the games as jugaad, the minister, continued with the wedding
analogy, saying that ‘you keep collecting ladoos [sweets] and flowers till
midnight, but early morning you get the garlands and ladoos and hope the baraat
[wedding party] is happy.’66 The minister was living in a make-believe world,
totally oblivious to ground realities, and worst of all, applauding one of the most
regrettable aspects of our psyche—jugaad. We were shocked to hear him speak
thus, and just to rejig my memory, I went back to our report. What did it say?
The Aquatic Complex, the completion date for which was October 2009,
was only 42 per cent complete. The Siri Fort Sports Complex, again a
competition venue, was to be completed by December 2009; yet at the time of
filing the study report, it was only 46 per cent complete. The Yamuna Sports
Complex for archery and table tennis, which had to be completed by December
2009, was only 7 per cent and 46 per cent complete for the respective games.
This level of preparedness has to be compared with that of the city of
London for the 2012 Olympics. London had achieved 74 per cent completion for
the 2012 event in 2009. The idea guiding this was that at least two years ahead
of the Olympics, different venues would be available for training, familiarization
and for the testing of facilities. How did we fare in comparison? We were hoping
to have our spaces ready by the morning of 3 October 2010, the date of the
inaugural ceremony, very much like a Punjabi baraat. Professionalism? No. The
government, from its highest echelons, was not just prescribing jugaad but
applauding it too.
The organization of the games was no doubt a mammoth exercise. There
were seventeen venues to be readied and tested to Olympic standards. Thirty-one
agencies had a variety of roles and responsibilities; evidently, a well-knit
coordinating arrangement had to be in place. Amongst the agencies were the
Delhi Development Authority (DDA) headed by the lieutenant governor of
Delhi, the state public works department (PWD) headed by the chief minister of
Delhi, and the central public works department (CPWD) controlled by the
ministry of urban development. The ministry of sports was the nodal agency.
The organizing committee, headed by Suresh Kalmadi, the chairperson, had the
ultimate responsibility for conducting the games. While these elaborate
arrangements looked tidy on paper, the main problem was that each institution
was headed by a chief who zealously guarded his turf. There was no overarching
body which could put all the pieces together.

It is instructive to go back in history to understand the creation of the organizing

committee and, indeed, the ‘birth’ of the XIX CWG in India. It was in May 2003
that the Indian Olympic Association (IOA) submitted a formal bid to the
Commonwealth Games Federation (CGF). After the the Government of India,
the lieutenant governor of Delhi, and chief minister of Delhi gave guarantees to
underwrite any shortfall between revenue and expenditure in September 2003,
the CGF voted to allot the XIX CWG to Delhi. The Host City Contract was
signed in November 2003. The May 2003 bid document had detailed the nature
of the organizing committee as a non-profit, government-owned and registered
society; the executive board was to have a chairman, a government appointee,
and the vice chairman would be the IOA president. Very categorical.
Most mysteriously, in the course of the CAG’s performance audit
subsequent to the games being completed, the audit team discovered an
‘updated’ bid document which was datelined December 2003. No one could
explain the source of this document, given that the bid had been made in May
2003 and the Host City Contract signed in November 2003, one month before
this ‘updated’ bid document. There was no logic or relevance to an ‘updated’ bid
document. Its irrelevance notwithstanding, the document was significant in that
there was a marked difference in the nature and structure of the organizing
committee from what appeared in the May 2003 document: while the original
document described the organizing committee as being a government-owned
registered society, the ‘updated’ document showed it as a non-government
registered society. Moreover, whereas the former document had indicated that
the chairman would be a government appointee, and the vice chairman would be
the IOA president, the latter document omitted any references to the chairman
necessarily being a government appointee or the vice chairman being the
president of the IOA. No one took responsibility for this document. And yet it
turned out to be the foundation for the final organizational structure—the most
credible document.
In fact, this document formed the basis of a letter that Suresh Kalmadi,
president of IOA, wrote to the prime minister on 23 October 2004, stating that
the then sports minister, the late Sunil Dutt, did not have the correct perspective
on the role of the IOA in the games. He also observed that the games had been
allotted to the IOA and, as such, the association was responsible for ensuring the
successful conduct of the games. Extending this logic, Kalmadi went on to
apprise the prime minister that the organizing committee had to be formed by the
IOA and approved by the general assembly of the IOA. The prime minister
chaired the first meeting of the GoM—a core group constituted under the late
Arjun Singh, the former human resource development minister, to coordinate the
work related to the organization of the games—on 25 October 2004. The next
day, Kalmadi wrote to the prime minister again suggesting that he (Kalmadi)
should chair the organizing committee, and that the sports minister could chair
the ‘steering committee’—a totally new creation.
 Sunil Dutt wrote to the prime minister expressing surprise at Kalmadi’s
assertions.67 Even more interestingly, he expressed opposition to the minutes of
the GoM of 25 October 2004, asserting that the minutes of this GoM meeting did
not fully reflect the trend of the discussions.68 His assertion was found to be true
since, as per government procedure, draft minutes of the GoM minutes has to be
submitted by the ministry; what came back from the cabinet secretariat after
being approved by the prime minister was divergent.
In December 2004, the PMO wrote to the ministry of sports stating that
‘institutional arrangements’69 had been evolved for the conduct of the games and
that Suresh Kalmadi should be the chair of the organizing committee and the
executive board. This was endorsed by the GoM meeting of January 2005. On
10 February 2005, the organizing committee was registered under the Societies
Registration Act of 1860, with Suresh Kalmadi as the chairman by name, and
not as the president of the IOA.
Suresh Kalmadi had arrived.

Let me explain the model of governance formulated to deliver the games. The
organizing committee, the apex body, had 484 members (though this number
was later reduced to 454), with Kalmadi heading it. Twenty-three sub-
committees were carved out of the organizing committee to extend advice in
functional areas. There was another eighteen-member executive board of the
organizing committee. This had only two government nominees, and Kalmadi
chaired it. The day-to-day financial and administrative decisions were taken by
yet another body, the executive management committee, chaired by Kalmadi,
which had as members Randhir Singh, Lalit Bhanot (secretary general) and A.K.
Mattoo (treasurer).
The organizing committee thus became a parallel non-governmental entity
with no accountability to the government or concomitant controls to ensure
propriety and transparency, despite full funding from the government. This, in
fact, proved to be its undoing, as subsequent events revealed.
It is strange that we did not refer to the institutional structures which had
successfully delivered the Asian Games in 1982. The 1982 Asian Games had a
special organizing committee, with a cabinet minister level person heading it
(Buta Singh). This was not only the nodal coordinating body but also had
overriding powers over other agencies to ensure a holistic approach. None of the
glitches CWG 2010 went through seem to have affected the 1982 Asian Games.
The other case in point is the conduct of the Melbourne CWG 2006. A large
Indian contingent—comprising, among others, officials of the central and state
(Delhi) government and the IOA secretary—visited Melbourne to make an on-
the-spot study of their governance structure. The regional government of
Victoria was made responsible for the overall supervision and conduct of CWG
2006 through a specifically formed cabinet sub-committee, drawn from key
departments, and chaired by the prime minister. There was a specially appointed
minister for the CWG (Justin Madden), and he was responsible for administering
the Commonwealth Games Arrangements Act 2001. Under the Act, he had
wide-ranging powers for the planning and the delivery of the games
infrastructure which included venues, project orders and crowd management.
This clearly established the fact that the games were the sole responsibility of the
government and a clear hierarchical and unitary structure was created for its
management. It is rather surprising that the huge Indian contingent of 139 people
who went to study this did not come back and report these facts to their parent
departments.
Most importantly, it was only to help the government in this regard that we
took the initiative for the study report in July 2009. The purpose of the study was
to give specific recommendations—considering the complexity and multiplicity
of activities and the different claims and counter-claims of the participating
departments, there was a need to rethink the entire governance model for the
timely delivery of the games. There was no attempt to criticize or find fault. The
objective was to help the government in its endeavour to stage a world-class
CWG which would do India and Indians all over the globe proud.
On the first page of the report, it has been specifically mentioned:
We hope that the report, which has been prepared by us as independent
auditors with an arm’s-length approach from the implementing
agencies, will serve as a checklist and a ready reckoner to benchmark
further progress toward preparing the infrastructure and in staging the
games […] Much time has been lost and it is imperative to move
forward with the new found sense of urgency tempered by the
realization that crashing of timelines and bunching of decisions carry
with it the heightened risk of compromising transparency,
accountability and structural safety of the venues.70
Despite such warnings, with twelve days to go for the games, a suspension
pedestrian overbridge near Jawaharlal Nehru Stadium, the main venue,
collapsed.
An intriguing event in the CWG saga was the appointment of a high level
committee on 15 October 2010 (the games ended on 14 October 2010) to
examine irregularities, if any, that had been committed by any agency. This
came on the back of an atmosphere rife with allegations of wrongdoing. Every
activity invited adverse notice. The electronic media made a certain toilet in the
Games Village—and the organizing committee’s Lalit Bhanot’s statement that
the standards of hygiene in India are different71—famous across the globe, to
drive home the country’s unpreparedness. Possibly to downplay such allegations
and to quell the groundswell on the very morrow of the closing ceremony of the
games, the constitution of a high level committee, with its chairman having the
status of Supreme Court judge, was announced by the government, to examine
the ‘weaknesses in management, alleged misappropriation, irregularities,
wasteful expenditure and wrongdoing in the conduct of the games’72 and
recommend action. The chair of the committee was a former CAG, V.K.
Shunglu. This is rather strange because, on the one hand, the government was
crying hoarse about the excesses of the three Cs—the CAG, the CVC and the
CBI—and, on the other hand, it was getting a probe done obviously in addition
to what the CAG would do—thus scoring a self-goal. I distinctly remember
ringing up the cabinet secretary, K.M. Chandrasekhar, to ascertain if what the
papers were saying was indeed true. Chandrasekhar, at home due to a foot
ailment, evinced no information. The argument that the committee would deliver
its findings earlier than the CAG audit also didn’t hold water, as the CAG audits
had telescoped the timespan and were appearing rather fast. Any further
collapsing of time would not be fair to the audited entities as they would not get
a fair opportunity to respond to the queries against them. In fact, we did submit
our report, all of its 743 pages, by about February 2011.
But that is not the issue.
The cabinet secretary wrote to me on 23 April 2011, enclosing extracts of
the recommendation of the chairman of the high level committee as sent to the
prime minister, addressing the oversight mechanism for the games. The extract
enclosed was pertaining to the CAG. One of the observations was:
CAG by statute was obligated to audit the expenditure of the CWG.
This expenditure was incurred by government entities, eg, CPWD,
DDA, etc, and the OC [organizing committee]. CAG reports from
2004 to 2009 did not display significant material on the entities. Even
though by that date all contracting had been completed, considerable
expenditure had been incurred and a great deal of wrongdoing, which
has now been elucidated, had taken place. CAG did not audit the OC
 even though he was obligated to do so by Section 14 of the Act,
declined to do so in 2007 when the government following a Cabinet
decision requested him to take up this work, and commenced audit at
the end of 2008 under Section 21 which was inappropriate. It is
another matter that the audit, commenced in November-December
2008, remained incomplete to this date. Clearly there has been a
failure of audit.73
So added to all the politicians who were happily criticizing the CAG, here was a
former CAG faulting his two successors; an executive appointed committee
taking potshots at a constitutional body. Or was he meant to do so—hit at the
credibility of the CAG who had, by then, come out with the 2G report?
It is a different matter that the high level committee was factually
inaccurate on the various audits of the organizing committee, the history and
results of which incidentally have been covered on the first page of a 743-page
report, in chapter three, ‘The Audit Approach’.
But that is still not the issue.
The enclosure of recommendations of the high level committee sent to the
prime minister and forwarded for my comments by the cabinet secretary also had
the following recommendation, inter alia.
CAG organization is a monocracy no longer conducive to efficiency,
outcome and accountability. A three member body would obtain
greater transparency in its operations. One member should possess
professional accounting qualifications, CA or its transnational
equivalent. This should not seem to exclude an Indian Audits and
Accounts Service officer from the triumvirate, who has wide exposure
to finance, audit and accounts and best international practices in these
areas. CAG accounts should be audited by a professional auditor
appointed by the Public Accounts Committee.
This was a very interesting recommendation—just the thing that the likes of V.
Narayanasamy, minister of state in the PMO, was reported to be partial to:
‘Making the CAG a multi-member body, as recommended by the V.K. Shunglu
Committee, is under the active consideration of the government’.74 He even
publicly stated that the recommendation had been presented to a committee of
secretaries. What was a high level committee doing—constituted to report on the
conduct of the CWG—dabbling with recommendations on the structure of the
CAG, regarding which the Constitution (in Article 148) is very clear: ‘there shall
be a CAG’ [emphasis mine]? And where did the question of the CAG’s accounts
being audited arise from?
We set about preparing our reply to the recommendation. One of the best
features of the government is its remarkable capacity to retain, access and
manage institutional memory—efficient even in the pre-digital era. Government
files throw light on the deepest of mysteries. It was recalled that the national
commission to review the working of the Constitution, popularly known as the
‘Justice Venkatachaliah commission’ had also made some references to such a
suggestion in 2001. The CAG had examined the suggestion and given its
response. This response was dug out to facilitate a seamless and consistent
response.
Our position was that, globally, there are different models of unitary or
multi-member bodies of supreme audit institutions. While the professional
qualifications of the member(s) of the multi-member audit bodies differ from
agency to agency, the common thread running across multi-member bodies is
that they are empowered with quasi-judicial powers of audit and adjudication.
This is the provision prevalent in democracies with multi-member audit bodies
such as France, Korea, Norway, Japan, Portugal and Spain. Commonwealth
countries following the Westminster model of parliamentary democracy such a
Canada, UK, Australia and New Zealand have single member audit bodies. The
US Government Accountability Office is also single member. They have the
right to approach a court of law for enforcement of audit rights such as access to
documents.
We pointed out to the government that models such as the one in France sit
as quasi-judicial bodies (cour des comptes) and, besides having the power to
summon records or undertake physical verification, they are empowered to take
punitive action. The audit office is assisted by a public prosecutor, advocate
general and advocates who are also magistrates. Hence, the multi-member body,
with a chief called the ‘premier president’ of the cour des comptes, has far-
reaching powers, including the right to punish erring officials. This applies to
Norway, Spain and Korea too. In fact, the auditor general of Austria, though
having monocratic status, also has the power to take punitive action. In Japan,
the supreme audit institution includes a board of audit, which is multi-member,
with a chairman; they, too, have wide-ranging powers.
We thus left the decision to the government after apprising them of the
models prevalent in different global jurisdictions. If the government were to
adopt a multi-member body, they had to bestow it with concomitant wide-
ranging powers—powers that the present CAG does not possess. It was also
pointed out that the CAG is presently assisted by a multi-member collegium of
five deputy comptrollers and auditors general who are professionally qualified
and rich in experience.
The government was also informed that, in September 2001—in response
to the queries from the Justice Venkatachaliah commission—with the approval
of the then CAG, V.K. Shunglu, a similar response was sent. Obviously it was
decided to continue with the monocracy. How the situation, environment,
government functioning and other parameters had changed, prompting a fresh
recommendation, were not known.
Even as Narayanasamy gave great publicity to the recommendation of the
high level committee, early November 2012 brought forth a huge number of
statements decrying the attempts of the government to dilute the CAG’s powers.
I did not enter the media space for any of these issues, but the moot point is that
making the institution multi-member does not in any way dilute its powers. We
have the classic example of the election commission, which was made multi-
member post T.N. Seshan, the tenth chief election commissioner of India. If
politicians and political parties generally fear any agency, it is, in fact, only the
election commission. Even today, issues such as new bank licenses, gas price
hikes, or the appointment of a new chief of naval staff get referred to the election
commission if an election is in the horizon. Hence, making the CAG’s office
multi-member and entrusting it with the concomitant powers that go with such a
model would have given the institution the muscle that it woefully lacks today.
However, seeing the groundswell of opinion from all corners, the
government decided to recant the entire process. By 11 November 2012,
Narayanasamy came out with the usual denial of being misquoted or quoted out
of context by stating, ‘I did not say so [to make the CAG a multi-member body].
In fact, I was not specifically asked about CAG […] There appears to have been
an unsuccessful attempt to put words in my mouth.’75
By December 2012, the government had done a complete one-eighty-
degree turn. Replying to a question in Parliament on the appointment process of
the CAG, the ministry of finance stated:
There is no urgent concern about CAG being partisan or working in
favour of the government or a particular political party. As [the]
custodian of public purse, [the] CAG has played the role of a vanguard
in reporting on financial irregularities, irrespective of the government
in power.76
Matters went a step further. To counter a possible perception in the Supreme
Court on the independence of the information commission—of which, some
members were recently-retired government officials—the attorney general
stated, ‘We have a CAG who was a former finance secretary. Can it be said that
he is loyal to the government?’77
The issue of the structure of the CAG appeared to have been laid to rest.
But what was the clinching factor accounting for the government’s change of
heart? The outcry against a perceived attempt at dilution? Not really. The
dominating factor motivating their U-turn was the rather late realization that the
Constitution (Article 148) stated: ‘There shall be a Comptroller and Auditor
General of India’ [emphasis mine]. Hence making it multi-member would
require a constitutional amendment, which in turn would require a two-third
majority in Parliament. This would have been impossible for the government.
This provision is distinct, quite unlike the provision for the election commission,
for which Article 324(2) of the Constitution reads: ‘The Election Commission
shall consist of the Chief Election Commissioner and such number of other
Election Commissioners, if any, as the President may from time to time fix […]’
This realization was echoed by Narayanasamy when he stated that ‘any change
in the CAG’s basic functioning would require an amendment to the Constitution,
which was not even on the government’s agenda’.78 Well stated, Narayanasamy.
At least the limitations were realized, albeit rather late.
As regards the suggestion by the high level committee to have the accounts
of the CAG audited by a chartered accountant appointed by the PAC, the
suggestion in itself was preposterous. The CAG is the supreme audit institution
in the country. A direct analogy would be that of the Supreme Court, the highest
court in the land. So the suggestion was tantamount to a lower court being
appointed by Parliament to audit the judgements delivered by the Supreme
Court. In any case, the department explained to the cabinet secretary that the
only items of expenditure incurred by the CAG through the department’s own
budget were salary, travelling allowance and office expenditure. Budgetary
devolutions towards buildings and construction lay within the CPWD’s budget
which, in any case, gets audited. The CAG does not deliver any other
governmental scheme or project. Thus there is hardly any sizeable expenditure.
Even so, Article 151 of the Constitution vests the power of audit in relation to
accounts (including the accounts of the CAG and his department) with the CAG.
Entrustment of the audit of the CAG’s accounts to any other authority would be
ultra vires of a constitutional provision. This interpretation was upheld by the
attorney general at the time of framing of the CAG’s (Duties, Powers and
Conditions of Service) Act 1971, popularly referred to as the Audit Act.
I was conscious that questions such as ‘who audits the auditors’ would
arise. We were sensitive to this issue and, in any case, in the interest of
transparency, it would be a healthy tradition to have our processes and
procedures audited by a peer agency. Since, the CAG is the supreme audit
institution in the country, we decided to request any other equally competent
supreme audit institution to audit or peer review us. We thus asked the auditors
general of USA, UK, Austria and Australia if they could ‘audit’ us. In response
to our request, the national audit office of Australia agreed to lead an
international peer review team of thirteen persons, comprising five of their
auditors—two from Canada, two from Denmark, two from the Netherlands and
two from the USA. This team spent about seven months on the job, and even
visited some of our state-level offices, and gave its final report in October 2012.
This report was uploaded on our website immediately. It is in the public domain.
We have accepted and acted upon all the recommendations. I sincerely feel there
cannot be any other paradigm of transparency or healthier practices.

