Tuesday, April 8, 2014

Holding government financially accountable to legislature : Vinod Rai, former CAG

Role of Accountability Institutions in maintaining good and ethical governance                                               
It is indeed a privilege  for me to be standing before an audience so distinguished and speaking in the memory of an individual who is truly a titan,  an  icon of his times and, whose deeds have left an impeccable legacy. 

Shri Pradhan Jwala Prasad was from that rare breed of distinguished statesmen, who had a broad vision, an abiding faith in the capacity of each citizen to build the nation and who led by example. 

A trained engineer, he had the capacity to not only conceptualise his ideas into practical  constructs but also to envision issues far beyond his times. 

He is fondly remembered in the ADB and his contribution to Bihar in the form of the Jeevak Heart Hospital is a rare gift to the people. 

His tireless striving to cleanse public life has ignited that spark, which I am sure has started the thought and action process to set in motion a groundswell, which will lead to the emergence of new paradigm founded on ethical governance, probity in public life and the rejuvenation of faith in a people and the govt that they elect. 

I am indeed very grateful to Dr Ajit Pradhan for giving me this honour to be able to speak in the memory of such a noble person as Shri Pradhan Jwala Prasad.  

2.We, the people of India, have given to ourselves a parliamentary democracy.

A democracy, of which all of us are so proud.

A democracy, which has consistently delivered near to double digit economic growth and delivered us from the tag of the ' hindu rate of growth'.

A truly vibrant democracy, in which each pillar has so very effectively performed its role.
We the people of India, have all the freedom that any model of a sovereign democratic republic can possibly enjoy in which the three pillars viz., the Legislature, the Executive and the Judiciary have steadfastly performed their roles.

The fourth estate has also been very alert and is growing increasingly assertive. In recent times, when the citizen has come centre stage, and the young urban middle class voice is wanting to be heard, the media has ensured that this voice is indeed heard.

The fifth estate, if it can be so described, in any democratic set up are always the over sighting and accountability institutions.

Every pillar in a democracy is expected to perform its given role, objectively and sincerely. Yet, to provide assurance to the man on the street,  an element of vigilante is routinely introduced. Such vigilante is exercised by specifically designed accountability institutions such as the Election Commission, the Vigilance Commission, Information Commission, a host of Regulatory Bodies and of course the Supreme Audit Institution, which in India is referred to as the Institution of the Comptroller and Auditor General.

3. While some of these institutions of accountability derive their mandate directly from the Constitution, some have statutory backing.  Regulatory Institutions are created by Government through specific statutes so as to distance itself from the oversighting function and entrust it to a specialized body well versed in the technicalities of that particular sector. It could be a Capital Market Regulatory body, Electricity Regulatory body or Pollution control body. However, before we examine the role and relevance of these institutions of accountability, it would be worthwhile to spend a couple of minutes to peep through the pages of history to ascertain how these institutions were conceptualized and have transformed themselves during the years.

4. The idea of governance and accountability is as old as organized government. Preservation of the resources of the king in ancient times was accorded top most priority. 

As early as in the third century BC, Kautilya in his magnum opus Arthashashtra, had observed of human nature's vulnerability to acquire public money for private gain. He wrote: “Just as it is impossible not to taste honey or poison that one may find at the tip of one’s tongue, so it is impossible for one dealing with government funds not to taste, at least a little bit, of the king’s wealth.” He added: “Just as it is impossible to know when a fish moving in water is drinking it, so it is impossible to find out when government servants, in charge of undertakings, misappropriate money.” Therefore, Kautilya went on to formulate a series of checks and balances in the administrative system. He wrote that “in all cases (where) an official has caused loss of revenue to the state….his property shall be confiscated.”

5. In the modern day accountability refers to the processes, norms and structures that hold the population of public officials legally responsible for their actions and even impose sanctions if they violate the norms. Accountability becomes essential, to ensure a systemic oversighting of those entrusted with acting on behalf of government. It is a fundamental tenet of a modern and democratic society. In a democracy, the citizens elect a government and invest the elected representatives with the power to govern them. The government is, therefore, obligated to work in the interest of its citizens and deliver accountable governance. The government spends a huge amount of money in creating infrastructure, providing services and running various schemes for the welfare of its people. 

