Column : Who elected the CAG

Written by Sunil Jain | Updated: Jan 13 2011, 04:12am hrs
Telecom minister Kapil Sibal was smart enough not to question the CAGs locus standi in examining policy decisions by the government issuing licences at 2001 prices in January 2008 instead of auctioning them, but enough senior Congressmen and government officials are now asking this question. Some, in the Prime Ministers setup, go so far as to ask, Who elected the CAG Policies are made by the government and cleared by Parliament, who is the CAG

To understand what this means, lets take a simple example. Lets say Sheila Dikshit, under some power, decides to allot a piece of land to me at Rs 1 crore while the market value of that land is Rs 10 crore. Now, lets say I pay only Rs 1 lakh and no one in Dikshits setup ensures I pay the rest, nor do they cancel my allotment. Does the CAG have the right to point out to a Rs 9.99 crore loss to the exchequer or can it only point to a Rs 0.99 crore loss The CAG thinks its rights extend to the former while sections of the government are veering around to the view it can examine only the latter. Veering around, perhaps, is an incorrect way of describing this, since it is precisely what telecom secretary R Chandrasekhar told the CAG several months agoyou cant examine policy decisions, he saidand this was done after the law ministry had approved it. (By the way, this government policy argument is what BJP chief Nitin Gadkari made to give a clean chit to Karnataka chief minister Yeddyurappa and the same Congressmen scoffed at him!)

Whether the CAG has the power to investigate what are called policy decisions is back in the limelight since Subramanian Swamy has asked the Supreme Court to hold Sibal guilty of contempt. Since the matter of the losses is before the Supreme Court and is being examined by CBI, Swamy says Sibal is overstepping his brief. The Court has, in a sense, already taken a view on the CAGs powers since, on December 16, 2010, it directed the CBI to take into account the CAG report and the losses the CAG has estimated. This was because CBI had put the loss at around Rs 22,000 crore as compared to the CAGs estimates which were several times higher.

Given that the government is increasingly going to be handing out assets to the private sectorcoal mines, oil and gas fields, you name itthe question is going to keep coming up, so it is important to know the Prime Ministers view on this, and perhaps Parliaments as well. After all, if a coal mine has been given to a firm at a fraction of its price, who is to hold the government responsible for this Theoretically, CBI can investigate this, but CBI reports to the same government and its track record has made it clear it does only what the government wants.

While Parliament and, perhaps, the courts debate the issue of the CAGs jurisdiction, what we need to see is whether Rajas issuing of licences in January 2008 was a matter of policy or an executive decision that can be challenged in any court of law. Prima facie, it would appear what Raja did was not policy since the various affidavits filed by the telecom ministry on the matter say he was merely implementing Trais recommendations; the then Trai chief Nripendra Misra says he wasnt implementing the recommendations faithfully, but if he was just implementing Trai recommendations, this couldnt be policy.

Government functionaries also argue all that Raja was doing was to implement what his predecessors were doingby the way, this was also just implementing of Trai recommendations! This has been the subject of earlier columns, so we wont get into too much detail. Suffice it to say that the First Come First Served (FCFS) that Raja used was never anything his predecessors did. Raja defined it to mean the first person to make the payment, while the original FCFS referred to the date on which a company had enough subscribers to be able to qualify for the next tranche of spectrum. Combine this distortion of the FCFS with the fact that 85 firms did not even meet the eligibility criterion, and there is a huge problem here.

Since Sibal has said he will examine this aspect of the CAGs report, lets move on to the more substantive issue of whether Raja was continuing with existing policy. Well, when the government cleared the Universal Access Service Licence (UASL) policy in 2003which legitimised offering full-blown mobile services on limited mobility licencesTrai recommendation was that all new mobile licences would henceforth be auctioned. The government accepted this. So its very clear that Raja was not following existing policy even while he claimed to be doing so.

Much is made of how, in 2007, Trai recommended that no auctions be done for new 2G licences. Misra argues, however, that he made no such recommendation! Whether Misra got it wrong, and Raja just faithfully did what he said, is irrelevant since, in 2003, the government had clearly accepted that all future mobile licences would be auctioned.

Lets then deal with the issue of whether government policy is such a holy cow that it cant be called into question. When the cellular mobile firms first questioned the governments right to issue the limited mobility licences in 2001, government policy was the very excuse the government used. The telecom dispute settlement and appellate tribunal (TDSAT) accepted this argument, and rejected the cellular firms plea. The matter then went to the Supreme Court, where the bench headed by the Chief Justice returned the matter to the TDSAT, saying it had to examine the matter on merits, never mind the government policy argument.

So, it would be nice to hear the PMs views on the CAGs rights since that will settle the debate once and for all. Also, since both P Chidambaram and GE Vahanvati (they are today home minister and attorney general, respectively) had argued, in the limited mobility case, that government policy couldnt be used as an excuse to not examine a policy on merits, it would be interesting to hear their views.