Vinod Rai

Vinod Rai
Vinod Rai at the World Economic Forum on India 2012
Born	(1948-05-23) 23 May 1948 Parasa Uttar Pradesh
Nationality	Indian
Education	Masters of Economics (University of Delhi), Masters of Public Administration (Harvard University)
Alma mater	Hindu College, University of Delhi
Occupation	ex-Comptroller and Auditor General of India
Known for	Audits on 2G spectrum allocation, Coal allocation
Title	ex-Comptroller and Auditor General of India
Predecessor	VN Kaul
Successor	Shashi Kant Sharma
Children	3
Website
cag.gov.in

Vinod Rai (born 23 May 1948) was Comptroller and Auditor General of India. He assumed office on 7 January 2008 till 22 May 2013.^[1][2] He is the current chairman of UN Panel of External Auditors.He holds a Masters Degree in Economics from the University of Delhi, and Masters in Public Administration from Harvard University. He is widely considered as symbol of the anti-corruption movement^[3] and is credited with having turned the office of CAG into a powerful force for accountability and transparency in contemporary India.^[4]

Early life and education

He was born in Uttar Pradesh. He did his schooling from Vidya Niketan - Birla Public School, BPS Pilani Rajasthan^[5] and graduated from Hindu College, University of Delhi. He has a Masters Degree in Economics from Delhi School of Economics, University of Delhi and Masters Degree in Public Administration from Harvard University, USA in 1988. He chose to study Financial Administration at Harvard Kennedy school in 1987 while he held the position of District Collector and Magistrate in the state of Kerala, India.^[6] He is married and has 3 children.^[7]

Career

Rai is a 1972 batch Kerala cadre officer of Indian Administrative Service (IAS).^[8] He started his career as the sub-collector of Thrissur District. Later, he became the Collector and spent his eight years of career in Thrissur City. He was called the second Sakthan Thampuran for his role in the development of the Thrissur City.^[7] He was the MD of Kerala State Co-operative Marketing Federation from 1977 to 1980.^[2] Later he was appointed as Principal Secretary (Finance) in the State Government of Kerala. He had served senior positions in the Ministries of Commerce and Defence, Government of India. Prior to his appointment as CAG, he served as Secretary, Financial Services and Additional Secretary in the Banking Division including banks and insurance companies under Ministry of Finance.^[9]

Rai was instrumental in setting up the India Infrastructure Finance Company and was also on the Board of this company. Apart from serving in both, state and union governments, he has been a Director on several Boards including the State Bank of India, ICICI Bank, IDBI Bank, Life Insurance Corporation of India and Infrastructure Development and Finance Company of India.^[10]

United Nations Panel of External Auditors

He is currently chairman of United Nations Panel of External Auditors and member of the Governing Board of the International Organization of Supreme Audit Institutions (INTOSAI).^[11] The United Nations Secretary-General Ban Ki Moon has appreciated the panel and the yeoman service rendered by the external auditors in improving governance in the United Nations system.^[11] The panel headed by Vinod Rai discussed the major business transformations currently under way in the United Nations with Secretary-General Ban Ki Moon.^[11] The Panel of External Auditors plays an important role in promoting accountability and strengthening governance mechanisms in the UN organisations.^[11] Mr. Rai has taken over as the chairman of Governing Board of the Asian Organization of Supreme Audit Institutions (ASOSAI) on 29 February 2012.^[12]

CAG of India

Forbes described Rai as being among that rare breed of civil servants who know how to get work done in the government.^[13] A former colleague says Rai has an uncanny ability to cut through red tape.^[13] He was appointed as Comptroller and Auditor General of India with the backing of finance minister P. Chidambaram.^[14] But he has served up uncomfortable audit reports that have pinned many government departments beyond the baseline.^[13]

He has consistently hit the headlines for his unforgiving audits, ranging from the scathing report on the shoddy preparation for the Commonwealth Games to the latest on spectrum allocations for second generation (2G) telecom services.^[13]

