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More teeth for the financial watchdog

The recent judgment of the Supreme Court on the Comptroller and Auditor General's (CAG's) duties and powers has put to rest all disputes on this issue. The CAG's powers and duties in relation to auditing the accounts of a firm form part of the basic structure of the Constitution.
By KP Shashidharan
UPDATED ON MAY 07, 2014 11:32 PM IST

The recent judgment of the Supreme Court on the Comptroller and Auditor General's (CAG's) duties and powers has put to rest all disputes on this issue. In the case relating to the Association of United Tele Services Providers and Others vs Union of India, the apex court has stated that the CAG's powers and duties in relation to auditing the accounts of a firm form part of the basic structure of the Constitution.

The main argument against the CAG's audit of the accounts of private telecom companies is that Article 149 of the Constitution talks about only the “accounts of the Union and states and any other authority or body”, meaning thereby only the entities that perform State functions or financed or controlled by the State come under the CAG's purview. The other point is that the CAG Act, 1971, does not apply to auditing private telecom licencees. In other words, the objective of Article 149 and the law of 1971 is to provide ‘for parliamentary control of executive on public funds ...'

The Supreme Court has reiterated Parliament's obligation to ascertain whether the receipts by way of licence fees and spectrum charges have been credited to the Consolidated Fund of India (CFI). It is the constitutional mandate of the CAG to report to Parliament and he can carry out examination into the economy, efficiency and effectiveness with which the Union of India has used its resources and whether it has realised the licence fees and spectrum charges, etc.

The CAG's audit is required because there is ‘revenue sharing' between the Union and private telecom companies which are licence holders. Since the revenue generated will have to be accounted for, all the relevant documents must be audited.

Spectrum, being a scarce-finite renewable natural resource and part of the country's natural resources, belongs to the people. The State legally owns it on behalf of its people and is empowered to distribute natural resources, but ‘is bound to act in consonance with the principles of equality and public trust …'

Good governance is a key concern of the citizens. While dealing with the conflicting interests of stakeholders, what is critical is a robust framework for good governance with adequate checks and balances. At the macro level, the principles enshrined in the Constitution safeguard the interests of the people; but those principles have to be factored in not only in formulating the policies and planning but also in implementing all governmental programmes, and projects and schemes aimed at realising the desired outputs and outcome. There are a number of checks and balances in the country's parliamentary democratic governance.

The Constitution defines the duties, powers and obligations of the key pillars of our democracy. And the people's representatives are elected to safeguard their interests.

KP Shashidharan is director-general, Comptroller and Auditor General of India

The views expressed by the author are personal

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