A large chunk of the government’s money comes from tax which is compulsorily collected from its citizens. The citizens need to know whether government funds were handled in accordance with rules and regulations and whether the programmes, projects and services are achieving their objectives economically, efficiently and effectively. The government is answerable to public on whether various development and welfare programmes are producing the expected results. Therefore, accountability of government, its agencies and public officials spending money is a key requirement in any democratic set up. Successive governments have created institutions of horizontal accountability to oversee the actions of one another. There are other institutions of  vertical accountability, such as media and citizens groups which involve citizens overseeing the actions of the State.

6. Accountability institutions are the core institutions of a successful and performing democracy. The existence of strong and independent accountability institutions ensure that the government performs its duties in the interest of its citizens. Oversight by these institutions improves the economy, efficiency and effectiveness of government operations. These institutions detect and prevent poor administration, waste and leakages in the system. They provide a restraint on abuse of power and arbitrary behaviour. They prevent illegal and unconstitutional conduct and enforce standards of responsible and accountable leadership. The oversight institutions provide an independent mechanism to ensure that things move in the manner they are supposed to move and that the deviations to acceptable practices are identified and mid course corrections taken. Citizens are the ultimate stakeholders in their government and public trust is crucial to any government which wants to survive. Such independent institutions assure the public, that efforts are directed towards achievement of national goals and help to build the trust of citizens in the system of government.

7.  Globally democratic nations have created constitutional and statutory institutions to enforce accountability. In India, we have the CAG and the Election Commission who have been given constitutional status. There are institutions such as the Central Information Commission and the Central Vigilance Commission who have been given statutory status. The CBI is the investigating agency of the Central govt. The CAG and the EC have the necessary independence guaranteed by the framers of the constitution, who had the foresight to visualise that unless rendered totally distanced from the executive, the efficacy of these institutions would be seriously compromised. As a consequence, these institutions have established their credibility and have gained the public trust. Similarly. it would be in the interest of the credibility of ,and faith in the functioning of govt, if institutions such as the CVC and the CIC are also distanced from govt and provided a constitutional status.  

Whilst, it may not be feasible to provide total autonomy to an investigative agency such as the CBI, maybe the agency could be kept at an arm's length distance from the govt. It could certainly be given a more autonomous status and yet oversighted by a committee comprising the Prime Minister, Chief Justice of India, the Lok Pal, the Lok Sabha speaker and the leader of the opposition. This would provide it good visibility as an agency which could no longer be called a handmaiden of the govt. Successive govts have hesitated to do this for obvious reasons but time has come when some such decisive step will have to be taken sooner than later. This would serve to vastly enhance the credibility of govt.

8. In exercise of their functions, these oversight institutions should not be subject to the direction and control of any other person or authority. It is important to insulate these institutions from inappropriate influences. Any attempt to dilute or resist oversight and challenge the credibility of accountability institutions will only be inimical to societal needs and concerns. The society today has become very aware and demanding. Accountability and good governance , matter to people as never before. It is, therefore, in the interest of the Parliament to empower these accountability institutions and reinforce checks and balances in the system. These institutions must be granted autonomy and allowed to exercise the powers vested in them independently and objectively. They must be allocated the resources and skills required to improve their effectiveness. This will help to repose public confidence in the functioning of the government and will assure the man on the street about government’s actions, decisions and performances. Moribund and feeble institutions weaken the accountability mechanism and impede the progress of the nation.

9. We are at a critical juncture today. The ability of the system to enforce accountability cannot be challenged. Bottlenecks impinging on accountability have to be removed. Accountability cannot be relegated to a secondary position in pursuit of power and money. Typically people with vested interests in the system attempt to subvert the rules of government accountability on the one hand and free market competition on the other. Several transformational developments taking place in the country present opportunities for this section of players to try to divert decision making in government and public institutions for their personal agenda. These people then become the most insidious threats to a healthy democracy. It is, therefore, crucial that the accountability institutions must reposition themselves to the changing scenario and must assist to serve the interests of the public.

