18 Institutional Arrangements for Transparency: (CVC), (C&AG) & (CIC).

Dr. Roopinder Oberoi

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Institutional Arrangements for Transparency

A) Central Vigilance Commission (CVC),

B) Controller & Auditor General (C&AG), and

C) Chief Information Commission (CIC)

 

Introduction

Public governance relates to the process by which a society organizes its affairs and manages itself. In democracies, public governance is a complex matrix of relationship that exists between the institutions and civil society regarding the responsibility and accountability for the management and control of public resources and delivery of public services. Governance implies effective management of public resources, high level of accountability, and transparency and a free flow of information, control of corruption; significant citizen participation and equity are the quintessential principles of democratic institutions.

Since around the 1990s, “transparency” became a maxim for national governments, international institutions, and civil society groups around the world. Nobel prizes have been awarded for bringing attention to the importance of information in the functioning of the markets. George Akerlof, Michael Spence and Joseph Stiglitz received the Nobel Prize in 2001 for their analysis of how imperfect information can lead to market failures. Amartya Sen won the 1998 Nobel Prize for illustrating the role of information and “entitlement” in the functioning of the markets. His extensive research on famines in the great Bengal, Sahel, Bangladesh and Ethiopia showed that famines had occurred in years when the supply of food was not significantly lower than during previous years. The problem was not the shortage of food but lack of information and “voice”. People will starve when their entitlement is not sufficient to buy the food necessary to keep them alive. The towering conceptual contributions of the Nobel-laureates in putting forth a framework linking the citizenry’s right to know and to access to information with development are undisputable, and have already had a significant influence in various fields.

In fact, transparency is widely recognized as core principle of good governance. Free access to information is a key constituent in promoting transparency. But the information must be timely, relevant, accurate and complete for it to be used effectively. Transparency and accountability in Government are mutually reinforcing. However, actual implementation of transparency-related reforms on the ground, while not devoid of stellar examples and progress in some countries, remains checkered globally.

This swing from a default of secrecy to transparency is a very important one. It not only indicates a concrete duty on the state to provide information as per the law, but can also be seen as an indication of a shift in the very conceptualization of the body politic. Formerly passive subjects of a state are re-imagined as active citizens with a legitimate interest in such information, and thus having an inherent right to it. Democracy necessitates an informed citizenry and transparency of information which are vital to its functioning and also to contain corruption and to hold Governments and their instrumentalities accountable to the governed. It provides a framework for an informed public to gain awareness of the interactions between institutions of government.

 

What is “transparency”?

Mitchell (1998: 109) defines transparency as the dissemination of regular and accurate information. Simply put, a transparent political regime is one that provides accurate information about itself, its operations, and the country as a whole,  or permits that information to be collected and made available. Kopits and Craig (1998) identify  transparency  as  “openness  toward  the  public  at  large  about  government structure and functions, fiscal policy intentions, public sector accounts, and projections. It involves ready access to reliable, comprehensive, timely, understandable, and internationally comparable information on government activities so that the electorate and financial markets can accurately assess the government’s financial position and the true costs and benefits of government activities, including their present and future economic and social implications.”

Vishwanath and Kaufmann (1999) regard transparency as the “increased flow of timely and reliable economic, social and political information, which is accessible to all relevant stakeholders.” Bellver and Kaufman (2005) follow Florini (1999), making the observation that can be seen as key to understanding transparency: “the release of information by institutions that is relevant to evaluating those institutions” (Florini, 1999, 5). As Bellver and Kaufman (2005, 5) put it, “Because transparency is a tool to facilitate the evaluation of public institutions, the information provided needs to account for their performance.”

An organization’s transparency can be measured by the “depth of access it allows,” “the depth of knowledge about processes it is willing to reveal,” and the “attention to citizen response” it provides ((Curtin & Meijer, 2006, citing Welch & Hinnant, 2003). “[T]he more transparent an organization is (via its web site or otherwise), the more it is willing to allow citizens to monitor its performance and to participate in its policy processes” (Curtin & Meijer, 2006).

Transparency as a concept covers event transparency (“open information about inputs, outputs and outcomes”), process transparency (“open information about transformations that take place between inputs, outputs, and outcomes”), real-time transparency (information released immediately), or retrospective transparency (information available only after time passes) (Hood, 2007). Transparent decisions should be “clear, integrated into a broader context, logical and rational, accessible, truthful and accurate, open (involve stakeholders), and accountable.” (Drew & Nyerges, 2004)

Simply put, a transparent political regime is one that provides accurate information about itself, its operations, and the country as a whole, or permits that information to be collected and made available. Stiglitz (2002) argues that governments can have incentives both to restrict and facilitate the flow of information. Moreover, in many instances the government is the sole repository (and/or producer) of these data, and it has complete discretion as to whether to release it or not. Governments also adopt a variety of domestic institutions (laws, regulations and procedures, such as administrative review) designed to regulate the flow of information. These include ‘Freedom of Information Acts,’’ Protections of media and speech freedoms, or more generally protections of the public’s ‘right to know.’

Information is valuable also to the electorate for democratic processes to function effectively, citizen have an interest in knowing about government actions and processes, allocation and redistribution decisions, market barriers and restrictions, tax and subsidy incidences and so on. Not only do these factors affect the economic performance of market activities, they affect the political support the voters may offer to incumbent policy-makers.

Transparency and accountability are reciprocally supporting. Essentially the term accountability encapsulates three main elements; answerability- the need for justification of actions; enforcement- the sanction that could be imposed if the action or justification of actions is found to be unsatisfactory (Schedler, 1999).; and responsiveness – the ability of those held accountable to respond to the demands made (Posani and Aiyar, 2009). Interwoven in these core elements is the notion of transparency, which is defined as ‘the degree to which information is available to outsiders that enables them to make informed decisions and or to assess the information made by insiders’ (Florini, 2007:5).

