I recall, while in UP in early '90s,* I was asked to take charge of the Auto Tractors Limited (ATL). The unit was established in the '60s and was a pioneer in that field in its early years, but by the early 1990s, it had been overtaken by bad times. Apart from competition from private tractor producers, the weight of PSU management issues and official intervention had brought the company to its knees. Employing about eight hundred people, the factory had been totally idle for the previous five years when I took over – the labour was getting idle-wages. To cut a long story short, I could not raise any further resources and could not persuade any Central PSU or the defence ministry to take over the unit. I negotiated with Sipani Motors to take over the unit and settled for the best possible terms. Incidentally, Sipani of Bangalore was well ahead of his times – it had great ideas to import the best automobile technology from abroad into India. A pity, the idea was ten years too early. At any rate, the deal was done at the official level and needed the political approval of the chief minister, who appointed a group of ministers to study it and give a final view. As I explained the deal, one of the lady members objected, saying that Sipani was an unknown, unreputed businessman with little credibility; why should we hand over our unit to him? The chairman of the meeting, a canny, old-style politician related a story, 'The wedding party (barat) had reached the village in the evening. The middleman urgently whispered to the bride's father – to get the jaimala(marriage function) done without any delay. When asked why, he explained that the bridegroom had night-blindness, which would be discovered after nightfall; he wanted the function immediately. The bride's father was unperturbed – he whispered, "the girl is totally blind. It is better that we do the function after dark!"' The sale of ATL was approved within a minute. Incidentally, this was, if I am not mistaken, the first sale of a large public sector unit in the country, well before the rash of disinvestments started in late '90s.
I need also to mention the disinvestment in VSNL, which took place in 1997. Apparently, a couple of years earlier, there was a major attempt to start the disinvestment process in VSNL. A consortium of underwriters had advanced the matter considerably and the book-building process was to start. At the very last moment, the formal signature of a senior politician in charge was required to complete the formality; the insiders' grapevine told me later that this dignitary demanded Rs 25 crores to affix his signature. There was no way this could be done within the time available. The process was suddenly halted, embarrassing the government no end. At any rate, the process of disinvestment was taken up again in 1997, by a committee under my chairmanship. We were able to conduct the process smoothly, without any controversy – indeed a leading economic magazine of UK called it the 'Disinvestment of the Year'. It would be recalled that further transactions of disinvestment have taken place and the company is now in private hands.
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*Already referred to in my earlier book Journeys through Babudom and Netaland: Governance in India.
8
THE NEED TO REVAMP AND REVITALISE
INSTITUTIONS
he progress of India is intertwined with the efficiency of the administrative system. There are a large number of commissions, councils, authorities, and other institutions established by the government, through which administration is conducted. Some of these are mentioned in the Constitution itself, some created through statutes by the Parliament, and there are other executive bodies created by the Centre or the state government as the case may be. These executive bodies have wide-ranging administrative functions. Some of these agencies cut across various sectors, some focus on a specific field; all are, however, integral and indispensable parts of the governance process. A reference has been made to some of these agencies, selected at random, mainly to bring in a flavour of why they have been constituted, and indeed how they have performed. The discussion is an assessment of the performance of the agencies over the years as also prescriptive in terms of the measures to be taken to bring about improvements in the governance process.
The Election Commission (EC) – the bark and the bite . . .
In a democracy, it is of legitimate critical importance that the process of election of the people's representatives to the legislatures, both at the Centre and the states, should be free and fair, and should also be seen to be so. The task of supervising the preparation of the electoral rolls and the actual conduct of the election process are in the purview of the EC, a body which gets its mandate from the Constitution. Its work is defined by the 'Representation of the People's Act'. By its very nature, its role in national polity is of crucial significance. At a time of splintered politics, and in an era of proliferating national and regional parties, the role of the EC as an independent, impartial umpire has become all the more important, delicate and critical.
Till the early 1990s, the commission consisted of a single chief election commissioner (CEC). Thereafter, it was expanded through a constitutional amendment to become a three-member commission, headed by a CEC, supported by two election commissioners. The commission itself does not have very large staff; it conducts its operations directly as also through the chief electoral officers in the state governments, using powers given to the Commission under the Representation of the People's Act.
Till T.N. Seshan, a retired Indian Administrative Service (IAS) officer became the CEC in the first half of the 1990s, the commission itself was a relatively unremarkable body, generally quiet and basically functioning in a docile manner, like another government department, without much fanfare. Seshan changed all this with a flourish. For the three-and-a-half decades or so, during which he was a civil servant, he apparently was fully conformist and rose to the position of Cabinet secretary. However, on becoming the CEC, he threw off the 'sheep's clothing' as the saying goes, and started exuding authority, befitting a constitutional authority. He has been variously called an 'Alsatian', 'arrogant', 'whimsical' and 'authoritarian', a bully, an 'empty' drum, all of which are probably true to a small or large extent. However, he was a genuine 'watchdog' of the Constitution, interpreting his role as a servant of the Constitution in wide, noble terms. Bark he did often but he also bit, viciously when required. Indeed, Seshan has transformed the EC, elevated the conduct of elections to a higher plane, and brought in a degree of much needed integrity and reliability to the process. His tenure in office was the turning point of the commission and revolutionised the election process.