10. What has however, become undoubtedly more important is the concept of vertical accountability to check abuses by public agencies and branches of government. Civil societies, NGOs, mass media and citizens, as they have demonstrated in the recent past, have become vital elements to enforce standards of good performance on officials. These groups are no longer content  to live in the shadows any more. They have become very assertive. They have started questioning decisions of officials and are playing an active role to hold the government to account. They are engaging actively with the government and demanding accountability. These groups through their increased awareness, collective action and new forms of participation are assuming a significant role in building greater accountability in policy implementation and delivery of services. Demand for accountability from an active citizenry has posed new challenges to the government and is acting as a catalyst for changing the cultures of accountability and deepening democracy. This is indeed the old order changing, yielding place to the new. The era of a new, discerning and demanding class of citizen, has come to stay. This phenomenon has debunked  an oft repeated and widely accepted myth ----that of a 'silent majority'. The majority is no longer silent. It wants to be heard and not only so, it wants to hold those in power truly accountable for their (mis)deeds. This voice wants to participate in governance and wants government to be participative rather than driven from the top.

This awareness in society is manifesting in yet another form: the white collar or elite in society are no longer content in participating in drawing room or T V debates about governance or administration.  They are now willing to descend on to the street and actively participate in electoral politics. Indeed a very healthy development. This is a powerful signal as, the politicians had never taken this class of citizens seriously. They had not commanded any political leverage. This phenomenon has now debunked yet another myth ; that of the white collared not getting into electoral foray or being politically irrelevant.

11. Vertical accountability is the means through which citizen, mass media and civil society seek to ensure transparency in decision making by govt..  It is here that the role of citizen groups and media recently has been outstanding.  We give to ourselves governments as we deserve, and if we are not capable of holding them to account, we have none other to blame.  In recent years the stellar role of citizen groups and media in ensuring accountability has been remarkable. 

In the appointment of the Central Vigilance Commissioner, reopening of the Jessica Lal murder case, the misdemeanors of the Haryana Director General of Police or the unwarranted parole of Manu Sharma, the role of media and the citizens ensured that truth prevailed.  

These are outstanding examples of the new order asserting itself – a very healthy development.   

These are moments in history , observed in geographies around the globe, when people seem to rise up to right the wrong.  India demonstrated this to gain independence.  

India did this again when democracy was snuffed out in 1975 to regain it in 1977 and yet again in 1991 with economic reforms. India is now demonstrating its inherent strength by enforcing accountability on government through citizens group and media.  

12.      Countries worldwide have had a new paradigm emerge after such upheavals.  The mass movements largely are against failures in the system or when the gap between what governments should be doing and are actually seen to be doing become very vast.  The movements seek the ideal working of the system, and those impeding it, be accounted for their misdeeds. 

Street protests globally are against inequality, unfair treatment and injustice in policies of a nation who could not, through regulators and their own administrative set up, check the greed of a few.  The accountability of regulators is to harness excesses of the top one percentile wealthy persons, shore up the middle class and empower those at the bottom of the income distribution.    

The most oft repeated statements by public officials over a large number of misdemeanours which have been reported are : that the law will be allowed to take its own course ! It is unfortunate that this is exactly what does not happen. 

Any number of impediments are, in fact, placed in the way of the law taking its own course. What we fail to recognise is that enlightened kings and vibrant democracies have been successful and popular, only because the rule of law was allowed to prevail. 

13. Audit is a powerful tool of good governance. Accountability and transparency, the two cardinal principles of Good Governance in a democratic set up depend for their observance, to a large extent on how well the public audit function is discharged. An effective audit, strengthens governance, by providing for accountability and protecting the core values of government. It helps in enhancing transparency in operations of the government and bringing to light improprieties committed by persons holding high positions. It plays a significant role in safeguarding the interests of various stakeholders thereby facilitating good governance. For any vibrant parliamentary democracy an effective system of accountability of the Executive to Parliament is fundamental. It is in this background that Parliament decided to create an independent authority in the form of the Comptroller & Auditor General under Article 148 of the Constitution.

The Comptroller & Auditor General’s external audit provides confidence by which Parliament, on behalf of the tax payer, scrutinizes how Government uses the money voted by it and holds the Government to account.

14. The focus of Audit has undergone a major change during the last few years. Due to massive outlays on socio-economic development activities, the attention has shifted into the areas of Performance Audit. Performance Audit is assessment of the operational performance of the Government against pre-established goals and is important for judging its accountability in delivery of programs and services to people. Performance Audit provides an early warning system to the administrator and is a tool for improving Government’s accountability to public. It helps the Government to ensure that their operations are effective and efficient

The Audit Department has carried out comprehensive performance evaluation of major flagship programmes of the Government. The focus is on issues that affect the well-being of fellow citizens—issues that touch their day-to-day lives like food, health, education and employment. These reviews provide meaningful recommendations to the Government for mid course corrections. 