Defined such, the links between the two are said to be fashioned along two axes- transparency of information is instrumental for demanding accountability because without information individuals cannot know the excesses being committed by the state. Further transparency of information is also seen as significant for motivating citizens to exercise ‘voice’ power. Voice power is defined as the capacity of citizens to pressurize the frontline officials in ensuring effective delivery of services (Goetz and Gaventa 2001). The role of transparency in strengthening ‘say’ and ‘engagement’ has been given particular emphasis. It is assumed that access to information mobilizes citizens for collective action and this in turn strengthens the incentive structure of frontline providers (ibid). In a capsule then, the recurrent theme seems to be greater transparency leads to more empowerment, which in the context of more participation amplifies ‘voice’ and the assertion of voice results in greater accountability (Aiyar et al, 2009).

Despite these linkages, scholars such as Jayal (2008) and Fox (2007) argue that while transparency is an important constituent for securing accountability, the link between the two is neither unassailable nor automatic. Further the exercise of ‘voice’ which is seen as a critical element for cementing this relationship is conditioned by various factors. Transparency of information while providing the opportunities and the material basis for the exercise of voice is not sufficient in impelling citizens to pressurize officials in demanding the effective delivery of services.

The extent to which measures to encourage transparency can add towards fortification of voice, is predicated on 1) the manner and type of information displayed, and 2) the design of the transparency mechanism; including the responsiveness of the system and the institutional space available for follow up action and the awareness on the part of the citizenry of these avenues (Stirton and Lodge, 2001). Similarly whilst ‘voice’ is a necessary condition for accountability it alone is inadequate in delivering accountable relationships. Thus while citizens may be motivated to raise their demands it does not imply that power holders will be responsive to them. Factors which influence the translation of voice claims into effective accountability include; 1) the personal capacities of citizens 2) the nature of the political framework and more specifically the structure of the service delivery system (O’Neil, Foresti and Hudson, 2007).

In the context of the relationship between transparency and voice, the capacity of individuals to make use of information and demand accountability is predisposed principally by the approach in which information is supplied, whether it is functional and felicitous. If information is not made available in a relatable manner, average citizens would have to rely upon others for the demystification or sense-making of information, resulting in the disempowerment of some groups over others.

According to Fox (2007) there are principally two different types of information displays: Clear and Opaque. The criterion of ‘Opaque’ refers to the type of information which does not reveal how institutions actually behave in practice, in terms of how they make their decisions or the results of their actions. Clear displays on the other hand refers to access to information on institutional performance, official responsibilities and flow of public money. Clear transparency thereby sheds light on institutional behaviour, which permits interested parties to pursue strategies for constructive change (Ibid). The distinction between Opaque and Clear transparency mechanism thereby rests on the premise that if transparency policies are to meet the requirement of transforming institutional behaviour by allowing individuals to exercise greater control over the delivery of services, they need to be explicit in terms of ‘who does what and who gets what’ (Ibid: 668). Fox (2007) however cautions that the extent to which transparency initiatives are successful depend on a) responsive to the end users such that they can exercise some input into the decision making process and b) the extent to which end users are made to understand the actions they can potentially take.

Institutional framework, on the other hand is seen as an intervening variable between citizens’ capacity to exercise voice and demand accountability. However while political legal systems which are constitutionally designed to be open and responsive may create the space for making claims for accountability, accountability of service delivery systems is ensured when certain basic elements are in place (World Bank, 2006).

 

Institutions of Transparency in India

The paradox in Indian Institutional framework to ensure transparency and thereby accountability is inescapable. The de jure policies might appear to be all in place, and yet in the de facto implementation and delivery, there is rampant corruption, absenteeism, indifference, incompetence, inefficiencies or outright failures. At the heart of these failures, is a systemic crisis of accountability. In fact, some observers have argued that the Indian state, its institutions, and the rules that govern them are structured to avoid accountability altogether (Mehta 2003, Saxena 2004).

There are various bodies in place for ensuring transparency and accountability. At the federal level, key institutions include the Central Vigilance Commission (CVC), the Office of the Controller & Auditor General (C&AG), and the Chief Information Commission (CIC) which we will discuss in this chapter. In India these institutions comprise of financial oversight bodies like the Comptroller and Auditor General, investigative agencies like Central Vigilance Commission. Independent agencies, such as these, increase the ability to commit to desirable policies and increase transparency in the sense that specialization makes the agent responsible more easily identifiable. Transparency is sometimes in tension with responsiveness and representation in tension with both. The crucial point is that harmonizing the different components of accountability cannot be done by conceptual fiat. It is an empirical matter addressed by institutional design and the concrete work of politics.

 

1. Central Vigilance Commission

Anti-corruption measures of the Central Government are a responsibility of (i) Administrative Vigilance Division [AVD] in the Department of Personnel & Training; (ii) Central Bureau of Investigation; (iii) Vigilance units in the Ministries/Departments of Government of India, Central Public Enterprises and other autonomous organizations [hereinafter referred to as Department]; (iv) the disciplinary authorities; and (v) the Central Vigilance Commission.

The Administrative Vigilance Division was set up in the Ministry of Home Affairs, in August 1955, to serve as a central agency to assume overall responsibility for anti- corruption measures. With the establishment of the Central Vigilance Commission, a good part of the functions performed by the Administrative Vigilance Division are now exercised by the Central Vigilance Commission. The Administrative Vigilance Division is now responsible for the formulation and implementation of policies of the Central Government in the field of vigilance, integrity in public services, and anti- corruption and to provide guidance and coordination to Ministries/Department of Government of India in matters requiring decisions of Government.