Along with a vibrant media, an activist Supreme Court and an increasingly vociferous civil society, his supporters say, Rai has made his office into a powerful force for accountability and transparency in modern India.^[15] However , post his retirement and on closer scrutiny it appears that he ended up exceeding his constitutional mandate as CAG of India. The Joint Parliamentary Committee set up by the Indian parliament to look into the allocation of spectrum and the notional loss imputed by the CAG has held "On the question of auditing Government policy, the C&AG clarified during evidence: “We are very clear. We do not question the Government (policy).” However, while communicating the decision regarding conduct of audit of grant of licences and spectrum, the then DG Audit,P&T in his letter dated 18 November, 2009 to the Department of Telecommunications had stated:“The aspects of policy, decisions taken, selection and rejection criteria of applicants for licences,process of issue of licences to the selected operators, policy and procedure adopted for allocationof 2G spectrum, logic and reasons behind the policies in these matters will also be included in the examination”. The matter was referred by the Department of Telecommunications to the Ministry of Law and Justice. The view of the Ministry of Law and Justice was: “CAG Act, 1971nowhere provides that he has any duty or power to question the wisdom of the policy/law makers as policy decision may involve trial and error theory. CAG, CVC and other watchdog no doubt play a very significant role in any democracy but they being constitutional/statutory functionaries cannot exceed the role assigned to them under the Constitution/law. Even the Courts refrain to question wisdom of Government in policy matters unless the policy decision is patently arbitrary, discriminatory or mala fide”. The opinion of the Ministry of Law and Justice was communicated to the C&AG Office by the Secretary, Department of Telecommunications on 7 September, 2010. It is surprising that despite the clarification by the Ministry of Law and Justice, the audit of the policy and calculation of loss thereon was carried out unhindered. In this context, the Opinion of the Supreme Court of India dated 27 September, 2012 in response to the reference made by the President of India conclusively hit the nail on the head: “Alienation of natural resources is a policy decision, and the means adopted for the same are thus, Executive prerogatives.” In a democratic framework every organ of the Government is expected to exercise maximum caution and restraint not to trespass the boundaries already drawn up. The Committee would, therefore, like to uphold the prerogative of the Government in a Welfare State to formulate policies which should under no circumstance be subjected to audit or calculation of loss." His controversial tenure can at best be described as an attempt "to push the envelope too far. "

</ref Report of the Joint Parliamentary Committee set up by the Indian Parliament " To examine matters relating to allocation and pricing of Telecom Licenses and Spectrum" dated 25th October 2013>

Reforms suggested by Vinod Rai

All private-public partnerships (PPPs), Panchayti Raj Institutions and societies getting government funds should come within the ambit of the CAG. The PPP model has become a favourite mode of executing big infrastructure projects worth millions of rupees and these projects are not audited by the CAG.Now, 60 percent of government spending does not come under the scrutiny of the CAG. That is a huge amount and not accounted.^[16] When most of the indian politicians were opposing his activities, even at that time he did his duty very perfectly and aggressively.

Major Audits

2G Spectrum allocation

He is widely credited for the report on issue of Licences and Allocation of 2G Spectrum by United Progeressive Alliance, UPA government which resulted in a huge controversy in India. The report estimated that there was a presumptive loss of 1766.45 billion (US$28 billion).^[17] In a chargesheet filed on 2 April 2011 by the investigating agency Central Bureau of Investigation (CBI), the agency pegged the loss at 309845.5 million (US$5.0 billion)^[18]

On 2 February 2012 the Supreme Court of India on a public interest litigation (PIL) declared allotment of spectrum as "unconstitutional and arbitrary" and quashed all the 122 licenses issued in 2008 during tenure of A. Raja (then minister for communications & IT in UPA government) the main accused.^[19] The court further said that A. Raja "wanted to favour some companies at the cost of the public exchequer" and "virtually gifted away important national asset".^[20]