I do not propose to dwell at any length on our findings while auditing the
different projects of the CWG, as they are dealt with in detail in the 743-page
report submitted to the government within six months of the completion of the
games. However, the modus operandi was significant, in that it left much to be
desired. Mismanagement and the flouting of governmental norms appeared to
have been the norm. Let’s look through a few vignettes which are representative
of the entire problem.

The IOA bid of May 2003 estimated an all-inclusive cost of 1,200 crore.
As against this, the budget estimate in 2010 was 18,532 crore. And this
excluded the Delhi Metro Rail Corporation (DMRC), the Delhi
International Airport Limited (DIAL) and others.
The organizing committee consistently projected the games as revenue
neutral, if not as revenue surplus. This argument was trotted out to justify
the independence and financial autonomy of the organizing committee. It’s
a different matter that the organizing committee’s revenue projections were
seriously flawed. In March 2007, the revenue projected was 900 crore, and
in July 2008 it was enhanced to 1,780 crore. There was no robust basis for
this projection, other than possibly increasing the revenue projections so as
to match the rapidly increasing operating expenditure—all in an effort to
seemingly justify the financial autonomy of the organizing committee. The
revenue actually realized was 173.96 crore.
Sponsorship revenue had been projected at 960 crore; 375 crore was
 realized, and that too when two-thirds of this was contributed by the public
sector enterprises following a government directive to them to take up
sponsorship.
The organizing committee had projected 300 crore from donations/raffle;
the realization was 0.99 crore.
The organizing committee was responsible for tendering the catering
services in the Games Village as well as the various sporting venues. The
processing of the contracts meandered, taking over fourteen months. The
chairman cancelled the first tender, a single bid, against the
recommendation of his own officials. This was despite the single bid
document being opened on the verbal instructions of the chairman. Re-
tendering happened in June 2010. Transparency, quality and economy
became casualties.
The preparation of the venues was similarly haphazard. Various projects,
including the Shivaji Stadium, could not be completed on time. When
completed, this stadium has an east-west orientation, as against the
prescribed north-south orientation. Many projects lagged so far behind
schedule that they had to be delinked from the staging of the games.

The CAG’s performance audit concluded that the organization of the games was
negatively impacted by inexplicable delays in decision making, which put
pressure on timelines, thereby creating artificial alarm and urgency and a
misplaced sense of emergency. This obviously necessitated exemptions from
laid-down governance processes. Contracting procedures became a casualty.
Many contracts were entertained on single financial bids, and some even on a
nomination basis. This led to an elimination of competition. Consequently, the
economy of expenditure and all hopes of protecting the government’s financial
interests were thrown to the winds. The inescapable conclusion would be that
this was, in fact, the intended objective. An article in the Hindustan Times sums
up the situation:
A year later, and nine months after the Games, government auditors
and financial investigators were staring at possibly thousands of crores
of public money that went down the drain or vanished from the books
of Kalmadi’s seat of power: the organizing committee. But in its final
audit report of the Games—one of its most thorough probes—tabled in
Parliament on Friday, the CAG said it had sounded an alarm about the
Games long before anyone sniffed any foulplay. In a report submitted
to the Centre in July 2009, the CAG had said, ‘There was a need to
 rethink the governance model for the Games Project.’ The study
report, which is not really a financial audit like the present one, could
not have been more explicit. But no one listened. That’s not all.
Kalmadi and Co. had organized the Youth Commonwealth Games in
Pune in 2008. In that too, the CAG had found unmistakable signs of
fishy dealings. But again, everyone turned a blind eye. The 743-page
report goes through every shred of evidence across 33 departments in
the central and state governments in Delhi and Maharashtra. In the end
it pulls no punches in naming the high and mighty at all levels—be it
Delhi Chief Minister Sheila Dikshit or even PM Manmohan Singh—
along with the now-jailed Suresh Kalmadi […]79
The unfortunate tragedy is that despite the detailed and obvious
highlighting of flaws, irregularities and certain obvious acts of mala fide, there
didn’t appear to be any credible attempt to establish accountability. It will be a
great travesty of justice if the big fish get away and only some lowly engineers
and officers land up in the CBI net. There will be no deterrence. No
demonstration effect. No learning from past mistakes. No good practice
absorbed and no established model of governance which can deliver a similar
event smoothly next time around.
Unfortunately, the whole CWG project was premised on a bedrock of
obfuscation, lies and misdirected representation designed primarily for personal
projection and aggrandizement. From day one, it was the messenger who was
being placed in the dock. From day one, the rogue elements were being propped
up. What was the signal being sent? The signal was that the malfeasant acts of a
coterie would be allowed to go unchecked; the leadership would shut its eyes to
the shenanigans and machinations of a few who had been entrusted the prestige
of the nation. Once this message emerged, the others also joined the party.




—————————
63In an interview to NDTV, 4 July 2011.
64Commenting on the study report of the CAG on its preparedness for the Commonwealth Games, 2010.
See ‘CAG Report 6-7 Months Old: Dikshit on Games 2010’, NDTV, 14 September 2009, in
<http://www.ndtv.com/article/india/cag-report-6-7-months-old-dikshit-on-games-2010-8520>, accessed on
29 April 2014.
65See ‘No Need to Panic, Games on Track: Sheila Dikshit on Delhi Games’, NDTV, 31 July 2010.
66See Rajdeep Sardesai, ‘Organising CWG is Like a Punjabi Wedding’, IBNLive, 30 July 2010, in
<http://ibnlive.in.com/news/organising-cwg-is-like-a-punjabi-wedding/127870-5-23.html>, accessed on 29
April 2014.
67See ‘CWG Scam: M.S. Gill, Sunil Dutt Has Warned PM on Suresh Kalmadi’, India Today, 4 July 2011,
in <http://indiatoday.intoday.in/story/cwg-scam-ms-gill-sunil-dutt-warned-pm-on-suresh-
kalmadi/1/143659.html>, accessed on 30 April 2014.
68See ‘Performance Audit Report’, CAG, in
<http://saiindia.gov.in/english/home/Our_Products/Audit_report/Government_Wise/union_audit/recent_reports/union_
performance/2011_2012/Civil_%20Performance_Audits/Report_No_6_CWG/CWG%20English%20-
%20Part-1.pdf>, accessed on 12 July 2014.
69See ‘PMO Appointed Kalmadi Despite Sports Minister’s Objections: CAG’, DNA, 5 August 2011, in
<http://www.dnaindia.com/sport/report-pmo-appointed-kalmadi-despite-sports-ministers-objections-cag-
1572851>, accessed on 30 May 2014.
70See CWG, in
<http://saiindia.gov.in/english/home/Our_Products/Other_Reports/Study_Reports/commonwealth.pdf>,
accessed 15 July 2014.
71See Himani Chandel, ‘Our Standard of Hygiene Different, Defends Bhanot’, The Tribune, 21 September
2010.
72‘Terms of Reference of High Level Committee to Look into the Organisation and Conduct of the
Commonwealth Games–2010’, Press Information Bureau, Government of India, PMO, 25 October 2010, in
<http://pib.nic.in/newsite/PrintRelease.aspx?relid=66561>, accessed on 30 April 2014.
73See Amitav Ranjan, ‘CAG Monocracy, Not Accountable, Shunglu tells PM’, The Indian Express, 30
June 2011.
74Also see ‘Ministers Favour Multi-member CAG to Ensure More Transparency’, Deccan Herald, 14
November 2012, in <http://www.deccanherald.com/content/292067/ministers-favour-multi-member-
cag.html>, accessed on 30 April 2014.
75See Nagendar Sharma, ‘CAG Setup Not to be Touched: Narayanasamy’, Hindustan Times, 11 November
2012.
76See Saubhadra Chatterji, ‘Finance Ministry Gives Clean Chit to CAG’, Hindustan Times, 23 December
2012.
77See Soli Sorabjee, ‘The Big, Fat Indian Entertainment Show’, The New Indian Express, 8 December
2012.
78See Nagendar Sharma, ‘CAG Setup Not to be Touched: Narayanasamy’, Hindustan Times, 11 November
2012.
79Atul Mathur and Avishek G. Dastidar, ‘No One Heeded CAG’s Warning Bells’, Hindustan Times, 6
August 2011.
8

COAL THAT TURNED TO GOLD: MINE BLOCK

ALLOTMENTS

The view of the government has been that rational bidding is unlikely to increase the cost of coal
when compared to notified price of CIL [Coal India Limited]. Through competitive bidding,
prerogative in the selection of a lessee will be exercised in a more transparent and objective
manner.80

—Dasari Narayana Rao, former minister of state (coal), Lok Sabha, 28

November 2007
Coal allocation was a pro-people move because an auction would have sharply raised the prices of
power, steel and cement.81

—Sriprakash Jaiswal, former coal minister

aking a statement in Parliament on 27 August 2012 on the coal block

allocation issue, the prime minister said, ‘[The] ministry of power, too, felt that
auctioning of coal could lead to enhanced cost of producing coal.’82 These flip
flops in government are rather strange. Especially if we consider the following
noting of the coal secretary on 29 July 2004, which was endorsed by the prime
minister (as coal minister); he ordered that a system of bidding be introduced:
[…] the present system of allocation in the changed scenario, even
with the modifications, may not be able to achieve the objectives of
transparency and objectivity […] it is submitted that even after
auctioning, the cost of production of coal from captive mine blocks is
going to be considerably less than the price such a consumer of coal
would have paid for CIL coal, and therefore the impact on the price of
end product can only be downwards i.e., the cost of production of
steel, cement or power would be less when using captively mined coal
than it would have been if CIL coal were used.83
Speaking at the Idea Exchange programme of the Express Group, the power
minister, Veerappa Moily, said the guidelines would require companies in all
segments—ultra-mega, captive and merchant—generating power to participate
in bidding for selling electricity. The minister explained that his ministry has
framed new bidding guidelines to prevent private firms with cheap captive coal
mines from selling power at steep rates in the open market and reaping windfall
profits.84
The present governor of the RBI, Raghuram Rajan, in a column said,
‘India’s corrupt elites have moved from controlling licenses to cornering newly
valuable resources like land. The Resource Raj rose from the ashes of the
Licence Raj.’85
Whom do we believe? All represent the government. Should not the
government have a consistent viewpoint? And, if such inconsistencies were
emerging from the government, what was the CAG’s folly in this entire saga?
The decision to audit the ministry of coal?
Or, the decision to make the audit report public by placing it in Parliament?