In pursuance of the recommendations made by the Committee on Prevention of Corruption  [popularly  known  as  Santhanam  Committee],  the  Central  Vigilance Commission was set up by the Government of India by a Resolution, dated 11.2.1964. The serious concern expressed by many Members of Parliament in the Parliamentary debate in June,1962 on the “Growing menace of corruption in administration” led to the formation of the Committee on Prevention of Corruption better known as Santhanam Committee to review the problem and make suggestion. Among other things, the Santhanam Committee noticed the conspicuous absence of a dynamic integration between- the Vigilance Units in various ministries and Administrative Vigilance Division in the Ministry of Home Affairs. The Committee also raised an important issue that the Administration could not be a judge of its own conduct.

Consequent upon the judgment of the Supreme Court in Vineet Narain vs. Union of India [CWP 340-343 of 1993], the Commission was accorded statutory status with effect from 25.8.1998 through “The Central Vigilance Commission Ordinance, 1998. Subsequently, the CVC Bill was passed by both Houses of Parliament in 2003 and the President gave its assent on 11th September 2003. Thus, the Central Vigilance Commission Act, 2003 (No.45 of 2003) came into effect from that date. The establishment of the Commission was considered fundamental for evolving and applying common standards in deciding cases involving lack of probity and integrity in administration.

In terms of the provisions made in the CVC’s Act, the Commission consists of a Central Vigilance Commissioner [Chairperson] and not more than two Vigilance Commissioners [Members]. The Central Vigilance Commissioner and the Vigilance Commissioners are appointed by the President for a term of four years or till they attain the age of sixty-five years, whichever is earlier. The basic powers and functions of the Commission as defined in Chapter III (Section 8) of CVC Ordinance 1998. Section 24 of the Ordinance also envisages that the Commission shall continue to discharge its existing functions as per the Resolution of Government of India of 1964, which are not inconsistent with the provisions of the Central Vigilance Commission ordinance 1998.

The Commission is deemed to be a civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 and every proceeding before the Commission is to be a judicial proceeding within the meaning of sections 193 and 228 and for the purposes of section 196 of the Indian Penal Code.

The task of CVO is not limited to interfering after faults and inaccuracies have been committed. The foremost object of his office is to thwart slipups. The Santhanam Committee, while outlining the preventive measures that should be taken to significantly reduce corruption, emphasized four major causes of corruption and how, in respect of each of these causes, preventive measures could be planned and implemented in a sustained and effective manner. These causes are:-

(1) Administrative delays

(2) Government taking upon themselves more than what they can manage by way of regulatory functions.

(3) Scope for personal discretion in the exercise of powers vested in different categories of government servants.

(4) Cumbersome procedures of dealing with various matters which are of importance of citizens in their day to day affairs.

The role of the Chief Vigilance Office may broadly be divided into two parts. i.e. preventive and punitive.

The Chief Vigilance Officers have so far been concentrating mainly on the punitive side, i.e. dealing with actual vigilance has not received adequate attention. The word Vigilance entails watchfulness. The role of Vigilance Officer is predominantly preventive and the use of adjective Preventive before the word Vigilance is strictly speaking redundant. While detection and punishment of corruption and other malpractices is certainly important, what is even more imperative is the taking of preventive measures which could lessen the number of vigilance cases considerably.

The proactive approach by the CVC is the call of the day seeing the glaring misconduct set within the system. These measures include:-

a) a detailed examination of the existing organization and procedures with a view to eliminate or minimize factors which provide opportunities for corruption or malpractices;

b) planning and enforcement of regular inspections, surprise visits for detecting failures in quality or speed of work which would be indicative of the existence of corruption or malpractices;

c) location of sensitive spots; regular and surprise inspections of such spots and proper scrutiny of personnel who are posted in sensitive posts which involve dealings, with members of the public on a considerable scale;

d) maintaining proper surveillance on officers of doubtful integrity and officers who are on the “Agreed” list; and

e) ensure prompt observance of Conduct rules relating to integrity; covering (i) statements of assets and acquisitions (ii) gifts (iii) relatives employed in private firms or doing private business (iv) benami transactions.

On the punitive side, the Chief Vigilance Officer’s responsibility can be:-

(i) To ensure speedy processing of vigilance cases at all stages. In regard to cases requiring consultation with the Central Vigilance Commission, a decision as to whether the case had a vigilance angle shall in every case be taken by the CVO who, when in doubt, may refer the matter to his administrative head i.e. Secretary in the case of Ministries/ Departments and Chief Executive in the case of public sector organizations;

(ii) To ensure that charge-sheet, statement of imputations, lists of witness and documents etc. are carefully prepared and copies of all the documents relied upon and the statements of witnesses cited on behalf of the disciplinary authority are supplied whenever possible to the accused officer along with the charge-sheet.