Indeed, before Seshan's time, major malpractices were rampant in the polling process. Thus, 'booth-capturing', if not the norm, was certainly not unusual. Terrorising whole villages to ensure no one goes to vote, indulging in various electoral malpractices with great ingenuity in a brazen and open manner, and attempting to bully the electorate were common practices. Seshan, with a strong hand cleaned up the mess and brought some order to the process. No one can argue that the system we have now has become flawless and fraud-proof. Many malpractices abound even now, especially in terms of spiralling campaign expenditures, much of it camouflaged as legitimate. However, Seshan's contribution has been noteworthy and significant in eliminating strong-arm methods, and raising the process to a much higher level of credibility. To the credit of the CECs who succeeded him, these traditions have been maintained.
The controversy in early 2009 about the EC has been quite unfortunate. Without going into the merits of the matter, one thing stands out clearly. It is of utmost importance to appoint only people of impeccable integrity and total autonomy to these exalted constitutional positions. As we have seen earlier, successive governments have proved themselves incapable of objectivity and fair play in making important post-retirement appointments to major institutions of governance. The government of the day prefers to 'reward' the loyal civil servant, also with an eye on his 'cooperation' or 'collaboration'. Thus, the ruling establishment has lost all credibility. It cannot be trusted to act fairly, honestly and objectively in selecting individuals for important positions. Having forfeited the customary right to nominate persons
to high office, it is now essential that all future appointments to such important chairs should be through a collegium. To make the process simple, I would venture to suggest that the three-member collegium should consist of a non-political chairman of experience in public affairs and acknowledged integrity from civil society, who would chair the collegium; the other two members being the prime minister (or his representative) and the leader of Opposition of the day. The chairman could have a maximum two-year tenure. He could be a retired judge or civil servant or from any other walk of life. Fortunately, there are any number of respected people in the country who would qualify by popular acclamation. One feels that the government has forfeited its right to unilaterally nominate persons to high office due to previous wrong decisions.
One last word on the EC. The CEC and election commissioners have the onerous task of acting as umpires and arbitrators among warring political parties, and splinter groups, whose mutual relations are hostile. Any biased decision from the commission could have far-reaching consequences. It must be laid down as a condition of office that retired CEC and election commissioners would not be eligible to join any political party, or stand for election even as an independent, with or without the support of political parties. This will be a salutary principle. Indeed, in the constitutions of the Telecommunications Regulatory Authority of India (TRAI) and some other regulatory bodies, established in the second half of the 1990s, this kind of stipulation has been incorporated. Without casting any aspersions on the intellectual integrity or impartiality of previous CECs, it certainly leaves a bad taste in the mouth when such high constitutional authorities join political parties after demitting office.
The Comptroller and Auditor General (CAG) – the occasional bark, no bite…
The Comptroller and Auditor General (CAG) is a constitutional position. He is charged by the Constitution to audit and keep track of public expenditures, at the Centre as well as the states. This is an onerous responsibility, to supervise the accounts and verify the accuracy of expenditure amounting to lakhs of crores in the public domain. He heads a large organisation, and is supported by the Indian Audit and Accounts Service (IA&AS) cadre, an All India Service, recruited through the same examination as the IAS, the Indian Foreign Service (IFS) and the other Central services. The quality and calibre of the recruited officers is quite high, coming from nearly the same class as the intake for the IAS.
The CAG does post-audit and provides 'audit paras', criticising public expenditures of this department or the other and the 'paras' are developed after post-event scrutiny by the CAG staff, detailed discussions with the senior staff of the ministry or department concerned. The process being followed is much like the role played by the external auditors in a private company. The 'finalised' paragraphs are then brought before the Parliament, where the concerned parliamentary committee that deals with the affairs of a particular ministry or department disposes off each 'para' finally. The final view can be to disagree with the findings of the CAG or while agreeing, to 'condone' the lapse, or even to launch disciplinary proceedings against delinquents identified in the paragraph. However, it has been seen that in practice the entire process is quite ineffective. The CAG's draft paragraphs are not taken too seriously. The department concerned defends its action fully. And finally, the discussion or debate in the parliamentary committee is frequently farcical in nature, and proceeds on party-lines. The effort at reaching the truth, pinpointing malpractices, punishing the guilty, drawing lessons to preempt future misdemeanours – none of these generally seem to be the objective. In all my years of association with the system, I do not recall a single audit paragraph which has led to any punishment to any wrongdoer in the government. Apparently, all government expenditure is fully and totally above board!