The production of coal assumed critical importance after 2003, when the
government of India announced its mission of providing ‘power to all by
2012’.86 To ensure that this declared objective was met, it was recognized that
the private sector would need to be encouraged to invest in power projects.
Consequently, it would be essential to provide them with assured fuel linkage for
their plants.
Coal is the most easily available domestic raw material for power
generation, apart from being the most reliable source of energy. More than half
the current commercial energy requirement is met by coal. However, according
to planning commission estimates, the gap between demand and supply of
indigenous coal had been widening and was expected to be more than seventy
million metric tonnes in 2010-2011. With imports being expensive, private
sector participation was encouraged in the coal mining sector to counter the
perceived limitation of Coal India Limited (CIL) to enhance production to meet
the requirements of the new power generating projects.
So, how were we to give private operators access to these sources of coal
given that under the Coal Mines (Nationalisation) Act, 1973, coal mining was
the exclusive preserve of CIL? To fulfil the objective of giving access to coal
blocks to private power producers, the Coal Mines (Nationalisation) Amendment
Act, 1993, was passed in June 1993. This amendment allowed Indian companies
engaged in the generation of power, in addition to the iron and steel producers,
to engage in coal mining for their captive use.
Till 1993, there were no specific criteria for the allocation of coal blocks.
Allocations were being done based on letters of recommendation from the
concerned state governments. From 1993, the allocation began to be done by the
ministry of coal (MoC), based on the recommendations of the inter-ministerial
screening committee, set up in July 1992, under the chairmanship of the
secretary (coal). The committee also comprised officials from state governments
and CIL. This committee was to scrutinize applications for captive mining and
allocate coal blocks for development, subject to the statutes governing coal
mining, following which the coal minister would approve the allotment. In view
of the increased demand for coal in the tenth five-year plan, the growing number
of applications for coal blocks, and the significant volatility in the international
prices of coal, the government, in 2003, evolved a set of guidelines with the
objective of ensuring transparency and consistency in allocation.

The CAG conducts routine audits of government departments in rotation. Such

an audit was proposed and undertaken for the MoC in 2011. In the course of this
audit, in mid-2011, this procedure of allocation of coal blocks—that is, one
based on the recommendation of the screening committee—came under scrutiny.
The screening committee is expected to assess applications based on parameters
such as the techno-economic feasibility of the end-use project, status of
preparedness to set up the end-use project, past track record in executing
projects, financial and technical capabilities of applicant companies and the
recommendations of the concerned state governments and ministries.87 The
committee was thus required to scrutinize each application and, then, depending
on the merits and demerits of each competing application, take a decision to allot
the coal mine block to the most deserving. Such criteria notwithstanding, the
process that the committee actually followed was not really clear from the
records. All that the records showed was that the committee met, deliberated and
merely recorded the name of the block allotted to a company, and the state
where the end-use plant existed. It is left to the reader to decide if transparency
was a victim and, if so, how audit erred in pointing out this lacuna.

As already mentioned, by 2004, the demand for coal had increased substantially,
and there was a view that it would increase further. Hence, in July 2004, the then
secretary of the department recorded that since there was a substantial difference
between the price of coal supplied by CIL and coal produced through captive
mining, there was ‘a windfall gain’88 accruing to the allottee of the captive mine.
He went on to state that the then prevalent system of allocation by the screening
committee was unable to achieve the aims of transparency and objectivity in the
allocation process and that ‘there are pressures of all kinds’. He recommended
that there was a need to adopt a selection process which could be acceptable as
demonstrably more transparent and objective. Stating that the auctioning of coal
blocks through competitive bidding was a widely practised and acceptable
selection process that promoted the causes of transparency and objectivity, he
recommended a change in the system of allocation to one of competitive
bidding.
This note set the cat among the pigeons.

Since so much has been said and written about the turn of events after this note,
let us wade through history and observe the twists and turns in the course of
policy change. The secretary’s notes of 16 and 29 July 2004 found favour within
the PMO. While the process of preparing a note for the cabinet was on, the
secretary received a note from the PMO listing certain disadvantages of the
recommended system. This note appeared to have been handed to the PMO by a
person who was aware of the discussions to change the allotment procedure but
himself did not favour it. Nevertheless, the listed disadvantages were really of no
consequence and were easily countered by the department of coal in the draft
note for submission to the cabinet. The secretary stated in the draft:
There is hardly any merit in the objections raised against the open
bidding system [….] decision making through the Screening
Committee is much more tedious and difficult as Screening Committee
is subject to different kinds of pulls and pressure[s] and is unable to
take a decision in one sitting.
This in itself is a damaging indictment by the very person who was presiding
over the meetings of the committee and was seemingly bearing the strain of the
pulls and pressures. But then, changing the system was clearly not going to be
easy. On 4 October 2004, the minister of state for coal, Dasari Narayana Rao,
observed that any change in the procedure for the allocation of coal blocks
would invite further delay in allocation. As it was, the Coal Mines
(Nationalisation) Amendment Bill, 2000, envisaging competitive bidding as a
selection process for the allocation of blocks for commercial purposes, was
pending in the Rajya Sabha with stiff opposition from trade unions and others.
The minister also disagreed with the view that the screening committee could not
ensure transparent decision making and added that this alone was not adequate
ground for switching over to a new mechanism. He went on to argue that no
complaints had actually been received against that extant system, as also that all
stakeholders were happy with it and, in fact, opposed any change. He
recommended to the cabinet minister for coal that the proposal for change need
not be pursued.
This indeed was very ironic. The secretary was being overruled by the
person okaying the minutes of the screening committee which apparently merely
recorded the names of the companies being allocated the mine block—and he
was convinced that this system was transparent.
P.C. Parakh, then the coal secretary, continued undeterred in his thinking
that the extant procedure for coal mine block allotment would not stand scrutiny,
and hence pursued the matter with the PMO. It is on record that he discussed the
issue with the prime minister on 14 October 2004. At this meeting, it was felt
that since a number of applicants had requested for allotment of blocks based on
the existing allotment procedure, it would not be appropriate to change the
allotment procedure through competitive bidding, especially when the
applications had been received by the department on the basis of the existing
policy. Parakh went on to state that since the concept of allotment through
competitive bidding was first made public on 28 June 2004 at a stakeholder
meeting taken by the department, it would only be fair to have a cut-off date for
considering applications according to the existing procedure; the revised
procedure would then commence for applications received after 28 June 2004.
This indeed appears logical and fair. This proposal submitted by Parakh to the
coal minister, who still happened to be the prime minister, met with the latter’s
approval.
The PMO finally communicated to the MoC on 1 November 2004 that, as
decided by the prime minister on 14 October 2004, all applications received till
28 June 2004 would be considered by the extant policy and, thereafter, allotment
of coal blocks for captive mining would be made on the basis of competitive
bidding [Appendix 10]. This fact had to be suitably incorporated in the cabinet
note proposed to be submitted for the approval of the council of ministers. This
decision of the prime minister as the coal minister should have set to rest all
opinion on the issue. However, this was not to be.
Soon, the regular coal minister, Shibu Soren, got back to his job. When the
decision taken by the prime minister, albeit in his capacity as coal minister, was
presented to Soren, he commented on 25 February 2005:
 I have gone through the entire issue. As minister of coal, I am in
complete agreement with the views expressed by minister of state, coal
[Dasari Narayana Rao] in his note dated 4.10.2004 and as such the
proposal need not be proceeded further.
The minister was thus clearly overturning the decision taken by the prime
minister and concurring with his minister of state for coal. Both seemed keen to
continue with the extant procedure. It was, of course, purely fortuitous that
Shibu Soren had to step down once again and that the prime minister held charge
of the ministry of coal (yet again). The secretary, at that point, was still
struggling to get the draft cabinet note, seeking change in the allocation
procedures, approved. He sought approval of the note, clearly stating that the
decision on all applications received by 28 June 2004 (namely, the cut-off date
approved by the prime minister earlier for allocation through the extant
procedure) would have been taken by March 2005, and if the revised procedure
was not put in place quickly, pressures would again mount on the government
for continuing with the then prevalent procedure; this would not be desirable in
the interest of generating total transparency in the allocation of coal blocks. The
prime minister lent finality to the decision taken by him earlier and recorded his
approval of the cabinet note seeking sanction of the competitive bidding system
on 24 March 2005.
The tenacious Dasari Narayana Rao, however, had still not given up. He
continued to put his weight behind the existing system. Even as late as 4 July
2005, he argued that the full implication of a bidding-based system of allocation
needed to be carefully considered by the cabinet as there was a general
reluctance on the part of the power utilities to participate in bidding due to cost
implications. It is strange that the secretary and the prime minister (as the coal
minister) were oblivious to such fears and pressures. Nevertheless, Dasari
Narayana Rao’s efforts did bear fruit. What was even more significant was that,
fearing a change in the system, a spate of applications had been received and
these applicants particularly were putting pressure, demanding status quo in the
system. Their efforts, too, succeeded. In a landmark meeting in the PMO on 25
July 2005, it was decided that a new procedure for allocation could be
introduced only after the Coal Mines (Nationalisation) Act 1973 was amended
[Appendix 11].
However, amending the act would take some time. Equally, the interest of
power generation and fuel linkage would be adversely affected if allocation of
coal blocks was to be stopped. Hence, in the interest of power generation, the
landmark decision was that the MoC would continue to allot coal blocks for
captive mining through the extant (screening committee) procedure till the new
competitive bidding procedure became operational.
Since I have called this a landmark meeting, I need to focus a bit on it.
Parakh, the secretary of coal, mentioned in the meeting that with the passage of
time, the number of coal blocks available for captive mining were declining,
while the number of applications were growing. This had made the selection of
an applicant for the allocation of a coal block for captive mining vulnerable to
criticism on grounds of a lack of transparency and objectivity. It is in this
context, he explained, that the MoC proposed to introduce competitive bidding
for the allocation of a coal or lignite block for captive mines. The secretary of
the power department was of the opinion that bidding could increase the cost of
power, as the cost of coal happened to be a passthrough item for power tariff
determination. This opinion was countered by the joint secretary in the PMO, on
the grounds that rational bidding would ensure that the cost of coal so sourced
would be less than that procured from CIL or through imports. The secretary
(coal) continued to be of the opinion that the competitive bidding procedure
would tap only a part of the windfall profit that accrued to the companies which
were allocated captive coal blocks under the screening committee procedure.
Representatives of state governments felt that their inputs would be marginalized
and the change would lead to a centralization of power at the centre. However,
the PMO and the secretary (coal) assured all concerned that these anxieties
would certainly be addressed.
It was after incorporating all these viewpoints that it was decided to
continue with the allocation procedure for pending applications. Also, the
genuine concerns of the state governments were indeed sought to be factored in.
Being convinced of the benefit and objectivity of the new procedure, the
PMO pressed for a follow-up to the decision taken in the 25 July meeting.
However, the minister of state continued to hold a different opinion. When the
PMO’s urgency was brought to his notice, he maintained that any amendment to
the act would be time consuming, and that the PMO had allowed the department
to proceed with allocation of mine blocks under the extant procedure. Twenty
coal and eight lignite blocks had already been put on offer, for which
applications had been received and were under process. Hence, he maintained
that there was no exigency to pursue the cabinet note seeking approval of the
council of ministers for a change in procedures, and that the note could be
submitted at another appropriate time.
Here, we have a classic case in which the department and PMO are
convinced of the need for a change and such an amendment has been ordered by
the prime minister. However, the minister of state continues to hold another
opinion. The issue does not end there. A new angle was then brought up. The
earlier decision to amend the Coal Mines Act was not considered appropriate,
and in a meeting convened in the PMO in April 2006, it was felt that it would be
more appropriate to amend the Mines and Minerals (Development and
Regulation) Act (MMDR Act), 1957, so as to cover all minerals under
competitive bidding. So it was back to square one.
This opinion was promptly endorsed by the minister of state. He felt that
the entire issue needed to be revisited, and withdrawing the current powers of the
state government had the potential to become controversial. Meanwhile, Shibu
Soren had re-entered as minister. He continued to support the views of the
minister of state. He went on to remonstrate against the MoC, advising them to
‘refrain from making suggestions which had implications for federal polity’.89
While discussions were on to ensure competitive bidding without encroaching
on the powers of the state government, yet another side act was playing out. The
MoC was separately examining the legality and feasibility of introducing
competitive bidding by making rules under the Coal Mines Act read with the
Mines and Minerals Development Act, by referring it to the ministry of law. The
ministry of law examined the issue threadbare and after two years of protracted
correspondence made it clear, in July 2006, that the government had the option
of introducing competitive bidding by merely amending the existing
administrative instructions. This opinion was reiterated by the law secretary in
his note of 28 August 2006.
The MoC have sought our opinion as whether the allocation of coal
blocks can be based on competitive bidding and whether the same can
be provided for by the rules made under the Coal Mines
(Nationalisation) Act 1973. This department had earlier advised that
there is no specific provision for auction through competitive bidding
in the Act and for making rules for allocation of coal blocks for
captive mining through competitive bidding process the Coal Mines
(Nationalisation) Act 1973 should be suitably amended. When the
proposal for the amendment for this said Act was undertaken, a
suggestion was received from the Principal Secretary to the PM to the
effect that it would be appropriate to make such amendment in the
Mines and Mineral (Development and Regulation) Act 1957, which
would be applicable to all minerals covered under the said Act. The
Administrative Ministry (MoC) has stated […] that there is no express
statutory provision providing for the manner of allocating coal blocks;
it is done through a mechanism of Inter-Ministerial Group called the
 Screening Committee which is headed by Secretary Coal and [has]
representation from the Ministries of Power, Steel, Industry and
Commerce, Railways etc. The Screening Committee has been
constituted by means of administrative guidelines. Since under the
current dispensation, the allocation of coal blocks is purely
administrative in nature, it was felt that the process of auction through
competitive bidding can also be done through such administrative
arrangement. In fact, this is the basis of our earlier legal advice. This
according to the Administrative Ministry has been questioned from
time to time for want of legal sanction. If provision is made for
competitive bidding in the Act itself or by virtue of rules framed under
the Act, the bidding process would definitely be placed on a higher
level of legal footing […]90
What does one make of this detailed note of the law department? An in-depth
reading that is not selective, by any standards, would enable the reader to draw
the following conclusions:

1. The process of allocation of coal blocks through the screening committee

procedure was by an administrative order and there was no specific
procedure prescribed under the Act.
2. Though claimed by MoC that this procedure has been questioned from time
to time (evidence of which was not seen in the files), the government
continued to allot coal blocks through this procedure right up to September
2007.
3. The ministry of law had indeed suggested in July 2006 that competitive
bidding could have been resorted to through administrative instruction.
4. However, on the suggestion of MoC to amend the Coal Mines Act, when
the proposal was submitted, the PMO revised its earlier opinion and desired
to seek an amendment of the Mines and Minerals (Development and
Regulations) Act (MMDR) 1957, which was applicable to all minerals.
5. It is obvious that a legal basis—as in, an amendment of the Act—would
definitely be an advisedly superior arrangement. Yet this course was not
considered for thirteen years since the screening committee’s inception in
1993 and the government continued to allot under the extant procedure.
6. Also, it was the government which kept seeking an amendment to the Act
in its repeated references to the ministry of law. The ministry of law had
admitted in July 2006 that an administrative order would suffice.
7. In any case, all arguments for providing a legal backup for a better footing
 are flawed because whether it is the screening committee method or
competitive bidding, it is only a procedure.
8. While there was no supporting evidence in the form of legal problems to
back up their case for revising the procedure, the fact remains that despite
the amendment to the MMDR Act and the formulation of rules in
September 2010 and February 2012 respectively, the procedure is yet to be
operationalized. So much for expediency.
9. Most surprisingly, even as late as January 2012, the MoC continued to
believe that an administrative order would have been sufficient.