A central thrust of evaluation of development programmes is to place more emphasis on what taxpayers get for their money by focusing on outcomes. The Department has taken measures in upgrading its auditing techniques and methodologies to address the issue of measuring performance outcomes.

15. It is also my firm belief that the mandate is not merely to prepare reports and place them in the legislature. The constitutional mandate places a larger responsibility : that of holding the government financially accountable to the legislature. It enjoins upon audit  to keep the ultimate stakeholder viz., the man on the street, apprised of the outcomes of government spending and not merely
conduct expenditure audits. Thus to sensitise public opinion,  steps have been taken to disseminate audit findings to citizens groups, non-governmental bodies, educational institutions and the media. 

It is with this objective in mind that booklets, commonly referred to us as "Noddy Books" were devised to provide a snapshot of  salient audit findings and recommendations. These "Noddy Books" also prominently display good practices adopted by implementing agencies and provide a channel for dissemination of these practices to other institutions implementing such projects. It is  believed that such an initiative, to sensitise the interested stakeholders has, served as a force multiplier for  and helps to promote accountability and good governance.

16. Worldwide, governments have empowered supreme audit institutions in response to the changing models of governance and the rising demands of citizens for greater transparency and accountability. Mandates of several national auditing offices have been broadened to secure not only the legality and probity of government spending but also its efficiency and effectiveness.  A symbolic demonstration of how public audit has evolved to bring into focus its accountability role is the repositioning of the Supreme Audit Institution of the United States. The erstwhile ‘General Accounting Office’ was redesignated as the ‘Government Accountability Office’. In July 2004 in USA, several proposals were introduced in the 110th Congress to augment the mandate of the external auditor.

17. The conventional wisdom of good governance is premised on the basic tenet that democratically elected governments will conduct public affairs with probity and accountability. However, recent actions of government, which have come in the public domain, indicate that elements of ethics and integrity seem to be lacking. This has triggered the feeling among the vast majority of urban citizenry that it is time when the conventional architecture along which governments are expected to function, needs to be tempered such that there is an element of participation by the informed public. The supremacy of the elected political executive in a parliamentary democracy cannot be denied.

The administrative bureaucracy is meant to advise and facilitate policy parameters enunciated by the political executive, which is commonly understood to be the Council of Ministers. However, whilst the political executive is superior to civil and uniformed bureaucracy, they owe their allegiance to the ultimate stakeholder on whose behalf they act. Hence, my proposition before you is that public oversight of government policy is essential. Also, as has been demonstrated by subsequent governments through the 73rd, 74th Amendments, Right to Information Act and implementation of flagship programmes through Gram Panchayats, participative governance has come to stay. 

If the benefits of economic growth are to be made inclusive and sustainable, the involvement and oversighting by the public to ensure transparency of decision making and accountability for actions will have to be ensured.

18. As I conclude, I stand before you today to remind you that we are poised at that juncture in Indian history where the pledge of the framers of our Constitution places a huge challenge before us. 

The challenge is that we were entrusted with the blessing of democracy, which brought with it an opportunity to practice and succeed in self governance.

Today, we need to remind ourselves that democracy is an experiment in government, which succeeds or fails on its own merit:

On the merit of the people who need to actively engage in nation building:

On the merit of those in whom, we place that fiduciary trust to control public moneys and thereby our welfare itself:

And, on the merit of the institutions that we create to ensure that indeed all actions and programmes of government are architectured for the good of the people.

I stand before you to remind you that there is really no Bharat or India. We are one homogenous whole.
 We the people, along with our geographical boundaries, constitute the nation a,
We the people, have given unto ourselves a Government or the State. 

This responsibility enjoins upon us to ensure that the State works for our benefit, that the nation can never be subjugated to the state : that, our institutions are strengthened to ensure that those in whom we place the trust to administer on our behalf indeed do so, placing our welfare as paramount.
I stand before you to remind you that ultimately it is We the people, whom posterity will hold accountable, if today, we do not ensure that we bequeath to Gen Next, an India richer, in all respects, than what we had inherited.

Vinod Rai delivered this lecture at A N Sinha Institute of Social Studies, Patna

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