(iii) To ensure that all documents required to be forwarded to the Inquiring Officer are carefully sorted out and sent promptly;

(iv) To ensure that there is no delay in the appointment of the Inquiring Officer, and that no dilatory tactics are adopted by the accused officer or the Presenting Officer;

(v) To ensure that the proceeding of the Inquiry Officer’s Report for final orders of the Disciplinary Authority is done properly and quickly;

(vi) To scrutinize final orders passed by the Disciplinary Authorities subordinate to the Ministry/Department, with a view to see whether a case for review is made out or not;

(vii) To see that proper assistance is given to the CBI in the investigation of cases entrusted to them or started by them on their own source of information;

(viii) To take proper and adequate action with regard to writ petitions filed by accused officers;

(ix) To ensure that the Central Vigilance Commission is consulted at all stages where it is to be consulted and that as far as possible; the time limits prescribed in the Vigilance Manual for various stages are adhered to;

(x) To ensure prompt submission of returns to the Commission; And To review from time to time the existing arrangements for vigilance work in the Ministry/Department for vigilance work subordinate officers to see if they are adequate to ensure expeditious and effective disposal of vigilance work;

(xii) To ensure that the competent disciplinary authorities do not adopt a dilatory or law attitude in processing vigilance cases, thus knowingly or otherwise helping the suspect public servants, particularly in cases of officers due to retire;

(xiii) To ensure that cases against the public servants on the verge of retirement do not lapse due to time-limit for reasons such a misplacement of files etc. and that the orders passed in the cases of retiring officers are implemented in time;

(xiv) To ensure that the period from the date of serving a charge sheet in a disciplinary case to the submission of the report of the Inquiry Officer, should, ordinarily, not exceed six months.

Information about corruption, malpractices or misconduct comes to the CVO from diverse sources. The CVO is also expected to scrutinize Report of Parliamentary Committees like the Estimates Committee, Public Accounts Committee and the Committee on Public Undertakings, and Audit Reports, Proceedings of the two Houses of Parliament and complaints and allegations appearing in the press relating to his own organization, and to initiate action whenever any case having a vigilance angle comes to light from any of these sources. In particular, the CVOs scrutinizes the P.A.C. Reports in details even when such reports come to the organization at the draft state with a view to see if any public servant might have acted for an improper purpose or in a “corrupt” manner or had exercised his powers for corrupt or improper purposes and the Central Vigilance Commission kept informed.

 

Where the scrutiny of the Report does not indicate any transaction having a vigilance angle, a Nil report should be furnished to the Commission. Apart from this, the CVO should also have a system of collecting his own intelligence about possible malpractices and misconduct among employees of his organization. Although the CVO may not by himself taken action on anonymous/pseudonymous complaints, such complaints forwarded for report by the Central Vigilance Commission should be regarded as a reference from the Commission. All complaints, from whichever source received should be promptly entered in the Vigilance Complaints Register (CVO-I) and the CVO should ensure that this register is regularly put up to him so that a preliminary enquiry into these complaints is held and a report sent to the Commission within the prescribed time-limit. If it is not possible to complete the preliminary enquiry within this period, the CVO should personally look into the matter and send an interim report to the Commission, giving the progress of the investigation, reasons for the delay, and the date by which the final report could be expected.

Improving vigilance administration is possible only if system improvements are made to prevent the possibilities of corruption and encourage a culture of honesty. Keeping this in view, in exercise of the Powers conferred on the CVC by Section 8(1)(h) of CVC ordinance 98 and Section 8(1)(g) of CVC Ordinance 99, the Commission issued instructions for compliance in exercising superintendence over the vigilance administration.

 

2. Comptroller and Auditor General

The Office of the Comptroller and Auditor General (C & AG) is the apex auditing body. The C& AG have produced several reports on various departments such as railways, public sector enterprise, and tax administration. The Comptroller & Auditor General of India plays a key role in the functioning of the financial committees of Parliament and the State Legislatures.

When the draft Articles 149, 150 and 151 dealing with the Auditor-General of India came up for consideration before the Constituent Assembly on 30 May, 1949, TT Krishnamachari sought to change the designation of the Auditor-General to Comptroller and Auditor-General because the duties of his office were not merely of audit but also of exercising control over government spending. The CAG has “to ascertain whether moneys shown in the accounts as having been disbursed were legally available for and applicable to the service or the purpose to which they have been applied or charged and whether the expenditure conforms to the authority which governs it.’’

The Constitution enables the independent and unbiased nature of audit by the CAG by providing:

◆ Appointed by the President of India

◆ Special procedure for removal (like a Supreme Court Judge)

◆ Salary and expenses are Charged (not Voted)

◆ Cannot hold any other Government office after his term expires

The organisations subject to the audit of the Comptroller and Auditor General of India are:-

• All the Union and State Government departments and offices including the Indian Railways and Posts and Telecommunications.

• About 1500 public commercial enterprises controlled by the Union and State governments, i.e. government companies and corporations.

• Around 400 non-commercial autonomous bodies and authorities owned or controlled by the Union or the States.

• Over 4400 authorities and bodies substantially financed from Union or State revenues

Today the scope of CAG is not just limited to the financial affairs but has increased significantly encompassing in it the objective of controlling corruption, preventing wasteful government expenditure and fostering excellence in the public sector. These reports have revealed many financial irregularities, suggesting a lack of monitoring of public expenses, poor targeting and corrupt practices in many branches of government. The most recent example is its report on 2G scam and Coal Allocation Scam that nailed the corrupt organizing committee members and government representatives.

CAG, hitherto, has played a significant role in alleviating issues of corruption, black- money, government’s anti-public policies and other challenges of good governance. Instances such as the improper implementation of Ganga Action Plan1, the inflated accounts of Food Corporation of India for the year 1997-1982 , the financial mismanagement in Bihar in the year 2000-03 brought out by CAG, prove that its office, since inception, has been playing a crucial role in achieving the goal of good governance. Yet, the recent cases of Common Wealth Games 2G spectrum scam, reports menace or aggravating losses of Air India establish the need for aggressive execution of CAG’s authority. Adarsh Housing scam, and more recently Coalgate.