After a detailed reading of this entire noting, one arrives at the inescapable
conclusion that an administrative order of 1993 could have been replaced by
another administrative order. Such a change had the support of the ministry of
law. If the law ministry’s advice had been accepted, the process of allotment by
competitive bidding could have been introduced as early as 2006, while
simultaneously pursuing the amendments to all relevant acts.
It is against this background that one gets the feeling that the MoC could
indeed have introduced the measures being sought had there been a will to do so.

Coal allocation to private power producers was the pressing requirement of the
day. The onus of facilitating easy access to coal mine blocks was that of the
government. In doing so, it was incumbent upon the government to ensure that
the processes of allocation could withstand public scrutiny and could project the
government as a model dispenser of mandated discretionary powers.
In the course of our audit of the coal allocations, on the MoC’s request and
in order to provide them adequate opportunity to project their views, three exit
conferences were held, on 25 January 2012, 9 February 2012 and 9 March 2012.
The minutes drawn for these conferences were jointly signed by the joint
secretary, the MoC and the director general of commercial audit (from the office
of the CAG). In the first of these conferences (on 25 January 2012), the record of
discussion states:
As regards amendment of Mines and Minerals (Development and
Regulation) Act, 1957, for auctioning of coal blocks through
competitive bidding, Ministry stated that the extant Law did not forbid
auctioning of coal blocks through an executive decision [emphasis
mine].91
This conference was followed by two more conferences in which the secretary to
the department was himself present and no viewpoint emerged to change earlier
conclusions.

Let’s take up the arguments presented to maintain status quo. One argument is
that any change could jeopardize the process of coal mining and power
production. Let’s grant this argument—namely, forget transparency, as long as
enough coal is mined to feed the power plants which have to significantly scale
up power generation. Now, let us see what the record of production of coal is, by
those who were allocated coal blocks to enhance power production.
It is found that out of thirty-two coal blocks allotted to private parties in the
period between 2004-2006, only three commenced production in 2010-2011.
Furthermore, of the forty-three granted in the period 2007-2011, none had
commenced production up to the end of 2011. The XI Plan target for coal
production was to produce 73 million tonnes. This production was to come from
eighty-six coal blocks. The achievement, with all the urgency shown in the
allotment process, was only 34.64 million tonnes out of only twenty-eight
blocks. Consequently, there was a shortfall of about 47 per cent. Such tardiness
forced the RBI to observe in its Annual Report (2011-12):
Lower coal production and supply shortage has emerged as a major
bottleneck in infrastructure sector. It also stated that the private sector
has added to the shortages by a dismal record of producing coal out of
the mining rights given to them. Therefore unused mining rights need
to attract deterrent penalties.
Thus, any argument that a change in policy could come in the way of expediting
early and rapid coal supply to power plants also gets negated.
In this context, I need to quote from the report of the high powered
committee for the allocation of natural resources, the Ashok Chawla committee.
In its report to the government (May 2011), the committee observed:
The following national resources were identified for further study and
analysis: Coal, Minerals, Petroleum, Natural Gas, Spectrum, Forest,
Water and Land. It was felt that while many of these subjects were
being administered and regulated by State and even local
Governments, the Union government still had a major role to play in
articulating the policy framework or otherwise influencing the manner
of their allocation.
The report further said:
Transparency relates to the openness in the activities that are
undertaken by any agency. With respect to decisions about allocation,
it is important that the reason why a person or firm was allocated a
reserve, and equally why another was not, be clear to both.
The panel goes on to state:
[The] majority of coal [was] allocated through a relatively non-
transparent system, via the Screening Committee route. […Yet] the
private sector was unable to mine faster than the public sector […] as
only three of the mines allotted since 2003 are producing.
It has often been the argument of the government, and indeed was the
explanation advanced by the prime minister in his statement to Parliament, that
‘it is true that private parties that were allocated captive coal blocks could not
achieve their production targets. This could be partly due to cumbersome
processes involved in getting statutory clearances.’92 This does appear to be a
defeatist argument; if the government is aware that the processes are
cumbersome and accords the process urgency, it is incumbent on the government
to take steps to ensure speedy clearances, since both state and central
government representatives are on the committees recommending the allotments.
It really does not behove the government to argue in Parliament that its own
procedures are cumbersome and that there are complexities in the process of
consensus building in our parliamentary system. Such admissions amount to
acknowledging that even for high priority issues, our democracy cannot deliver
early decisions!
Let’s look at a second issue—that of windfall gain calculated by the CAG
in the audit report. It is surprising that the government placed a statement in
Parliament, asserting that ‘even if we accept CAG’s calculations that benefits
accrued to private companies, their computations can be questioned on a number
of technical points.’93 The main thrust of the CAG’s findings were that the
objectives set by the government had not been achieved by the government
itself. How sincere the government was in the entire process had been put to
doubt. A greater show of alacrity and alertness to issues like power generation
would have leapfrogged the nation into an entirely different level of economic
development. The issue is not of ‘technical points’, raising trifles and
stonewalling findings. The issue is of flagging certain seminal issues, and letting
the government take immediate remedial measures. Audit, and performance
audit in particular, is not about advancing ‘technical’ arguments regarding audit
findings. It is about analysing the efficiency of government spending, the
effectiveness of the allocation of national resources and the leakages in the
delivery process of government schemes.
The CAG had highlighted a fact already observed in July 2004 by the
secretary of the coal department, that ‘a windfall gain’ was accruing to the
allottee of the captive mine, and that a bidding system would consequently only
tap part of the windfall profit. It was incumbent upon the public auditor to
inform Parliament of the extent or magnitude of these gains undeservedly
accrued to private parties and thereby, by implication, leading to a decline in
revenue accrual to the government exchequer. Auditors worldwide compute such
revenue losses. Indeed, the performance audit guidelines dictate that such losses
be computed. Hence, computation for the CAG was not an option—it was
obligatory.
Now, what are the guidelines for computation? The CAG could only rely
on authentic data which was already in the public domain. Any other basis
would be questionable. Two issues had to be computed—the quantum of
extractable coal reserve available and the cost of extraction. For the quantum of
reserves, what could be more credible than the government constituted ‘expert
committee on road map for the coal sector’?
Let us delve into this step by step. First, let us look at the methodology
adopted for computing extractable reserves. In the case of open cast mines, we
accepted the geological reserves (GR) for each block as given in the mine plans
(where available). In other cases, figures were given by the Coal Controller
Organization’s mine plans or the ministry of coal itself. Hence, there could not
be any dispute, as the government itself was the source.
In the next step, where the mine plan was available, the extractable reserves
out of the GR, as mentioned, were taken. Where the mine plan was not available,
audit strictly followed the computation of the expert committee. What was this
computation? It goes as follows: If the GR was 100 million tonnes, the net GR
was assumed to be 10 per cent less, namely, 90 million tonnes. The mineable
reserve (MR) was assumed by the committee to be 10 per cent further less,
namely, 81 million tonnes. The extractable reserve or recovery ratio in open cast
mines was further computed at 10 per cent less than the MR, hence 72.9 million
tonnes or say 73 million tonnes. Audit based its computation on this
conservative estimate of 73 million tonnes for every 100 million tonnes given in
the GR. As against this, the expert committee assumed the recovery ratio to be in
the range of 90-95 per cent of the mineable reserves in the open cast mines. Can
audit be faulted if its computation was based on a conservative 73 per cent?
Given that the MoC had also stated that the MR for open coal mines would
range between 75 to 80 per cent of GR, audit had indeed been conservative in
taking an average of 73 per cent. In mixed mines, the extractable reserve had
been taken by audit as only 37 per cent of the GR. How much more conservative
should audit have been? The extractable reserves of open cast mines and mixed
cast mines allocated to private parties, based on the aforementioned method, was
found by the CAG to be 6282.50 million tonnes, which is mentioned in the
report.
Coming to the second issue: that ‘cost of production rises significantly from
mine to mine due to varying geo-mining conditions’. Obviously it does. Again
audit relied on authentic data: put out by CIL and authenticated by a CAG audit.
It is a fact that CIL and its subsidiaries operate though open cast mines
spread over eight states. The geo-mining conditions, method of extraction,
stripping ratio, nature of land, surface features of land, number of people in
villages affected by the project, inaccessibility of the project, the availability of
infrastructure on the site, etc. vary. Undoubtedly, the cost of production will
differ substantially. This would also apply to the fifty-seven open cast mines
which were then recently allotted. In each of these too, the aforementioned facts
would vary. Therefore, wouldn’t using the average cost of production of CIL,
which accounted for the majority of coal production in the country and its
subsidiaries, provide an accurate measure? Also, reserves of coal in a mine block
can be extracted over its lifetime, as per its mine plan. All these mine blocks had
still not commenced production, even after the lapse of the normative production
date. In the absence of future year-wise quantities of coal extracted, cost and sale
price, financing cost, etc., audit had used the available average audited figures of
CIL for 2010-2011 for each of these factors as a reference outline. How can this
be faulted?
On the third issue addressed by the government through the statement of the
prime minister in Parliament—that CIL had generally been mining in areas with
better infrastructure and more favourable mining conditions, as against the
difficult geological conditions of the private mine block allottees—I merely
quote the government itself. The MoC stated in its note to the cabinet on 26
October 2007:
Experience shows that cost incurred by the private sector in captive
mining of coal is far less compared to that by the public sector coal
companies because they [the latter] carry with them many socio-
political responsibilities. Experience in respect of block already
allotted does not support the contention that these are difficult or
 inferior blocks as compared to those with CIL.
Need I say more? Rather strange that the prime minister is made to make a
statement in Parliament which is contrary to that in government files.
The statement in Parliament goes on to state, ‘Therefore, aggregating the
purported financial gain to private parties merely on the basis of average
production costs and sales price of Coal India Limited would be highly
misleading.’94 Now it would not be incorrect to assume that before the company
decides to take up investment in an end-use project, it would ascertain the
quantity and quality of coal reserves available in the mine blocks. All bidders
have the freedom to get the data available in the geological report and have it
analysed. More importantly, the government itself had observed this in a
meeting (earlier referred to) in the PMO on 25 July 2005. It said that ‘rational
bidding would ensure that the cost of coal through the competitive bidding route
is less than that of coal sourced from CIL or imports.’95
In the light of all this, it would only be fair to conclude that since CIL is the
largest producer of coal in India, producing about 80 per cent of the total
requirement, and operating mines in all kinds of locations across the country, it
has developed infrastructure in all these places over a period of time. Any
private developer applying for a block would certainly keep these facts in mind.
Thus, unless the cost of production of coal from a captive mine is less than the
price of coal obtained from the nationalized coal sector, no entrepreneur will opt
for captive mining. Moreover, for a captive coal producer, the only other option
is getting coal from CIL. Hence, it is only natural for audit to compare costs and
profits as available with CIL.
The issue then arises, if one has to give a monetary value, what value does
one attach? Coal was being purchased by power producers from three sources.
The first was by imports. The average import price of non-coking coal sourced
from Indonesia during 2010-2011 was 3,678 per tonne (Indonesia supplied
most of our non-coking coal imports). The second source was the coal sold in e-
auction by Northern Coalfields Limited, a subsidiary of CIL based in Singrauli.
Their average e-auction price for 2010-2011 was 2,387 per tonne. The third and
the major source of coal supply in the country was that which was mined and
supplied by CIL. Audit utilized the only creditable data available in the public
domain—that of CIL. CIL is regularly audited by the CAG, so its accounts and
other details can be taken as authentic. From the audited accounts of 2010-2011,
the average sales price for all grades of coal sold by CIL was taken as 1,028 per
tonne. This was the most conservative price too. Similarly, the average cost of
coal mined by CIL was found to be 583 per tonne. The MoC has indicated,
after due verification, that the financing cost ranges from 100 to 150 per
tonne. To be on the safe and conservative side, audit assumed it to be 150.
Thus, while the average sale price was 1,028, the average cost was 583 plus
150, namely 733. This leaves 295 as the financial benefit per tonne ( 1,028
minus 733). Multiplying this amount with the extractable coal reserves—6,282
million tonnes—one got the figure of 1.85 lakh crore as the financial gain
which would accrue to the captive mine allottees and from which a part could
certainly have been garnered by government, if auctions had been resorted to.
Let us, for the sake of argument, set aside all that the federal auditor has
observed vis-à-vis windfall gain accruing to private parties while not adopting
competitive bidding for allotment. Let us follow the government
pronouncements on this issue—one made by the government in a statement filed
before the Supreme Court. For those not familiar with it, let me explain: in a
civil writ petition, the Supreme Court constituted a central empowered
committee (CEC) to monitor approvals given by the forest advisory committee
within the ministry of environment and forest (MoEF) for diversion of forest
land for mining purposes. The Supreme Court had directed the CEC to file its
response with respect to projects cleared by the forest advisory committee after
15 September 2006. The CEC had requested the MoEF to provide details of all
clearances given by it by 15 September 2006. The MoEF thereafter had provided
the details. These details formed the basis on which the CEC made its
submission to the Supreme Court. The first and fourth report of the CEC dealt
with the projects submitted by M/s Sainik Mining and Allied Services, a joint
venture with Orissa Mining Corporation in the Amelia project area of Orissa.
The CEC had recommended cancellation of the allocation by the forest advisory
committee for two projects having about 400 million tonnes of mineable
reserves in Orissa. What, however, is mindboggling is the startling revelation
made by the CEC in the note arguing for the cancellation. The note refers to the
experience gained from bids received for six coal blocks for commercial mining
allotted to the MP State Mining Corporation, which were put up for auction by
the MP Corporation. The bids received from the joint venture partners were
2000 per cent of the royalty payable for coal. The royalty rates payable vary
from 55 to 130 per tonne. At a mean royalty rate of 100 per tonne of coal,
2000 per cent of its royalty amount comes to 2,000 per tonne. If this rate is
applied to the 400 million tonnes of mineable reserves in these two mining
projects in Orissa, the financial value of these mineable resources would amount
to a staggering sum of 80,000 crore. The CEC has gone on to plead before the
Supreme Court that it would be in public interest that instead of allowing a
private party to corner this huge benefit, sincere efforts be made to make the
states the beneficiary of this wealth. This is the monetary value that the
government committee affixes for 400 million tonnes of reserves. In the case of
allotted captive mines, the reserves were 6,282 million tonnes. How can the
government argue that the computation of windfall gain by audit was flawed and
over-assessed?
I need to deal with one more issue in this context. Learned economists have
commented that audit gave a wild figure of windfall gain of 1.85 lakh crore but
did not compute the net present value (NPV) of the same. Such learned
economists and prominent persons have sarcastically called the CAG ‘our
famous CAG’,96 and suggested that the department is economically illiterate.
The issue regarding NPV was considered. In the case of other audits such as the
Delhi International Airport or the Ultra Mega Power Projects, the revenue stream
was known, but in the extant case, the rate at which the sale price of coal would
change over the years, the rate of change of the cost of production, the cost of
financing, and the schedule of production of these fifty-seven mine blocks could
only be assumed. Making assumptions across all these factors would make any
such calculation unsustainable and thereby vulnerable to criticism. Hence it was
only to provide an order of magnitude at 2010-2011 prices, that the calculations
were made. Even if discounting had been done to arrive at the NPV, we would
have possibly projected an annual increase of 10 per cent in cost/sale price, and
we would then have discounted at, say, a discount factor of 10 per cent. We
would have got to an NPV of financial gain of 2.40 lakh crore, at 11 per cent of
1.86 lakh crore and at 12 per cent of 1.49 lakh crore. There is no substantial
difference. Hence, why all the ire?