However, the Presumptive Revenue loss calculation has never been established and has at best remained a conjecture .On 3 August 2012 when according to the directions of the Supreme Court, Govt of India revised the spectrum price to Rs 140 billion as reserve price for 2G spectrum and decided to sell airwaves in Delhi, Mumbai, Karnataka and Rajasthan for 1800 MHz band, and pan India for the 800 MHz band the response was poor to say the least . The Government then announced that it would auction the unsold spectrum in the 1800 MHz band from the 2012 spectrum auction, immediately after the first round, which began on 11 March, got over to comply with a Supreme Court order. The government also reduced the reserve price for 1800 MHz by 30% and for 800 MHz by 50% from the 2012 spectrum auction.Response to the 2013 spectrum auction was also very poor. While there were no bidders for spectrum in 1800 MHz and 900 MHz bands, MTS India was the only bidder for airwaves in 800 MHz band. Airtel and Idea were reluctant to participate in the spectrum auction for due to steep pricing of the auction.

The main criticism to the report now emerging is that the CAG exceeded its constitutional mandate as it attempted in a sense to change the policy of the Government of India which at that point was to promote telecom growth and not revenue maximisation by arguing that spectrum could only be sold by auction and creating figures for Presumtive losses around it .However,the Honble Supreme Court Of India in the Presidential Reference (2012) has upheld the right of the Government to frame policy and said "The norm of “common good” has to be understood and appreciated in a holistic manner. It is obvious that the manner in which the common good is best subserved is not a matter that can be measured by any constitutional yardstick - it would depend on the economic and political philosophy of the government. Revenue maximization is not the only way in which the common good can be subserved. Where revenue maximization is the object of a policy, being considered qua that resource at that point of time to be the best way to subserve the common good, auction would be one of the preferable methods, though not the only method. Where revenue maximization is not the object of a policy of distribution, the question of auction would not arise. Revenue considerations may assume secondary consideration to developmental considerations. " 1

CoalGate (Coal Mines Allocation)

Delhi Commonwealth Games 2010

Confrontation with Governments

As a part of his duty, Rai has many a times raised questions on faulty policy making of several state governments and Union government run by Congress led United Progressive Alliance and BJP led Governments in Chhattisgarh and Gujarat. He had slammed the Union government in the allocation of spectrum for 2G mobile use to telecom operators, conduct of the 2010 Commonwealth Games, running of its flagship rural employment guarantee scheme and the spending by Reliance Industries in an oil block. He had also pointed out improprieties in allocating coal blocks, and Union government's overt generosity to GMR in an airport project and Reliance Power in a power plant.^[21] CAG slammed govt of Goa for forest policy delay,^[22] Haryana govt for loss of over 10 billion (US$160 million) due to "deficiency" in imposing taxes like sales tax on goods, stamp duty and registration fee in land deals and taxes on vehicles in more than 4,000 cases in a year.^[23]

There are certain times when ministers of ruling Congress coalition government criticised CAG. Minister of state in PMO, V. Narayanasamy said "CAG has no authority or right to comment on the policy of the government but unfortunately it has questioned its authority, which is totally unwarranted and against the mandate given to them".^[24] However CAG Vinod Rai defended his position by stating at an Economic Editor’s Conference in 2011 “I am making it clear that I do not think the CAG is exceeding its jurisdiction, because the basic responsibility of the CAG is to identify if there is any lapse.” and challenged the government to identify the specific breach of mandate.^[25]

Awards and recognition

He figured as one of the Persons of the Year in Forbes magazine January 2011.^[27]

In December 2011, he was chosen as the chief of UN external audit panel.^[28][29]

In February 2012, CAG was complimented for professionalism, training and infrastructure by its US counterpart.^[30]

Quotes

• "We cannot do the role of cheerleaders. We strive to provide objective feedback on the functioning of the various departments of the government." - Vinod Rai speaking at the inaugural function of a Conference of Accountants General.^[31]

References