The duties of the CAG as defined by the DPC Act, 1971, are to audit and report upon:

a) All receipts into and spending from the coffers (called the Consolidated Fund) of the Union and State Governments.

b) All transactions relating to the Emergency expenses (called Contingency Funds) and relating to the monies of the public held by the Government e.g. Postal savings, Vikas Patras (called

Public Accounts) at Central as well as State levels. All trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept in any Government department.

c) All stores and stock accounts of all Government offices and departments.

d) Accounts of all Government companies and Corporations e.g. ONGC, SAIL etc.

e) Accounts of all autonomous bodies and authorities receiving Government money e.g. municipal bodies, IIM’s, IIT’s, State Health societies.

f) Accounts of any body or authority on request of the President/Governor or on his own initiative.

 

CAG has the

a) Power to inspect any office or organisation subject to his audit.

b) Power to examine all transactions and question the executive.

c) Power to call for any records, papers, documents from any audited entity.

d) Power to decide the extent and manner of audit.

 

CAG’s oversight audit functions in India have traditionally focused on ensuring that Government entities are spending funds prudently as intended by the Parliament and complying with applicable laws, rules and regulations, while guarding against loss due to waste, misuse, mismanagement, abuse, errors, frauds and other irregularities. C&AG’s.

Performance Audit reports provide important insight into whether mega infrastructure projects, major flagship programmes and other development schemes are being implemented in an efficient and effective manner with due regard to economy. C&AG seeks to improve governance by enhancing accountability and transparency through his oversight and insight reports placed before Parliament and State legislatures. The number of such reports presented to the legislature has increased in recent years from 80 in 2001-02 to 102 in 2006-07 indicating enhanced audit performance. However, inadequacy of powers and mandate, inefficient audit systems and procedures, and skills gaps in auditing complex and new emerging areas continue to impact audit quality and the Department’s capability in timely detecting serious  irregularities, abuse of authority, frauds and mismanagement of public funds. This very adversely affects the effectiveness of the CAG in enforcing accountability in governance. In fact, in the context of controlling corruption which is acknowledged by the Government as an area of serious concern, the XIth Plan document advocated to seriously work upon “strengthening the watch dog role of the Comptroller & Auditor General of India and his establishment in order to ensure probity, transparency and accountability in all public financial transactions”. The Plan document inter alia suggests grant of “wider powers to audit” and other measures to improve effectiveness of audit and promote accountability in financial administration.

During last few years, not only the magnitude of public spending and receipts has increased enormously, there has been emergence of new organisational structures such as Regulators, Information Commissioners, Non-Governmental Voluntary Organisations, Societies, Public- Private Partnership arrangements etc. These increasing varieties of organisational forms raise serious challenges and opportunities for audit in view of their important role in delivery of public services in the liberalised and globalised environment today. Many provisions of DPC Act of 1971 have, therefore, been rendered completely inadequate on account of rapid changes in the manner of Government functioning.

While the C&AG’s DPC Act does not have any specific provisions for audit of non governmental organisations, various autonomous bodies and societies receiving Government funding are audited under Section 14, 15, 19A and 20 of the Act. In the recent Regulation on Audit and Accounts issued by the CAG in 2007, NGOs have been included in the expression ‘body’ and ‘authority’ used in the above sections of the DPC Act.

The existing provisions of these Sections are highly restrictive, as a result, large amount of the ‘directly transferred funds’ remain outside the scope of audit by the CAG.

Section 14(1) does not allow CAG to audit bodies or authorities unless the amount of grant or loan released to them is more than Rs 25 lakh and exceeds 75 per cent of their total expenditure. The CAG requires prior approval of the President or the Governor of a state under section 14(2) for taking up audit of bodies and authorities which are not ‘substantially financed’, but may have received grants or loans of any amount exceeding Rs.1 crore. Under Section 15, when the funding is provided for ‘specific purposes’ to a body or authority, the scope of audit by CAG is limited to the ‘scrutiny of the procedure by which the sanctioning authority satisfies itself as to the fulfilment of condition, subject to which grants/loans are provided’. As the Section 13 of the DPC Act allows CAG to audit all the expenditure from the Consolidated Fund of India, the restrictions imposed by Section 14 and Section 15 prohibit comprehensive ‘whole-of-the-programme’ audit of centrally sponsored schemes and flagship programmes in social and economic sectors.

 

Depending upon the objective of audit, we can classify audits by the SAI India into:

a) Compliance Audit

b) Financial Attest Audit

c) Performance Audit

Compliance Audit

Compliance audit is often called a transaction audit in which some selected transactions (for e.g. a purchase by a Medical Officer, a contract executed by a Public Works Division for building a road or a tax assessment order by an Assessment Officer) of an entity for a particular financial year are chosen for examination.

A compliance auditor would ask what has been/ not been done in a transaction against rule, sanction, provision and propriety. He checks whether a transaction: conforms to sanction/provision of funds; adheres to all rules and regulations; adheres to the principles of financial propriety, which go beyond mere observation of rules.

Financial Attest Audit

Financial statements are prepared by departmentally run undertakings, statutory corporations, Government Companies and other autonomous bodies and authorities. CAG certifies how far the accounts are “true and fair” i.e. whether the financial statements (accounts) are properly prepared, complete in all respects and are presented with adequate disclosures. In some cases, our financial Audit is a “supplementary audit” with the primary auditor usually being a Chartered Accountant. CAG audits and certify the annual accounts of the Central and State Governments.

Performance Audit

After issue of Performance Auditing Guidelines in 2004, Performance Audit has become a major activity of the Audit department, and most of the stakeholders including the Public Accounts Committee have shown increased interest in such Reports in view of comprehensive insight provided by them into the economy, efficiency and effectiveness of operations of the Government.