As I had mentioned in the chapter entitled ‘Media Policy’, a preliminary audit of

coal blocks, which hadn’t even been seen or approved by the CAG, reached the
hands of the media. The Times of India report with the leaked findings caused a
furore.97
Eventually, the dust settled. Eventually, too, the truth emerged—from the
government as well as in the Supreme Court. Such were the headlines which
appeared in newspapers on 10 January 2014: ‘Govt. admits to irregularities in
coal blocks allocation. Allotments were made in good faith but could have been
done in a better manner, Attorney General tells Supreme Court’.98 Audit had
been vindicated.
The coal mining saga is a remarkable case study of people in power who,
when provided the mantle to lead, faltered the moment a challenge arose. How
many in the decision making hierarchy would be able to stand up and declare
that they were of the genuine opinion that despite a decision being taken to
auction mine blocks in November 2004, it was at the altar of expediency, and to
meet the needs of genuine power producers, that allocations continued via the
screening committee process? How many would stand up and declare that,
indeed, decisions were taken only on merit and only the most deserving of
applicants got the minefields? Does an alarm signal not go off in the mind of the
seasoned administrator that pressurizing is done only by the undeserving, and the
undeserving are those who do not seek to set up an enterprise to earn normal
profit, but are the rent seekers? More importantly, how did we believe that such
decisions would not come into public domain? These are questions that demand
answers.




—————————
80See ‘Action of Coal Blocks’, Press Information Bureau: Government of India, 28 November 2007, in
<http://www.pib.nic.in/newsite/erelease.aspx?relid=33332>, accessed on 2 May 2014.
81Rohini Singh and Himangshu Watts, ‘Coal Allocation Was Pro-People: Sriprakash Jaiswal’, The
Economic Times, 20 June 2012, in <http://articles.economictimes.indiatimes.com/2012-06-
20/news/32335932_1_coal-blocks-pc-parakh-coal-secretary>, accessed on 2 May 2014.
82‘PM’s Statement in Parliament on the Performance Audit Report on Allocation of Coal Blocks and
Augmentation of Coal Production’, Speeches: Prime Minister of India, 27 August 2012, in
<http://pmindia.gov.in/speech-details.php?nodeid=1208>, accessed on 2 May 2014.
83See Sujay Mehdudia and Girija Shivakumar, ‘Bid to Deflect Focus from Wrongdoers: Ex-CAG Official’,
The Hindu, 17 October 2013.
84See ‘Firms Must Bid to Sell Captive Coal Power: Moily’, The Financial Express, 13 September 2012.
85Raghuram Rajan, ‘What Happened to India?’, Project Syndicate, 8 June 2012, in <http://www.project-
syndicate.org/commentary/what-happened-to-india>, accessed on 2 May 2014.
86‘Power for All by 2012’, Ministry of Power, in
<http://www.powermin.nic.in/indian_electricity_scenario/power_for_all_target.htm>, accessed on 2 May
2014.
87Based on the Prime Minister’s Statement in Parliament on 27 August 2012.
88See Sujay Mehdudia, ‘Coal Secretary Warned of “Windfall Gains” in Captive Mining Allotments in
2004’, The Hindu, 28 March 2012.
89See Ashish Khetan, ‘Coal Spill’, Tehelka, Volume 9, Issue 32, 11 August 2012.
90See, ‘Performance Audit of Allocation of Coal Blocks’, CAG, in
<http://saiindia.gov.in/english/home/our_products/audit_report/government_wise/union_audit/recent_reports/union_perform
accessed on 21 August 2014.
91Minutes of the Exit Conference Held on 25 January 2012.
92‘PM’s Statement in Parliament on the Performance Audit Report on Allocation of Coal Blocks and
Augmentation of Coal Production’, Press Information Bureau: Government of India, 27 August 2012, in
<http://pib.nic.in/newsite/PrintRelease.aspx?relid=86761>, accessed on 5 May 2014.
93See ‘From the Prime Minister, a Lengthy Defense on Coal’, India Ink: The New York Times, 27 August
2012, in <http://india.blogs.nytimes.com/2012/08/27/from-the-prime-minister-a-lengthy-defense-on-coal/?
_php=true&_type=blogs&_r=0>, accessed on 6 May 2014.
94Ibid.
95See G. Srinivasan, ‘Seeing a Sellout’, The Hindu, in <http://hindu.com/thehindu/thscrip/print.pl?
file=20120921291803600.htm&date=fl2918/&prd=fline&>, accessed on 7 May 2014.
96Shekhar Gupta, ‘National Interest: Anybody Out There?’, The Indian Express, 19 May 2012.
97Sanjay Dutta, ‘CAG: Govt Lost 10.7 Lakh Crore by Not Auctioning Coal Block: “CAG Draft Report”
Estimate of “Undue Benefits” to Firms is 6 times 2G Loss,’ The Times of India, 22 March 2012.
98Business Standard, 10 January 2014.
COURSE CORRECTION
11

EXCELLENCE, ACCOUNTABILITY & PROBITY

THE PURSUIT OF EXCELLENCE

In the London Olympics of 2012, India was hailed for its stellar performance; it
had never done so well before. The medal winners returned to a triumphant and
tumultuous reception. They were welcomed with flowers, taken in processions in
flower-bedecked vehicles and paraded before the highest in the land. Their
achievements were praised by all, and most deservedly so. Chief ministers
rushed to offer praise and gift land and money to the medal winners. No doubt
our athletes had done us proud.
What was our haul?
No gold medal.
Two silver medals.
Four bronze medals.
We routinely compare ourselves with China; we would like our
achievements to be in the same league as those of our neighbour. What was
China’s medal tally? Thirty-eight gold. Twenty-seven silver. Twenty-three
bronze—a total tally of eighty-eight, second only to the USA with one hundred
and four.
Since we so triumphantly celebrated our performance, we need to ask
ourselves a few questions—and in doing so, I am by no means discounting the
phenomenal performance of our athletes:

When the world goes for gold, why do we settle for bronze?
Are we only a nation of mediocre people?
Are we content celebrating mediocrity?
Has mediocrity become the nation’s soul?

The celebrations did not reflect on our athletes. They reflected on India, which
had produced six medal winners out of a population of 1.2 billion. They
reflected on the fact that we have forgotten to pursue excellence.
We have become a nation content with accepting a leader foisted upon us
not because of his proven leadership qualities or dynamism, but by virtue of his
loyalty to an organization or its high command. We are a nation that has come to
accept its topmost civil servant not because of his ability to motivate, innovate or
introduce initiative into what was possibly the best bureaucracy in the world, but
by virtue of his seniority, and the number of years he has served the
establishment. We are a nation that will accept a chief minister not because the
legislators of the majority party of that state see him as a naturally elected leader,
but because some remote central committee would like to helicopter down their
own lackey. We are a nation that will nominate a scientist to our highest
scientific organization not because of his proven research findings, but because
some decadent technician recruited in the scientific cadre decided he had
‘arrived’. And finally, we are a nation that has forgotten the skill of winning gold
medals in international events because we do not choose a team of the finest
calibre, but would rather have one affiliated with the nation’s power corridors.
This issue stares us in the face when in global conferences we are asked
why, despite having the fourth largest number of billionaires in the world, we are
home to the largest number of malnourished children. We are a country about
whom Christine Lagarde (the International Monetary Fund managing director)
said, at the Richard Dimbleby Lecture in London in February 2014, ‘The net
worth of the billionaire community in India increased twelve-fold in fifteen
years—enough to eliminate poverty in the country twice over.’ This reflects on
how well we have been able to manage the country’s economic growth and
make it inclusive. It reflects on how good we are as administrators, scientists and
educationists. It reflects on us, as we seem to have become a land of jugaad. We
excel in cut-and-paste solutions. We make promises and provide quick fixes to
tide over the crisis at hand, thereby abandoning long-term objectives.
We also seem to keep widening the threshold of our tolerance. We see
enormous wrong, abysmally high levels of corruption, but accept these as
necessary evils and refuse to raise a voice against them. We need to ask
ourselves not only why we choose to live with mediocrity, but also when we
plan to stand up and say, enough is enough. I daresay—and I am relieved to see
this in my lifetime—such change is on its way; we see welcome signs,
particularly from GenNext.
Indian democracy is in the throes of transformation, and there is only one
constant that will define and determine success: the pursuit of excellence.
Whether we are the political executive or the administrative bureaucracy or a
corporate enterprise; whether we are associated with the fields of science and
technology, or sports, or academia and the arts, we cannot afford to limit
ourselves to anything less than the best. Indeed, the quality of pursuing and
achieving excellence should be ingrained in all of us.
But is this, in fact, the case? No. And the major reason for this is that we do
not choose to follow best practices. There is no transparency in our procedures,
no integrity in our professional pursuits. The view that the end justifies the
means is becoming an increasingly convenient cover for the behaviour of
individuals, groups and governments. Added to this are the two Hydra-headed
monsters—bribery and extortion—which emerge out of rampant corruption. The
implications of such lapses are far-reaching. History is witness to the fact that
any dilution of morality has eventually led to degeneration of societal values,
pushing the country into a quagmire from which it takes ages to emerge. In fact,
any ethical lack leads to inefficient or even bad governance. As a direct and
immediate consequence, economic growth bypasses the poor, and we fail to reap
the full potential of development.
I should add that the Indian economy has much to be proud of. It recorded a
consistent growth of around 8 per cent in the new millennium. This lasted till
about three years ago, till the onset of the global financial meltdown. Even then,
while the rest of the world reeled under a deep economic crisis—with negative
growth even in developed economies—our growth rate simply shrank to about 6
per cent. This is not merely a cyclical phenomenon but reflects structural
changes in the Indian economy which can be sustained over the long run.
We are a country that airlifted forty-seven tonnes of gold to the Bank of
England, and twenty tonnes to the Union Bank of Switzerland to raise US$600
million in 1991, and today have reserves of about US$320 billion. We are a
country that managed to overcome the problems caused by the Enron and Arthur
Andersen imbroglios. We are a country that could insulate our financial
institutions from the crippling global financial meltdown. This speaks highly of
the inherent strength and robust fabric of the public and private sectors of India,
which continue to deliver resounding growth.
We are now a proud country that has debunked the tag of the ‘Hindu rate of
growth’—considered our hallmark for roughly forty years post-Independence.
We are a country that has been able to substantially transform a huge population
base into productive capital. We are a country that has helped the global
economies pioneer in the space of information technology, and have ourselves
become market leaders in that segment.
We are a nation with sporadic displays of innovation or excellence, those
that create an abiding partnership between the government and its people. A case
in point is Tiruchirappalli, where the introduction of community policing was a
paradigm-shifting effort which has not only sustained over time but has also
affirmed the faith of the people in the police force. Another example is that of
Surat, where a series of structural and procedural innovations converted the
plague-ridden city to the second cleanest in the country. These examples serve to
repudiate the myth of a lazy bureaucracy, and establish the tenet that with ethical
actions, transparent procedures and good quality leadership, we can achieve
distinction.
Clearly the potential for excellence exists. The challenge is to extend it
uniformly across institutional and societal structures. It is entirely convenient to
remain in a state of lethargic non-performance, seeking cover under excuses—
that the rules are complicated, that one fears investigation, or that certain
procedures are time-consuming. However, with forty years of experience in the
bureaucratic system behind me, I am of the firm opinion that given a little
imagination and initiative, changing dysfunctional systems is within the realms
of possibility. Excellence requires no major effort. It merely has to become a
habit. All this requires is will, an enabling mindset, simple innovation of
processes, and an insistence on timeliness. If we run a commercial enterprise, we
need to innovate to maximize profits, not seek rent by beating the system. If we
are part of a public organization, we need to make probity our core value and
impose moral authority, as there is no escape button. The efficiency multiplier is
public support. In seeking this support, we do not demean our office; rather, we
enhance its stature and performance.
The country is poised at a critical juncture. We, the educated urban middle
class, owe it to our brethren to provide leadership in thought and action so we
reach the heights of perfection. We live in a society which has awakened to
realizing the strength of the hitherto silent majority. This silent majority is
calling the government to account. It desires participative governance. Our
leaders must recognize that the outcome of such participation will be excellence.
While we accept the greatness of our leaders, building bridges with the public
will only enhance the former’s greatness and extend the tenure of their
leadership. It is for them to improvise and thereby create a national advantage—
a success story. We need to move from small time jugaad to high value and high
impact innovation. The key element is to permit merit to have free play in all our
actions. Let the message go out that merit alone will be the dominating factor in
all decisions taken by the government and that a thousand flowers will be
allowed to bloom. We have to get over the accusations of nepotism and
cronyism that seem to have crept into our psyche.
A basic premise of parliamentary democracy is that an elected and
accountable political executive, with the assistance of an elaborate bureaucratic
structure, will manage public affairs within the parameters set by the
Constitution and the law. However, the reality of complex politics in every
democracy is leading to convenient deviations. A dominant culture of
adjustment has become prevalent, with honesty and integrity being the
casualties. It is this rather imperfect world that we have to negotiate if we must
become men and women who matter; we have to be leaders in society—the
agents of change—who ensure that the pursuit of excellence becomes the
cornerstone of institutional and individual actions.