As we have seen, the CEC acts as a true watchdog of the Constitution. By the same analogy, the CAG till now can be likened to a toothless paper tiger. Most of the CAGs appointed so far are retired IAS officers, generally elevated to this post as a post-retirement gift, frequently for being closely associated with the political class, and occasionally as a reward for genuine good work during service. They often turn out to be a passive, conformist authority, unwilling to exert themselves or to rock the boat; exhausted and rather wasted potential. In any case, successive CAGs have not grasped their true role as an instrument of the Constitution created to keep a close watch on government finances, blow the whistle when required, and punch hard on wrongdoers. Equally important is their responsibility, to create such conditions that would lead to minimisation of frauds or improper expenditures, while ensuring that the normal business of government is not hampered. All the CAGs till date have seen their institution as an extension of the government, as indeed another department, reluctant to stir up controversy and pursue wrongdoers with vigour. Sadly, in a nation riddled with swindling of public finances, the CAG is hardly in the public eye, and does not stand out as a symbol of anti-corruption. Indeed after my retirement years, I have been quite impertinent in talking to a couple of successive CAGs in private, chastising them for keeping a low profile when so much skullduggery is afoot.
There is one more aspect related to the CAG's work. After all, his job is to do post-audit work to ensure that financial malpractices are brought to light and also to take preventive measures that discourage financial leakages. It is obvious that a large amount of public developmental money finds itself leaked at various levels, mostly in the states. We have seen elsewhere how the collusion between the local sub-district officials and local politicians siphon off a large proportion of development expenditure, and only a small amount reaches the intended beneficiary. This is a well-known phenomenon. Why has not the CAG created conditions where such leakages are difficult to perpetrate, by laying down procedures and also ensuring that sufficient checks, and cross-checks, and verifications are administered? It is not sufficient to say that these matters are in the 'purview of the state government'. Indeed this is the slogan of the Government of India whenever malpractices and failures are discovered – to blame the state governments, in situations relating to agriculture, law and order, terrorism, flood control, drought management, etc. The reality is that much of the money is provided by the Government of India; they cannot just take the credit for all programmes that function well and blame the state governments for all failures, on the ground that it is a 'state subject'. Much of the development expenditure is earmarked by the Government of India and the CAG has the responsibility to ensure that it is well spent. The current practice is that the audit done by the local auditor at the sub-district level is generally treated as final and is merely countersigned blindly at the district, state and Government of India levels, and accepted as gospel truth by the CAG – every counter-signatory at each level knows that there is large-scale defalcation.
The other day, I happened to come across a group of about twenty IA&AS officers, still under training, during their 'Bharat Darshan' tour. Indeed it was a very young, vibrant, bright and savvy lot, who could be trained to be top class accountants or auditors capable of doing quality management audit. I asked them if they were exposed to situations of verification of field audits at the village level, as part of their training. I was astounded to get the reply that while they spent a total of one week or so in the rural areas, they are not exposed to the current procedures, its weaknesses and potential for systematic mischief; nor given any training in these areas. This is most disturbing. Huge amounts of money belonging to the citizen have been spent on rural development programmes, carrying fancy-sounding project titles. Rajiv Gandhi downwards every person concerned has talked of massive diversion of funds. However, our main national watchdog merely treats it as a 'state subject'. This is yet another instance where a group of people, not under anybody's external scrutiny, tends to lead a cushy, cloistered life, without concern for any kind of bottom-line in its performance. They, however, constantly clamour for more privileges and perks, and generally want to be left alone without 'outside i
nterference'! It is necessary that a regular outside audit of the performance of the CAG and its setup needs to be undertaken (for heaven's sake, not by another parliamentary committee – we do not need a farcical, politics-based supervision!). The CAG has to indicate annually his contribution to the nation's welfare, and held accountable for his performance – it does not matter if he is a 'constitutional authority' – he still needs to perform!
The above discussion also points out another kind of need. Why should we not have groups of private auditors, tightly supervised by CAG, auditing the field operations in the states on behalf of the Government of India to ensure better utilisation of developmental funds? We have not created a structure for using private audit channels to audit public funds. We need, definitely, to examine induction of private audit systems to clean up the mess that surrounds developmental expenditure in rural areas, naturally with suitable safeguards.
Central Vigilance Commission (CVC) – no bark, no bite poodle…
Till about the mid-1990s the Central Vigilance Commission (CVC) was a departmental part of the Ministry of Personnel. The central vigilance commissioner, with his sizeable staff, was responsible for keeping a vigilant eye on wrongdoings in the various Central organisations, including ministries, Public Service Unions (PSUs) and other agencies in Delhi and all over India. The institution was expected to function as an internal watchdog, to prevent financial wrongdoings and to keep check on the activities of civil servants and ensure broadly that they keep to the straight and narrow path. Sometime in the mid-1990s, the CVC was converted to a statutory commission. It was also expanded to accommodate two vigilance commissioners, apart from the central vigilance commissioner. As per past practice since Independence, and as per the provisions of the CVC Act of 2003, the central vigilance commissioners and vigilance commissioners are to be selected from civil servants. Most of them generally have been from the IAS or the IPS till now. Having been in a 'subordinate' position, many or most civil servants cannot shake off their mindset of being subservient to a politician. Given statutory or constitutional responsibilities towards the end of their careers, or immediately after retirement, most civil servants continue to function in the same passive, polite, non-intrusive, gentle mode, not wanting to give offence, and without comprehending the enormity of the new responsibility thrust on them through the constitutional position. Sadly, Peter Principle overtakes most of them.
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