In India, however, no ‘specific and separate’ provision exists in the CAG’s DPC Act for conducting performance audit. The first authority for conducting performance audit was drawn from an administrative order issued by the Ministry of Finance in 2006 directing the Ministries and Departments to facilitate the conduct of such audits by providing access to all the documents required by the CAG. Interestingly, the CAG’s DPC Act defines ‘accounts’, but does not define the word ‘audit’. The term ‘audit’ has been defined for the first time in the Audit Regulations issued in 2007, which clarifies that ‘audit’ includes performance audit or any other type of audit determined by the CAG. Thus, the authority of CAG of India to conduct performance audit emanates from an administrative order and the Audit Regulations and not clearly from the Audit Act passed by the Parliament.

Performance audit does not correspond to the traditional image of auditing as a process centered on ‘checking the books’ to attest their correctness. It seeks to establish at what cost and to what degree the policies, programmes and projects are working. Performance Audit, apart from asking whether things are being done in the right way, goes a step further and analyses whether the right things are being done. In addition to all the financial audit checks, the Performance Audit seeks to assess whether a programme, scheme or activity deploys sound means to achieve its intended socio-economic objectives. A performance auditor need to ask what should have been done to achieve the objectives; how can we do things better and how to do better things.

What happens to the Audit Reports?

The Constitution (Article 151) prescribes that the reports of CAG relating to accounts of the Union/states shall be submitted to the President/Governor, and is then to be laid before each House of Parliament/state legislature. As regards Govt. companies and corporations, the relevant provisions are contained in Section 19A of the DPC Act which requires CAG to submit his reports to the central or state Government concerned who shall cause the reports to be laid before each House of Parliament/state legislature as the case may be.

Nearly 100 reports are prepared every year by the CAG for presentation to Parliament/state legislatures. Quite often, despite the reports being sent to the President/Governor/Central Government well in time before commencement of the Parliament/Assembly session, the reports are not placed in Parliament/ state legislature immediately. Government takes considerable time in getting necessary approvals for tabling of Audit reports. In many cases, Government places the reports towards the end of the Parliament/Assembly sessions or on the last day of the session thus denying adequate opportunity to the legislature to take cognisance of the CAG’s reports and raise relevant issues in the Parliament/Assembly. Such serious delays or sometimes manipulations on the part of the Government in deciding timing of placement of the reports before the legislature erode the independence of the C&AG as well as his effectiveness as constitutional watchdog of public finances.

Once tabled in the House, the Reports stand permanently referred to the Central and State Standing Committees on Public Accounts (PAC)/ Committees on Public Undertakings (COPU). These specialized committees have been constituted to facilitate timely and intensive scrutiny of the Annual Accounts and the Audit Reports thereon. The Committees select those findings and recommendations from CAG reports that they judge to be the most critical to the public interest and arrange for hearings on them.

At the hearings of the Committees, the executive can be called to account for their actions/ inactions. Based on their Examination, the Committees prepare and submit their reports to the Legislature that summarize the Committee’s hearings, the action taken by the executive and include recommendations to improve administrative practices and procedures.

Qualitatively, audit provides many tangible and intangible benefits. Audit presence has a deterrent and preventive effect on financial lapses. Audit reports provide an analysis of the financial health of the Union and State Governments based on time series data so that the respective Governments can draw appropriate lessons and take corrective action. At the instance of audit, many changes in policy, law and rules are made by various departments at the Union/State levels to avoid recurrence of similar irregularities. These make services more efficient, improve revenue collection and strengthen management of resources.

Action on Audit Reports

The scrutiny of the Annual Accounts and the Audit Reports thereon by the Parliament as a whole is an arduous task, considering their diverse and specialized nature, besides imposing excessive demands on the limited time available to the Parliament for discussion of issues of national importance. Therefore the Parliament and the State Legislatures have, for this purpose, constituted specialized Committees like the Public Accounts Committee (PAC) and the Committee on Public Undertakings (COPU), to which these audit Reports and Annual Accounts automatically stand referred.

The CAG in its draft audit report on KG-D6 block stated that the Oil Ministry and DGH bent the rules, to grant “huge benefits” to Reliance when it was allowed to retain the entire block, but said gains cannot be quantified. It also pulled up the Ministry for going out of its way to grant nearly 1,700 sq km of additional area to Cairn India adjacent to its oil discovery in Rajasthan block. CAG turned down a request of the Oil Ministry to allow private firms like Reliance and Cairn India, against whom the draft report has passed strictures, an opportunity to present their views on the audit objections. The audit mandate does not provide for seeking a response on its draft observations and the government could raise audit objections after it has finalized its report and it is tabled in Parliament, thus also ensuring that these reports are tabled without any influence of Private firms.

The reports of CAG are not just a collection of statistics; rather they also suggest the steps which can be used to improve a situation and rectifying the errors of the past. For instance CAG with the task of improving the social audit process in MGNREGA following reports of malpractices and corruption recommended in March 2011, to the States to set up directorates to train auditors from civil society. As per CAG’s recommendations, a nominee of the government auditor would be present in social audits that gram sabhas would conduct twice a year. Even in 2007, CAG while pointing out that the defence acquisition is “a cross-disciplinary activity requiring expertise in technology, military, finance, quality assurance, market research, contract management, project management, administration and policy making”, suggested that an integrated defence acquisition organization be set up incorporating all the specializations involved in defence procurement under one head; A special cadre of Acquisition Managers be formed by training suitable people in the different areas of acquisition and certain other recommendations were also given.

However, existing mandate of CAG in respect of bodies and authorities does not permit him to conduct a comprehensive ‘whole-of-the-programme’ audit and leaves out large number of bodies and authorities and substantial amount of funds outside the purview of CAG’s audit.