THE ROLE OF ACCOUNTABILITY

Accountability refers to the processes, norms and structures that hold the
population of public officials legally responsible for their actions and even
impose sanctions if they violate the norms. Such accountability is the
fundamental tenet of a modern and democratic society, and is essential for
ensuring systemic oversight by those acting on behalf of the government. This is
especially relevant since the bulk of the government’s revenue comes from tax,
compulsorily collected from citizens. The citizens need to know that government
funds have been handled in accordance with the rules and regulations of the
land, and that the government’s programmes are achieving their objectives.
Accountability institutions are the core institutions of a successful and
performing democracy. The existence of strong and independent accountability
institutions ensures that the government performs its duties faithfully and
efficiently. These institutions detect and prevent poor administration; halt waste
and leakages in the system; alert and restrain the abuse of power; deter illegal
and unconstitutional conduct; and enforce standards of responsible leadership.
They ensure that deviations from acceptable practices get corrected mid-course,
and thus, assure the public that all efforts are directed towards the achievement
of national goals.
Successful governments create institutions of horizontal accountability to
provide vigilante and safeguard the efficient functioning of its various arms.
Such vigilante is exercised by specifically designed institutions such as the
election commission, the vigilance commission, the information commission,
and of course, the supreme audit institution, which in India is referred to as the
institution of the CAG. It is also performed by regulatory bodies such as the
capital market regulatory body, the electricity regulatory body, or the pollution
control body. These are created by the government, so it can distance itself from
the function of supervision, and entrust it to a specialized body well-versed in
the technicalities of a particular sector. While some institutions of accountability
derive their mandate directly from the Constitution, some have statutory
backing.
The idea of governance and accountability is as old as organized
government. In ancient times, the preservation of the resources of the king was
accorded topmost priority. As early as the third century BC, Kautilya in his
magnum opus Arthashashtra commented on human nature’s biggest
vulnerability, its tendency to acquire public money for private gain. He wrote:
Just as it is impossible not to taste honey or poison that one may find
at the tip of one’s tongue, so it is impossible for one dealing with
government funds not to taste, at least a little bit, of the king’s wealth.
[…] Just as it is impossible to know when a fish moving in water is
drinking it, so it is impossible to find out when government servants,
in charge of undertakings, misappropriate money.132
Therefore, Kautilya went on to formulate a series of checks and balances in the
administrative system. He wrote that ‘in all cases [where] an official has caused
loss of revenue to the state […] his property shall be confiscated.’
In the Athenian state, the accountability of officials was the key to
responsible government, and unaccountability implied lawlessness. Aristotle
wrote:
Some officials handle large sums of money: it is therefore necessary to
have other officials to receive and examine the accounts. These
inspectors must administer no funds themselves. Different cities call
them examiners, auditors, scrutinees and public advocates.133
In Athens, consequently, the officials were required to report their actions ten
times a year to the Assembly of the Citizens. If the explanations were found
inadequate, the officials were subjected to trial by a jury of their fellow citizens.
In medieval England, we find that the concern for fiscal accountability was
paramount. As early as the thirteenth century, Parliament had sought to
scrutinize accounts. Later, in the fifteenth century, such attempts met with
objections from Henry IV; he said that ‘kings are not wont to render accounts’.
After the Glorious Revolution of 1688, the Commons felt that they might claim a
more extensive function, that of investigating the wisdom, faithfulness and
economy with which grants had been expended. This led to the setting up of the
commissioners of accounts. Later in 1780, the creation of statutory commissions
by Lord North was a significant step in the process of establishing systems of
accountability, as these commissions were independent agencies, distinct from
earlier political instruments.
Most modern day democratic constitutions are based on the philosophy of a
separation of powers. The legislative accountability of Parliament or
parliamentary oversight is exercised through hearings of parliamentary
committees. Judicial accountability is maintained by courts that adjudicate cases,
protect human rights and assess the constitutionality of government decisions.
Executive accountability is ensured through ombudsmen or human rights
commissions. While setting out the distinct roles of the legislature, the executive
and the judiciary, the framers of the Indian Constitution also set up the necessary
checks and balances needed for administrative objectivity and accountability.
Whilst the executive has been given the freedom to frame and design schemes,
projects and institutions to fulfil the requirement of growth, it is essential to
ensure that subjective elements do not enter the implementation process. Hence,
the need to have an independent agency—audit—to ensure objectivity. In light
of this, Parliament decided to create an independent authority in the form of the
comptroller and auditor general under Article 148 of the Constitution.
While the CAG and the election commission have the necessary
independence guaranteed by the framers of the Constitution (who had the
foresight to visualize that unless distanced from the executive, the efficacy of
these institutions would be seriously compromised), it would be in public
interest if institutions such as the CVC and the central information commission
(CIC) were also distanced from the government and provided a constitutional
status. Similarly, it would help if an investigative agency such as the CBI could
be given a more autonomous status, while being supervised by a committee
comprising the prime minister, the chief justice of India, the Lokpal, the Lok
Sabha speaker and the leader of the opposition; such measures would make it
more than (as is often alleged) a mere ‘handmaiden’ of the government.
Successive governments have hesitated to do this for obvious reasons, but the
time has come for a decisive step in this direction.
In exercising their functions, these oversight institutions should not be
subject to the direction and control of any other person or authority; it is
important to insulate them from inappropriate influences. Any attempt to dilute
or resist oversight and challenge the credibility of accountability institutions will
only be inimical to societal needs and concerns. In an age where the average
citizen is emphatically demanding good governance, it is in the interest of
Parliament to empower oversight institutions; grant them autonomy, so they can
exercise the power vested in them independently and objectively; and allocate
the resources and skills required to improve their effectiveness.
We are at a critical juncture today. Typically, those with vested interests
attempt to subvert the rules of government accountability on the one hand and
free market competition on the other. These people become the most insidious
threats to a healthy democracy. In such a fast-changing scenario, it is crucial for
accountability institutions to reposition themselves to serve the interests of the
public.
Thus, the concept of vertical accountability becomes especially significant
to check abuses by public agencies and branches of the government. Civil
societies, NGOs, mass media and citizens, through increased awareness,
collective action and new forms of participation, have become vital to the
process of holding the government to account, and ensuring transparency in
decision making. This is indeed the old order changing, making way for the new.
This phenomenon is most evident in the case of the employed and educated
middle class—a class that is now willing to take to the streets and actively
participate in electoral politics. The era of a discerning and demanding class of
citizens has come to stay.
Countries worldwide have had a new political paradigm emerge after such
upheavals. The mass movements are largely against failures in the system, or
when the gap between what governments should be doing and are actually seen
to be doing becomes vast. The movements seek to make systems work to their
ideal capacity; they hope to make those impeding this process account for their
misdeeds. Street protests globally are against inequality, unfair treatment and
injustice in the policies of nations that have not, through regulators or the
administrative set up, checked the greed of a few. It is imperative for legislators
to harness the excesses of the top one percentile of wealthy individuals, shore up
the middle class, and empower those at the bottom of income distribution. The
most oft-repeated statement by public officials, when confronted with a large
number of misdemeanours, is—‘the law will take its own course’.
Unfortunately, this is exactly what does not happen. Any number of
impediments are placed in the way of the law taking its course. What we fail to
recognize is that enlightened kings and vibrant democracies have been
successful and popular only because the rule of the law was allowed to prevail.

THE ROLE OF PROBITY AND ETHICS IN PUBLIC LIFE

Probity in public life is an important step towards building the character of a
nation and its citizens, and the key to stability and economic growth. A country
is not only respected for its mountains and forests, roads and rivers, monuments
and structures, but also for the quality of its human resources—a value-driven
society is the hallmark of a progressive nation. Today, as democracy takes root
all over the world, people have come to demand good governance and ethics in
public life. An ethically governed state has become as important today as the
purity of the air we breathe or the water we drink.
Even as India marches ahead maintaining a robust rate of economic growth,
corruption continues to be an area of major concern. The country is rated very
low in the Corruption Perception Index by Transparency International.134
According to a 1999 UNDP report on South Asia, if India’s corruption levels
were to decline to that of Scandinavian countries, its GDP would increase by 1.5
per cent and its FDI by 12 per cent.135 Dr Bimal Jalan, the well-known
economist and former governor of the Reserve Bank of India, in his book The
Future of India136 has estimated that all things remaining the same, if there were
no corruption, India’s growth rate would have been nearly 8 per cent in the
1980s and 1990s, rather than close to 6 per cent. Ethical management of
resources is, therefore, of utmost importance to optimize the benefits of growth.
The concerns regarding governance and, in fact, corruption-free
governance, are not new. While we are all familiar with Jawaharlal Nehru’s
famous ‘tryst with destiny’ speech on the midnight of India’s Independence, I
refer to another speech made by our first vice president. Speaking on the very
same occasion, Dr S. Radhakrishnan, a great visionary and statesman, said:
Our opportunities are great but let me warn you that when power
outstrips ability, we will fall on evil days. We should develop
competence and ability which would help us to utilize the
opportunities which are now open to us. From tomorrow morning—
from midnight today—we cannot throw the blame on the British. We
have to assume the responsibility ourselves for what we do. A free
India will be judged by the way in which it will serve the interests of
the common man in the matter of food, clothing, shelter and social
services. Unless we destroy corruption in high places, root out every
trace of nepotism, love of power, profiteering and black-marketing
which have spoiled the good name of this great country in recent
times, we will not be able to raise the standards of efficiency in
administration as well as in the production and distribution of the
necessary goods of life.137
In quoting Dr Radhakrishnan, I am only drawing attention to a concern which
has manifested itself in the country for a long time—corruption in public
dealings. Sadly, today’s level of probity in public life paints a dismal picture. We
are confronted with scams of the worst kind, involving political leaders, civil
servants and corporates. We see a deficit of trust and ethics in governance.
Today, more than ever, every patriot at heart wants to build a country which
truly emerges as a global leader. But today, more than ever, each one of us faces
the dilemma of how best to introduce ethics and morality in public life, and give
GenNext a heritage that they can be truly proud of.
Today, more than ever in the history of India, every patriotic citizen wants
to build a country which truly emerges as the global leader. But today, more than
ever before, each of us faces the challenge of weaving ethics and morality with
public life. The commencement of the present millennium in India was exciting
and rewarding. It helped provide comfort within the country and also globally
that a vibrant Indian democracy was capable of achieving close to double-digit
growth. We have successfully overcome the stressful situations preceding the
1991 reforms, consolidated initiatives taken post the unfolding of the reform
agenda, and withstood the shock of the Asian Tigers nearly folding up. The
country even managed to survive the initial setbacks of the financial meltdown
which commenced with toxic assets originating from the USA. However, since
practically all major developed and developing economies are now globally
networked through the operations of trade and financial institutions, the
subsequent economic impact created difficulties for India.
While India’s vibrant democracy countered many of the factors leading to
unrest among the citizens of several developed countries, in the latter years of
the first decade of this millennium, our country, in turn, also witnessed
momentous churning in civil society, which led to an outburst of public dissent,
and an outpouring of young men and women on to the streets. The reasons were
for all to see—a perceptible build-up of resentment against unmet demands,
callous disregard for aspirations, and the insensitivity of and corruption within
the administration.

THE CITIZEN’S VOICE

The latter part of the first decade of this millennium, which saw citizens of
several developed countries participate in waves of protest, also witnessed a very
severe churning in civil society in India. While this may have been provoked by
a number of events, the spontaneous outpouring of young boys and girls on the
streets of India in December 2012 posed a challenge to the administration.138
2012 will go down in the history of the Indian democracy as a defining
year: a year in which the citizen took centre-stage to debunk the myth of the
silent majority. This certainly portends a maturing of Indian democratic forces.
It’s too early to predict the extent to which the political class and administration
has come to terms with this factor. However, it is clear that the citizens seek a
dialogue—a dialogue in which they can participate in governance, call the
responsible parties to account, and seek transparency in policy formulation—so
as to develop a new moral and ethical framework. The country is at inflection
point; if the heightened outrage of the citizenry and the urban middle class is
moulded in a positive manner, it will translate into tremendous synergy between
the government and its people.
There are distinct signs of the urban Indian middle class mobilizing
themselves politically. There are also signs of a tenacious assertion in this
mobilization. This mobilization debunks conventional wisdom that the white
collar, urban citizenry is unwilling to take to the streets to pursue causes; that
ordinary civilians would rather confine themselves to living room discussions,
television debates and college politics; that several national residents take pride
in not going to vote, look down upon caste and regional politics, and
consequently are never sought out by political parties. Rather, suddenly this
disparate group is uniting for a cause.
What has stirred our citizens? Perhaps it is the rampant corruption at every
government office, to procure just about any document—a birth certificate, a
driver’s license, a hospital bed, a gas connection. Perhaps it is a series of cases
involving Jessica Lal, DGP Rathore or Manu Sharma. Perhaps it is the
realization that they can no longer tolerate being denied basic amenities such as
drinking water, power and security. Perhaps it is a TV clip of a state minister
telling officials that it is okay to steal a bit, but one should not loot.
To understand what has stirred us, as citizens, we need to do a clinical,
objective and incisive analysis of the scenario today. As Indian democracy ages,
India grows younger; in other words, the median age of its population is only
twenty-five, which is about fifteen years younger than that of the USA. This
young population has grown up in a ‘flat world’, in a world that is totally wired,
networked across political and geographical frontiers. This generation has grown
up with respect for all democratic institutions and with pride that the vibrant
democracy that we practise has delivered double-digit growth. They also read
and hear statements, as made by President Barack Obama, that democracy
involves accountability, and accountability can only come through transparency.
It is such aware, informed and demanding youth who will keep holding the
government to account for all its actions. It is this cross-section of the urban
middle class that seems to have awakened; they see a major role for themselves
in building this nation and influencing policy.
Hence my proposition that public supervision of government policy has
matured. Also, as has been demonstrated by subsequent governments through
the 73rd, 74th Amendments, Right to Information Act and the implementation of
flagship programmes through Gram Panchayats, participative governance has
come to stay.

