Keralam CM Satheesan questions CAG audit methods

Keralam Chief Minister, V D Satheesan on Tuesday questioned methodology adopted by Comptroller & Auditor General (CAG) to calculate loss. He also said that the legislature has no power to exclude a report tabled by the CAG from the scrutiny of the PAC.

Addressing the inaugural ceremony of Conference of Chairpersons of Public Accounts Committees of the country here, he cited the CAG’s findings on the 2G spectrum allocation and the Vizhinjam port. The estimated loss of ₹1.76 lakh crore in the 2G spectrum allocation was not an actual realised loss but a hypothetical, presumptive projection, he said. “It extrapolated potential revenue based on later benchmarks such as 3G spectrum auction prices and later 2014 re-auction realisation, rather than actual market conditions in 2008,” he added.

“The CAG stepped outside its traditional mandate of financial oversight by questioning the merits of a deliberate government policy decision, rather than auditing procedural and administrative lapses, which is its job,” he said.

On Vizhinjam, Satheesan said the CAG evaluated the project as a public sector undertaking (PSU) although it is a public-private partnership (PPP). “PPP infrastructure ventures operate under fundamentally different commercial risk-sharing and financing structures than standard State-owned PSUs. Applying generic public sector audit principles led the CAG to mischaracterise the project’s fundamental legal and financial architecture,” he said.

“Moreover, the methodology evaluated the port as a standard stand-alone profitable asset from day one. It failed to adjust for the fact that massive mega infrastructure setups require heavy State-backed viability gap funding precisely because they are not financially viable on a stand-alone basis during their early life cycles,” he said, while adding that there should be a serious discussion on how PACs should treat audit findings that fall “out of the constitutional audit purview through misconception in the audit approach”.

Talking about consideration of CAG report by CAG, the Chief Minister pointed to the Keralam Legislative Assembly, which in January 2021 passed a resolution excluding the Comptroller and Auditor General’s audit findings on the Kerala Infrastructure Investment Fund Board (KIIFB) from Public Accounts Committee scrutiny. The then Assembly, he said, “disrupted” the normal parliamentary process.

“I think no legislature is competent to dismiss the report submitted by the CAG. What is the legislative competency? If you have a majority, you can take any decision. But you are not constitutionally competent to dismiss a CAG report based on your majority on the floor.”

“A government with a majority in the House can pass such resolutions, but these kinds of unhealthy parliamentary practices will defeat the very purpose of parliamentary institutions and the principles of accountability,” he said.

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