It is felt that ‘expenditure and receipt’ cannot be the core/ guiding principles for determining CAG’s audit mandate with respect to regulators. The regulators discharges executive functions which were earlier performed by the Governments. Though their own expenditure/receipt may be negligible, their decisions can have serious impact on the revenue receipts of the Government and also on the cost and quality of service provided to the common public.

3 ) The Chief Information Commission

“A popular government without popular information, or the means of acquiring it, is but a prologue to a farce or a tragedy or perhaps both. Knowledge will forever govern ignorance, and a people who mean to be their own governors, must arm themselves with the power knowledge gives.” – James Madison, Former US President, 1822.

The promulgation of Right to Information Act (2005) set the stage for the transparency in the functioning of the government and its various agencies. Under this Act, access to information from a public agency has become a statutory right of every citizen. In its enactment, it had been argued that the system of government in India is so opaque that ordinary citizens do not have much information about how decisions are made and how public resources are utilized. In effect, RTI Act is a vehicle for greater transparency about the manner of functioning of public agencies. There have been some ‘major gains’ in disclosure of information, as reported in media and research from time to time.

The new Act comprises a single piece of legislation which is to be implemented by the Central and State Governments of India throughout the entire country at all levels of government. The fact that the same law will be supported by different sets of Rules in each jurisdiction and will not be coordinated by a single nodal Ministry leads to complications. As such, coordination is an important issue which Information Commissions, as champions of openness under the Act, need to constantly facilitate and promote as implementation and application of the law progresses.

The Chief Information Commission (CIC) was established in 2005 and came into operation in 2006. Information Commissions sit at the crossroads between the rights of the public and the duties of officials. As such, it is essential that their judgments are consistent, well justified and can stand up to scrutiny – by the courts, the public and officials. At a minimum, all decision notices need to be collected internally into a central database, so that Commissioners and staff can easily refer back to previous decisions. Decisions need to be collected and filed even if they are issued summarily as a short order, as well as when they involve complex legal points and take the form of more detailed judgments. State information commissions have also been setup, thus giving practical shape to the 2005 Right to Information (RTI) Act. It is expected that the CIC will help spread the culture of public seeking information under the RTI and expose wrong doings.

One of the Information Commissions’ most important roles is to handle appeals and complaints made under the Act. While an internal appeals mechanism is available as an inexpensive first opportunity under Section 19(1), oversight by Information Commissions which are independent of government is one of the most important safeguards included in the Act to ensure compliance with the law. By setting strong precedents in favor of openness, the Information Commissions operates to tackle entrenched cultures of secrecy that may continue to impact on openness under the Act.

When handling cases, it is important that Information Commissions keep in mind the law’s objective of promoting open government via maximum disclosure of information. In this context, it is important to recognize that the passage of the RTI Act symbolizes the Government’s recognition that information disclosure is in the public interest.

Section 19(10) of the Act specifically requires that Information Commissions, and/or the Government nodal agencies are responsible for administering the RTI Act, and they will need to develop Rules which provide more detail on how an appeal will be made and processed. Some jurisdictions have already promulgated appeal rules.

Section 18(1) gives Information Commissions a very broad review remit to consider issues not only regarding disclosure, but regarding the calculation of fees, forms of access, imposing penalties and awarding compensation. Section 24(1) also gives Information Commissions a role in determining when information should be released by intelligence or security agencies exempted under Section .24(1) where it is claimed that the information sought “is in respect of allegations of violations of human rights”. As a consequence of the breadth of the oversight remit of Information Commissions, internal procedural guidelines also need to address the different challenges that are thrown up by the different types of cases the Commissions will handle.

Section 19(5) of the Act specifically places the burden of proving that withholding information was justified onto the official who denied the request. In practice, this means that a requester only needs to interact with the Commission after the official withholding the information has first been questioned, because the burden is on the official to show the Commission that they were not wrong.

It is essential that the Information Commission remains user-friendly and does not turn into another overly legal forum which is dominated by lawyers. Although the Commission does have the powers of a civil court under s.18(3) of the Act, nonetheless, the Commission is not expected to operate like a court. The main goal of setting up the Commissions was to provide an alternative to the courts which was cheap and easy to use for ordinary people.

It is important that Information Commissions can be easily utilized by any member of the public, not just those who can afford sophisticated legal representation. In the event that officials engage legal counsel, the Information Commission, as an openness champion, needs to be proactive in ensuring that arguments in favour of disclosure are not overlooked simply because the requester is not present or has not used a lawyer. This approach focuses on ensuring that the fundamental constitutional right to information is properly enforced – rather than simply turning hearings into a competition as to which party has the resources and skills to make a better argument.

Most importantly, s.19(8) includes a catch all phrase which enables Information Commissions to “require the public authority to take any such steps as may be necessary to secure compliance with the provisions of this Act”. This clause, when combined with s.19(7) – which makes it explicit that the decisions of the Central and State Commissions are binding – makes it clear that Commissions have the statutory clout to be strong champions of openness and accountability, if they choose to exercise their decision making powers keeping in view the objectives and spirit of the law.

It is expressed that a matter of concern in the Act is that currently it contains no time limit for the disposal of appeals by the Information Commission, whereas section 19(6) requires Departmental Appellate Authority to dispose of appeals within 30-45 days. Ideally, the same time limit of 30-45 days which is given to Departmental Appellate Authorities under s.19(6), should be adopted by Information Commissions.