GOOD GOVERNANCE

The principles of good governance, as endorsed by the United Nations, are

transparency and accountability; fairness and equity; efficiency and
effectiveness; respect for the rule of law; and high standards of ethical
behaviour.
The need for able governance has never been so strongly felt as in the
present day world. While developed countries have to deal with the aftermath of
the economic slowdown, developing countries have to struggle to ward off
economic downturn, create employment opportunities and meet the growing
aspirations of a demanding populace. Indeed, if we look at the Indian experience
in the last decade and a half, since the opening of the economy from 1990s, we
observe that despite having performed well in almost all the sectors in the
economy since liberalization and withstanding the global economic slowdown,
we failed to achieve the true potential of liberalization reforms. In such a
scenario, the need for greater probity, transparency and accountability in
governance gains added significance.
As such, issues of governance, equity and inclusiveness are as much the
responsibility of corporates as of the government. This is because the
relationship between society and corporates is one of mutual dependence.
However, in the recent past, issues relating to corporate accountability have
come into sharp focus, with instances of corporate governance failure and
auditing irregularities, both at the national and international level, causing major
embarrassment—a case in point being the Satyam saga. While we have grappled
with questions of revenue, fiscal and current account deficits, it is the deficit of
ethics in corporates that will have long term deleterious effects on the economy.
Having said that, it is important to bear in mind that there is an element of
higher accountability on the government, since the government collects money
from the public (as tax) and spends this on behalf of the public (to provide
infrastructure or run welfare schemes). Therefore, the government is obligated to
work in the interest of its citizens; remain answerable to the public for policies,
decisions and performance; prove that its actions are fair, equitable and
transparent; and deliver accountable governance.
Unfortunately, the actions of the last decade, discussed earlier, which have
come into the public domain, indicate that ethics and integrity seem to be
lacking. While the supremacy of the elected political executive in parliamentary
democracy cannot be denied, and while the political executive is certainly
superior to civil and uniformed bureaucracy, the former owe their allegiance
primarily to the ultimate stakeholder on whose behalf they act—the public. In
other words, since the political executive is an agent of the will of the people, it
is incumbent on the executive to remain accountable to the citizenry. The
executive does not need to be advised to reform; rather, it must put in place
measures of self-reform. For instance, the election commission cannot restrict
muscle or money power in elections; the participants in this exercise alone can.
We have, over the last few years, heard expressions—not wholly
uncommon—such as crony capitalism and policy paralysis. Many countries have
had to come to terms with these expressions.
History speaks of a number of instances when kings and even elected
leaders took resort to cronyism. In many cases, this even delivered good results.
It is said that when Vienna was being built, the rulers gave parcels of land on the
main avenues to respected and prominent business houses and families to
construct aesthetically magnificent structures. The result is there for all to see.
However, it’s important to remember that the clinching factor here is that the
‘cronies’ actually delivered quality results.
Unfortunately, this is not the story that has unfolded in India. We have had
examples of cronyism at its worst—with contracts being rigged, and ‘cronies’
being advised to bid at rates that ensure that their bids are winners. Once the bid
is accepted, the saga of concessions starts. We have seen several such examples
—the construction of the national highways, airports, power plants, ports, PPP
contracts, etc. To some extent, such cronyism could have been overlooked, had
the cronies actually delivered. Sadly, because they didn’t, our infrastructure
remains mired in controversy and burdened by financial difficulties.
Cronies emerge out of the ‘turf’ paradigm that has played itself out in the
last six to eight years. There are categories of cronies. They belong to political
parties, regions and states, and individual power brokers, and they emerge as
necessary players in sectors where they actually have no strength. Turf wars
come to be witnessed, and lead to an atmosphere of distrust between the
government and the business community, and between people and the
government.
Cronies have neither domain knowledge nor financial strength to deliver.
They use their ‘connections’ to borrow from the banking sector—and that too,
from public sector banks that are prone to manipulation. This is the underlying
reason for non-performing assets (NPA) of public sector banks going up
manifold. The RBI’s own compilation shows the gross NPAs of public sector
banks increasing to a whopping 3.61 per cent, which by all standards marked
unprecedented high levels in 2013. Even if we were to accept the argument that
these banks had to advance money in difficult times, why is it that the NPA of
private sector banks is only half this percentage? It does not require much
analysis to ascertain the reasons. Stories of Kingfisher airlines and Bhushan steel
are only now emerging in trickles. The amount that has gone into corporate debt
restructuring is another story; it contains all the marquee names.
Many of those who bemoan the malfeasance that has crept into appointment
processes, are aware of the names of the nominee government directors on
public sector bank boards, and the absence of ‘fit and proper’ criteria for their
nomination. However, few take steps to correct the situation. Somewhere,
someone will have to take the bull by the horns. The process cannot be delayed
by even a day.
Equally, it is imperative for the bureaucracy to perform its duties—to think
big, be bold and loyal to the Constitution instead of to any individual.
Bureaucrats are meant to be professionals; they have to be the steel fibre in a
frame which holds a structure together. They have to keep the nation in focus
and not hold on to their kursi.
The India story attracts worldwide attention as it involves one-sixth of the
global population. All decisions that we take regarding political reforms and
economic liberalization will have consequential global ramifications. We need to
recognize that democracy is meant to empower the people and not emasculate
them. Empowerment will be felt only if we have an intrinsic belief in individual
freedom, accept personal and social responsibility, display ethical behavior in all
our actions, and unswervingly uphold the rule of law.
I am an economist by training. My knowledge of English literature is
minimal. However, I take recourse to Shakespeare to emphasize the point that
tomorrow belongs to the people who prepare for it today.
There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
 Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.139
We, as conscious and informed citizens, must ensure transparency,
accountability and morality in the functioning of our government. Far too much
is at stake, and for far too many in this country, if we choose not to take action.
The time to usher in change is now.
I have mentioned in my preface that I decided to write to keep future
generations apprised of the pitfalls to be avoided in the mission for nation
building. The pain that they have experienced should inspire in them the strength
for greater success. Each challenge must spur greater response. Each failure
should provide a greater stimulus for success. And more importantly, it is vital to
recognize that success will not be handed on a platter; one will have to go out
into the sun and toil for it.
This is the quality that will set the men apart from the boys. If we have the
ambition to be counted among the nations that matter, we have to ensure that we
become change agents. It is incumbent upon each one of us to ensure that the
space around us is ‘clean’—clean in every sense of the word. An aggregation of
such individual efforts will make for an ethical and committed society. It is only
fair and able governance which can incubate and nurture sustainable and
inclusive growth. This is a pursuit that we have no option but to embrace, and I
am convinced that GenNext can do so.




—————————
132R.P. Kangle, The Kautilya Arthasastra (Bombay: University of Bombay, 1972).
133See Patricia Day and Rudolf Klein, Accountabilities (London: Tavistock Publications, 1987).
134‘Corruption Perceptions Index 2013’, Transparency International, in
<http://www.transparency.org/cpi2013/results>, accessed on 16 June 2014.
135‘CVC Unveils Three-Point Plan to Fight Corruption’, The Hindu, 24 June 2001.
136Bimal Jalan, The Future of India: Politics, Economics and Governance (India: Penguin, 2013).
137Sarvepalli Radhakrishnan, ‘The Dawn of Modern India’, The Great Speeches of Modern India, edited
by Rudrangshu Mukherjee (India: Random House, 2011).
138See ‘Delhi Gang Rape: Protests Go Viral Nationwide, Unstoppable Public Outpouring as Gang Rape
Victim Dies’, The Economic Times, 29 December 2012.
139William Shakespeare, Julius Caesar, 4.3.218-224.
APPENDICES
 Appendix 1
Letter from CAG Vinod Rai to Prime Minister
Manmohan Singh, dated 17 September 2010, on the role
of internal and external audit
 Appendix 2
Office memorandum issued by the ministry of finance,
dated 13 June 2006, on whether performance audit falls
within the mandate of the CAG
 Appendix 3
Letter from CAG Vinod Rai to Prime Minister
Manmohan Singh, dated 22 March 2012, on the challenge
posed by leaked reports
 Appendix 4
The media policy issued by CAG V.N. Kaul, dated 16
March 2006
Office of the Comptroller and
Auditor General of India
Date: 16 March 2006
To

1. All Directors General/Pr.AsG/AsG (Audit) by name

2. All Pr. Accountants General/Accountants General (A&E) Offices.
(As per mailing list)

Sub.: Media Policy—Holding of press conference by the officers of

IA&AD

Sir/Madam,

The Media Policy of IA&AD is intended to facilitate dissemination of the
information contained in the Audit Reports of Comptroller and Auditor General
of India to the Parliament and State Legislatures. The matter regarding
consolidation of the media instructions relating to media policy has been under
consideration for some time. In supersession of all previous instructions on the
subject, following guidelines are prescribed for interface with media. A
comprehensive Communication Policy, integrating the Media Policy is
separately under consideration.

(A) General
(i) The press conference shall be held by the designated officers immediately
after the presentation of each Audit Report in the Parliament/State
Legislature. All press conferences so organized shall be Report specific for
Central Reports and State specific for State Reports.
(ii) The press conference may be held either within the Parliament
House/State Legislature, after following the prescribed administrative
procedure for holding of press conference by Government officers in
Parliament House/State Legislature, or in the offices of IA&AD.
(iii) The designated officers shall announce at the outset in the media briefing
that in accordance with the provision of Article 151 of the Constitution of
India, C&AG submits his Audit Reports to the President or Governor, as the
case may be, for being laid on the Table of the Parliamentary/State
Legislatures in respect of matters arising out of the audit of Union
Government and State Governments respectively.
(iv) Together with the above, it shall also be stated at the beginning that as per
the procedure, the Audit Reports of Comptroller and Auditor General of
India to the Parliament/State Legislature relating to expenditure and revenue
 from the consolidated Fund of the Union or of the States stand referred to
the respective Public Accounts Committee. The reports in relation to Public
Sector Undertakings stand referred to Committee on Public Undertakings.
The Committees examine the Reports of Comptroller and Auditor General
of India and issue recommendations for remedial action by the Government.
(v) Care shall be taken to ensure that no comments, directly or indirectly, are
made during the press briefing on the functioning of the Committees of the
Parliament/State Legislature, including the factual position about
selection/discussion and issue of Reports which should be obtained by the
press from the Secretariat at the various Parliament/Legislative Committees.
The media may be advised to seek clarifications on these issues from the
Parliament/State Legislative Secretariat.
(vi) The press conference shall be limited to conveying the contents of the
tabled Audit Reports. For this purpose a press brief shall be sent for prior
approval by the report controlling DAI/ADAI and specific approval to the
press brief obtained. The overview, to the extent possible, may be utilized
for the press brief. However, where it is not intended to utilize the overview
as press brief, specific approval of the Headquarters shall be obtained.
Where considered necessary, the report controlling groups may send the
press brief to Director General (Audit) for vetting before putting up to
DAI/ADAI.
(vii) The report controlling wings shall send a copy of the approved Report to
DG (Audit) as soon as the Reports are placed on the Table of the
Parliament/State Legislature, indicating the date on which the Report is
placed on the Table of the Parliament/State Legislature. They may also
circulate copies of the press brief on the spot to media persons attending the
press conference.
(viii) The designated officers holding the press conference may send a copy of
the approved press brief to the editors of newspapers and other sources of
media along with the information regarding the date of presentation of the
Report to the Parliament/State Legislature. They may also circulate copies
of the press brief on the spot to media persons attending the press
conference.
(ix) The designated officers may seek advice and clarifications from DG
(Audit) in the Headquarters office.
(x) Care shall be taken during the press Conference to ensure that the
statements are factual and are confined to what has been stated in the audit
Reports. No opinion on the government and its policies shall be given
 during the press conference. The press brief shall confine itself to the issues
of compliance, waste, fraud and performance of
programmes/projects/schemes etc. as brought out in the Audit Reports. The
press briefing is an occasion for conveying factual information and
removing ambiguity on issues/findings included in the Audit reports.
(xi) The press brief shall be non-partisan and without any political slant or
comment.
(xii) No reference to the names of the executive authorities involved in
transactions in Audit Reports shall be made in the press conference, as such
authorities do not have an opportunity to defend themselves at the time.
(xiii) The matters included in Chapter 1 of the State Audit Reports, or the
chapters in Report No. 1 on the accounts of the Union Government
containing overview shall not be discussed, except highlighting factual
information in various paragraphs. In case media persons seek clarifications
or elaboration on the issues discussed in the chapters, it may be provided
without attribution.
(xiv) These instructions apply both to print and audio-visual media.
Participation in any panel discussion on Audit Reports or on issues relating
to audit practices and their effects shall require prior approval of the
Headquarters.

(B) Press brief on the Union Audit Reports
(xv) The press briefing for Audit Reports, relating to the Union Government
shall be conducted by the report controlling DAI/ADAI, who may take
assistance of Directors General/Principal Directors at his/her discretion.
(xvi) DG (Audit) may be kept informed of the schedule for presentation of the
Audit Reports and of date and time of the press conference. Assistance of
OSD (Communication Policy) and Media Adviser may be obtained by the
DAI/ADAI in charge of the concerned Report, if required by him.

(C) Press brief on State Audit Reports
(xvii) The Principal Accountants General shall preside over the press
conference for the States as the designated officer, where the senior most
representative of IAAD in charge of audit of the accounts of the State
Government is of the rank of Principal Accountant General. However, all
other Accountants General shall be present at the State level press
conference and shall independently clarify matters relating to their Audit
Reports. In other States, the Accountant General in charge of audit shall
 hold the press conference.
(xviii) The Principal Accountant General and the Accountant General shall make
it convenient to be present in their headquarters for a press conference on
the day of the presentation of the Audit Reports relating to the State
Government. Any deviation in exceptional circumstances shall have specific
approval of the report controlling ADAI, who may approve an alternative
arrangement.

Please acknowledge receipt.
Yours faithfully,
Sd/-
(A.K. Thakur)
Director General (Audit)
Copy to:

1. All Officers in Headquarters office

2. Secy. To CA&AG.
 Appendix 5
The terms of reference of the GoM
 Appendix 6
Letters from Telecommunications Minister Dayanidhi
Maran to Prime Minister Manmohan Singh, dated 11
January 2006 and 28 February 2006, asking for a change
in the terms of reference of the GoM for the vacation of
spectrum
GOM 2006—Draft terms of Reference The Mid Term Appraisal (MTA) of
the 10th Five Year Plan has identified spectrum as a scarce natural resource and
the consequential need for its optimum use by all. Adequate availability of
spectrum for telecom services has been recognised as a significant area and the
need for a formalized institutional arrangement for vacation of appropriate
spectrum from existing users like Defence.
The Prime Minister has approved, in principle, the constitution of a Group
of Ministers (GOM) to address these issues.
The Terms of Reference of the GOM are as follows:

To recommend measures to make available adequate additional spectrum

for growth of telecom sector to achieve high teledensity.
To make necessary funds available to the Ministry of Defence in particular
for replacement of analogue/old equipment with alternate systems or more
spectrally efficient equipment;
To recommend measures for vacation of spectrum in a time bound manner.
To suggest measures for early introduction of efficient digital terrestrial
broadcasting for vacation of spectrum for other services in line with
international practices;

The Group of Ministers will be serviced by the Office of WPC Wing,

Department of Telecommunications, Ministry of Communications & IT.
The GOM will give its report within a period of six months.
 Appendix 7
The terms of reference of the GoM for spectrum
allocation, issued by the cabinet secretary in 2006
 Appendix 8
Letters exchanged between Telecommunications Minister
A. Raja and Prime Minister Manmohan Singh, between
November 2007 and January 2008, on spectrum
allocation
 Appendix 9
Press release, dated 7 January 2008, highlighting the
interpretation of FCFS as 'first-cum-first served'
 Appendix 10
The PMO’s letter to the ministry of coal, dated 1
November 2004, highlighting the change in policy for the
allocation of coal blocks for captive bidding
 Appendix 11
Summary record of a landmark meeting in the PMO on
25 July 2005 discussing competitive bidding as a
selection method for coal block allocation
 Appendix 12
Minutes of the meeting taken by the minister of state for
civil aviation on 2 August 2004 to discuss the proposal of
Air India’s aircraft acquisition
ACKNOWLEDGEMENTS

As I end the writing process, I am happy that I embarked upon it. I have said in
the preface: life gives us only one opportunity, and I have been lucky to get it
and grasp it. I have had a lot to narrate. My career has been interesting. I have
enjoyed it thoroughly. Hopefully, I have contributed too, through whatever
assignment came my way.
My first acknowledgement is to all those who worked alongside me in
different projects and locations—for having been such excellent colleagues,
supportive and encouraging. The political personalities I got to work with were
all outstanding and most unlike the image that one carries of politicians.
I am grateful to the scores of faceless colleagues across all levels in the
Indian audit and accounts department, who provided wholehearted support to
our endeavours. In fact, it is this part of my career which powers the book. How
many do I name? Each has been an invaluable asset. Thus, my most sincere
appreciation and gratitude goes to each one of them. I do hope that in the process
of reinvigorating the department they have experienced job satisfaction.
Dr A.K. Khandelwal, former chairman and managing director of Bank of
Baroda, who himself has brought out a well regarded book, has been
instrumental in nudging me to write. He has been a constant advisor.
I am grateful to my siblings and my progeny, located in all corners of the
world. They have provided me much needed encouragement and have offered
the little nuances which make the book worth reading. My elder brother, Kamal,
has been the embodiment of this, and represents the enthusiasm of the entire
family. I mention only him by name, as he dons the mantle of the head of the
family.
I owe a debt of gratitude to my wife, Geeta who took onto herself the
onerous responsibility of settling down in a new house with no staff support, and
permitted me the time and space to concentrate on my writing. She has also
bravely borne the rather testing times I have had at work, more so in my last
assignment. She has been steadfast in her belief that accountability is the
obligation of every public official.
My publisher and editor have given me a long rope. I am grateful to them
for bearing with me, my idiosyncrasies and, of course, my insistence on the
timing of the release of the book. Kapish has been the quintessential diplomat.
His persuasive powers are immense. The women power of Rupa—comprising
Ritu Vajpeyi-Mohan, the leader of the pack, Dharini and Sohini—have kept me
on a tight leash. Thank you—but for your guidance, this book would not have
materialized.
INDEX

2G auction, 102-103
2G networks, basic benefits of, 82-83
2G spectrum licensing scam, 51-52, 65, 82-89. See also CAG’s report on
spectrum allocation 2G spectrum pricing clause, 84

accountability, the role of, 202-206

Ahluwalia, Montek Singh, 42
Airbus A340 aircraft, 177-178
aircraft acquisition process and issues, 178-187
Air India purchase-related issues, 177-187
Air Sahara, 189
Aiyar, Mani Shankar, 120
AKER Floating Production (AFP), 166
Antony, A.K., 12
Apang, Gegong, 24-25
Arora, Sunil, 181-184
Asian Games, 1982, 126
audit, function of, 35-36
Awasthi, A.K., 162

Bank of Baroda logo issue, 31-32

Bhanot, Lalit, 125, 127
Bhargava, Jitender, 180n119, 187
bilateral flying rights, issues of, 188-192
Boeing 737-800 aircraft, 177-178
Boeing 777ER, 179, 190
bond copy, 101

cadre allotment process, 3

CAG, mandate of, 51-57
CAG’s audit reports, government’s perception of, 37-47
CAG’s (Duties, Powers and Conditions of Service) Act 1971 [DPC Act], 53-56,
 113
CAG’s media interactions, 69-71
CAG’s report preparation for spectrum, 110-111
CAG’s role and position in the PAC, 106
cashew business of Kerala, 12-13
CBI enquiry against Atul Rai, 72-77
CBI’s administrative control, 78
central information commissioner (CIC), 64, 204
Chanda, A.K., 39, 69
Chandrasekhar, K.M., 9, 34, 128
Chatterji, Pulok, 92-93
Chaturvedi, B.K., 181
Chaturvedi, G.C., 170-171
Chaturvedi, T.N., 50
Chauhan, B.S., 69
Chavan, Prithviraj, 120
Chawla, Ashok, 107, 150, 170-172
Chidambaram, P., 31-33, 102, 114
Christuvinte Aaram Thirumurivu, law and order issue related to, 18-20
citizen’s voice, 208-210
civil aviation, CAG audit of, 176-177
CNBC TV18’s India Business Leader Awards, 37
coal allocation to private power producers, 148-152
coal block allocation issue, 137-157
coal blocks, criteria for the allocation of, 139-142
Coal India Limited (CIL), 137, 139, 153-155
Coal Mines (Nationalisation) Act, 1973, 139, 144, 146
Coal Mines (Nationalisation) Amendment Act, 1993, 139
Coal Mines (Nationalisation) Amendment Bill, 2000, 142
coal production and uses, 139
Code of Criminal Procedure (CrPC), 5, 10, 19
committee on public undertakings (COPU), 71
Common Wealth Games, CAG audit of, 127-136
Commonwealth Games Arrangements Act 2001, 126
Commonwealth Games (CWG), XIX, 121-123
Commonwealth Games Federation (CGF), 123
Communist Part of India (Marxist) (CPM), 17, 21, 28
competitive bidding-based system of allocation, 142-148
complex ‘roster’ principle, 3
compressed natural gas (CNG), 160-161

Dabhol Power Project, 173

Davy, Kim, 26
Delhi metro, audit report of, 56
Department of Telecom (DoT) parameters for spectrum, 95-97
deputy secretary, entitlements of, 15
Devas Antrix S-band spectrum issue, 118
Dikshit, Sheila, 120, 136, 121n65
District Collector of Thrissur, stint as, 9-11, 15-22
Dutt, Sunil, 124

Emirates, 189-192
entitlement hierarchy in the government, 14-15
Etisalat International, 96
excellence, pursuit of, 197-201
excise officers’ yardstick, 28
extractable reserves, computation of, 152-153

Farooqui, M.F., 102

Fernandes, George, 39
first-come-first-served (FCFS) policy, 84-85, 87, 90-91, 93-97, 250
floating, production, storage and offloading (FPSO) facility, 166-167

Gandhi, Indira, 5, 14
Gandhi, Rajiv, 42
Gandhi, Sanjay, 14
Gill, M.S., 122, 124n67
good governance, 210-213
Gupta, K.K., 7

Halliday, John F., 5, 8

Host City Contract, 123-124
hydrocarbon exploration, 159-160. See also Production Sharing Contracts
(PSCs) in gas exploration hydrocarbon exploration, discovery related issues,
163-164
hydrocarbons extraction, CAG audit of, 161

IFCI CMD issue, 72-77

Indian Frontier Administration Service (IFAS), 5
Indian Olympic Association (IOA), 123-124, 126, 134
Industrial Development Bank of India (IDBI), 31, 76
Industrial Finance Corporation of India (IFCI), 31, 72-77
insiders and outsiders, 3
investment multiple (IM), 168

Jaiswal, Sriprakash, 41, 137

Jalan, Dr Bimal, 206
Jet Airways, 189
Jethmalani, Ram, 42n12
John, Baby, 11, 13
Joint Parliamentary Committee (JPC), 66
joint secretary, cabinet secretariat, stint as, 29-31
joint secretary, ministry of defence, stint as, 22-27
Joshi, Murli Manohar, 107, 110
JPC report, 105-106, 110-119
Justice Venkatachaliah commission, 130, 131
J-Virus, 41

Kalmadi, Suresh, 123-125, 136

Karunakaran, K., 10-11, 20-21
Kashyap, Subhash C., 65
Kaul, V.N., 70, 158, 223
Kerala Dramatic Performance Rules 1964, 20
Kerala experiences, 7-13
Kerala secretariat, 29
Kerala State Cooperative Marketing Federation, 12
Khan, Colonel Ayub, 47
Kittu, 23
Krishna Godavari (KG) basin, case of, 163-164
Kumar, Vijay, 69-70

Lal, Jessica, 209

Left Democratic Front (LDF), 21, 27
letters of intent (LoI), 85, 88, 91, 95, 99

Mahajan, Pramod, 27
Mahajan, Vini, 92-93
Maran, Dayanidhi, 84, 229
Mason Program, 21
Mathrani, Roy, 117
Mattoo, A.K., 125
Melbourne CWG 2006, 126
Menon, C. Achutha, 10
Menon, K.P.K., 8
Menon, Krishna, 39
Menon, T. Sivadas, 28
mid-career training programme, 21-22
Mines and Minerals (Development and Regulation) Act (MMDR Act), 1957,
145-146, 149
Moily, Veerappa, 43-44, 138
MP State Mining Corporation, 156
Mukherjee, Pranab, 38, 48, 55, 87
Mukhopadhyay, Sukumar, 105

Nagaland cadre, training and district experience as, 3-7

Nambiar, K.A., 27
Narayanan, Dr S., 31
Narayanasamy, V., 129, 131-132
Nath, Kamal, 86-87, 89
National Aviation Company of India Limited (NACIL), 176
National Games of 1987, 17
National Telecom Policy (NTP 1994), 82-83
natural gas, 160
Nayanar, E.K., 28
Nehru, Jawaharlal, 207
NELP regime (New Exploration Licensing Policy), 158-159, 161, 165
Ninan, T.N., 103-104
Noddy books, 59
Northern Coalfields Limited, 154

open skies policy, 176, 188-190, 192

organizing committee of CWG, 123-126

PAC, 65, 71
PAC for 2010-2011, 107
Pandit, R.V., 40
Parakh, P.C., 142,
Patel, Praful, 175, 180n119, 181n122, 183n123
Pawar, Sharad, 37, 38n6
police academy talk and its impact, 48-50
Pope visit to India, 20-21
press release of CAG reports, impact of, 64-69
prime lending rate increase issue, 32-33
principal secretary, finance department, stint as, 27-29
probity and ethics in public life, 206-208
Production Sharing Contracts (PSCs) in gas exploration, 158-174
public auditors and social obligation, 58-62
public-private-partnership contract (PPP), 159-160, 174
public sector banks, repositioning and reorientation of, 31-32
Purulia arms drop case, 26

Radhakrishnan, Dr S., 207

Rai, Atul Kumar, 72-77
Rai, Geeta, 47
Raja, A., 44, 75, 81, 84-94, 100-101, 104, 107, 234
Rajan, Raghuram, 138
Rangarajan, Dr C., 174
Rao, Dasari Narayana, 137, 142-144
Rathore, DGP, 209
Reliance Industries Limited (RIL), 45,162-167, 169n103, 170n106, 171n108,
173
Right to Information (RTI) Act, 55

Sakthan Thampuran Nagar, 16

Sardar Vallabhbhai Patel National Police Academy, 48
SBM, 167
secretariat posting in Trivandrum, 11-12
Sema, Hokishe, 3
Seshan, T.N., 131
SEZ policy, 107
Sharma, Manu, 209
Shunglu, V.K., 69, 94, 128, 129, 131
Sibal, Kapil, 52, 102-105
Singh, Amar Pratap, 72
Singh, Arjun, 124
Singh, Buta, 41, 126
Singh, Digvijaya, 50
Singh, Dr Manmohan, 34, 44, 50, 78, 81, 84-89, 136, 173, 217, 220, 229, 234
Singh, Jaswant, 30-31, 76
Singh, N.K., 46-47
Singh, Randhir, 125
Singh, R.P., 99-101, 106, 108-112
Societies Registration Act of 1860, 125
Soren, Shibu, 143, 145
spectrum allocation, CAG’s report on, 93-104. See also spectrum audit report in
Parliament spectrum audit report in Parliament, 105-119
spice trade, 12
Srinivasan, K., 8-9
Srinivasan, M.S., 158
S Tel, 95-99, 111
Subramaniam, Gopal, 51
Su-30MKI aircraft deal, 27
Swan telecom, 96, 91n41, 108

Tata, J.R.D., 175

Tata Airlines, 175
Tata Teleservices, 96
Telangana agitation, 48
telecom regulatory authority of India (TRAI), 85, 97, 99-100
teledensity argument, 89-90
Telenor, 96
telephone connections in India, 2010, 82
Tewari, Manish, 37, 41
Thrissur, politics of, 10-11
Thrissur Urban Development Authority, 16
Tiwari, Dheeraj, 72
Tiwari, N.D., 40-41

Ultra Mega Power Projects (UMPP), 118

undersecretary, ministry of commerce, stint as, 13-15
Unified Access Services (UAS) regime, 95-96, 100
Unitech, 96, 111
United Democratic Front (UDF) alliance, 21

Vadakkumnathan Temple, 16
Veeraswamy judgement, 50
Vajpayee, Atal Bihari, 27, 83
vendor qualification criteria (VQC), 166
Venkatramanan, R., 22
Verma, Amitabh, 73, 77
V.K. Shunglu Committee, 129

‘water pollution in India,’ audit of, 60

Yadav, Mulayam Singh, 23-24

‘Zero Credibility,’ 103-104

zero loss hypothesis, 97, 102-104
 Table of Contents
Title Page
Book Information
Copyright
Dedication
Contents
Foreword
Preface
THE JOURNEY
1. Dimapur to Delhi
2. The Role of Audit
3. Media Policy
4. The CBI
FOLLIES
5. First Come, (Not) First Served: The 2G Saga
6. Sound & Fury: The PAC & JPC Saga
7. The Punjabi Wedding: Commonwealth Games 2010
8. Coal That Turned to Gold: Mine Block Allotments
9. A Slippery Deal: Gas Exploration
10. Off Course: Civil Aviation
COURSE CORRECTION
11. Excellence, Accountability & Probity
The Pursuit of Excellence
The Role of Accountability
The Role of Probity and Ethics in Public Life
Good Governance
Appendices
Acknowledgements
Index