International best practice supports the establishment of a legal unit, or at least the employment of a legal expert, which will vet all decisions before they are issued, to ensure that they accord with the Act and common law generally. For example, the Act contains exemptions for information available to a person in his “fiduciary relationship”, disclosures which would constitute a “contempt of court”, and “trade secrets and intellectual property” – all of which are terms which have agreed legal meanings. It is important that Commissions take account of how these terms have already been interpreted by courts.

Section 25(3) specifically requires that Information Commissions produce annual reports through their Annual Reports; Information Commissions can provide a holistic picture of the status of compliance with the Act. They can highlight areas of good and bad practice, lessons learned and innovations which could be replicated. They can also pinpoint areas for reform.

Annual reports also provide an important opportunity to draw attention to RTI implementation  issues.  The  statistics  collected  in  the  Annual  Report  can  be  an important monitoring tool for heads of public authorities, nodal agencies and the Information Commissions to regularly assess whether authorities are meeting their obligations under the Act. They can also be used to identify any public authorities which perhaps require additional training or systems support – for example, because statistics show that they are regularly missing deadlines for disposing of applications or appeals.

At the time the Annual Report is tabled in Parliament, Information Commissions could issue a press release summarising the highlights and setbacks in terms of implementation which are discussed in the Report. Publicity will be an important means of encouraging Governments to take action to address implementation deficiencies. In keeping with the strong proactive disclosure requirements in the Act at s.4, Annual Reports should also be available for inspection at every office of every public authority, so that all members of the public can easily find out how well the Act is being implemented.

It is important that all awareness raising and implementation strategies take account of the local needs of communities, as this will make it more likely that the public will feel “ownership” of the RTI and will recognize its relevance to their daily lives. In this context, experience has shown that strategies which promote government- community implementation partnerships can be particularly useful. Right to Information Councils is one mechanism for promoting more community engagement with the Act.

In other jurisdictions, Information Commissions have also set up Government-Civil Society Advisory Committees, drawing together representatives from civil society, the private sector and the media with officials and Commission staff to make recommendations for improvements and identify gaps in implementation and access in practice. This can also be a useful means of catalyzing civil society organizations to undertake their own public awareness activities, as they will feel that they have a more direct stake in ensuring that implementation efforts are effective. In India, civil society groups have already been extremely active throughout the country in raising awareness of the Act, and their efforts could usefully be supported and endorsed by Information Commissions.

But, the experiences of ordinary citizens in most villages, towns and districts of this country have not always been very positive. A recent study (PRIA, 2008) on implementation of RTI Act in 12 states concluded:

a) information about who the designated Public Information Officers  (PIOs) were in the district was not available in 90% of the districts;

b) nearly half of all respondents felt that PIOs were not at all cooperative in giving information even when asked (Kerala and MP behaving worse than UP, Bihar, Orissa and Haryana);

c) self-disclosure mandated under section 4 of the RTI Act was not made in 90% of the districts in these states. (PRIA, 2008)

One of the key provisions of this Act is self-disclosure of information in public domain. It is assumed that if adequate information is available, citizens can demand services and claim rights due to them from appropriate authorities and officials. The status of self-disclosure is rather poor nationwide.

Another recent study conducted by PRIA and CHRI (2009) about status of self- disclosure in the arena of food security showed that Food Corporation of India and PDS (civil supply departments) have reasonably clear web-based self disclosure at national level. But, the quality and accessibility of such self-disclosed information at district level becomes extremely poor and non-existent. What it means is that an ordinary citizen desirous of accessing food from the PDS system cannot get any clear information from the system of self-disclosure currently being practiced in these states (including Karnataka, Gujarat and HP, which are generally deemed to be better governed states). Disclosure of information at state or national levels only, mostly in English language, and largely through only web-based tools have resulted in systematic exclusion of the very same citizens in whose name and interests’ right to information has been enacted.

Transparency is necessary for making the system of public service delivery effective; it enables information in the hands of the citizens in a manner that they may be able to claim their entitlements. However, mere knowledge of what entitlements are, and who is responsible for fulfilling them, is not enough in ensuring that public services are adequately and effectively delivered to the ‘intended’ beneficiaries.

Conclusion

The functioning of institutions of transparency is undergoing a paradigm change. Focus has shifted from secrecy to transparency, from working in isolation to working with the people, from arbitrariness to accountability for actions. These include emphases on substantive improvements in open government laws and governmental compliance with them, especially in terms of the timeliness and comprehensibility of disclosures, as well as on strengthening institutions that can provide more informed and rigorous resolutions of informational disclosure disputes. There is a general consensus in India that these institutions of transparency taken singly and collectively, have underperformed.

The new churnings in civic associations in India, and newer hybrid means by which they are demanding responsiveness from the state, the Decentralization and increased ‘sightings of the state’ (Corbridge et al 2005), the Right to Information Legislation ‐ all present the potential to open up newer opportunities for empowerment of people, and for their claims for a transparent and accountable government. (Posani and Aiyar 2009)

In conclusion, rent seeking and resource dissipating activities are a subversion of the will of the voters, facilitated by obscure policymaking processes. Transparency Institutions limits rent creation and diversion by forcing democratically elected policymakers to be accountable to the citizen. However, institutions created to strengthen the link between transparency and accountability is neither automatic nor unassailable. The institutional links shared between transparency and accountability measures allows for citizens to access and use the information in understanding how the institutions are functioning; in lodging complaints if the procedures are followed or if there is violation on account of probity or denial of essential entitlements to citizens through mechanisms of grievance redressal. However, even if transparency measures create the space for the exercise of voice, the translation of voice into accountability needs further analysis of the ways in which transparency and accountability measures are designed, the social and institutional factors which impact such relations and empower citizens with the capacity to exercise their voice and demand accountability from the state.

 

you can view video on Central Vigilance Commission (CVC),

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