Appraising its own
Civil Aviation report (Air India) of September 2011, the Comptroller and
Auditor-General has described the criticism of its findings as an attempt “to
shoot the messenger,” and pointed to several subsequent events that have
ratified the conclusions.
The report highlighted
that Air India’s acquisition plan had been a recipe for disasterab initio.
The CAG criticised the national carrier and the Civil Aviation Minister “for an
unduly delayed acquisition process that was disastrous for [the] financial
health of the commercial airline.” The acquisition of 111 new aircraft for Air
India and Indian Airlines was a “recipe for disaster.”
The report highlighted
that Air India’s original proposal for acquisition of 18+10 aircraft took its
own time for processing but the revised proposal for 18+50 aircraft was
processed faster. The CAG also criticised the merger of the two state-run
carriers as “ill-timed” and said, “The financial case for merger was not
adequately validated prior to the merger.”
The report recommended
a “hands-off” approach to the management of the airline, dwelling at length on
Air India’s losses, fleet acquisition, merger, huge debt burden, delay in
joining the global grouping Star Alliance and its financial and operational
performance. The report highlighted the massive Rs. 38,423-crore debt liability
as of March 31, 2010, attributing it to the large number of planes. Even where
price negotiations were concerned, the CAG said that no benchmark of prices and
commercial intelligence was set. It concluded that Air India was “in a crisis
situation” and that salary payments and aviation fuel obligations would become
increasingly difficult.
Now, after its
internal assessment, the CAG has drawn attention to an admission by the new
Civil Aviation Minister, Ajit Singh, in May 2012: “We all agree that the merger
hasn’t progressed or happened as it should have.”
Secondly, in April
2012 the government approved a Rs. 30,000-crore bailout package for Air India,
to be pumped in over the next 9 years with an immediate infusion of Rs. 6,750
crore, in addition to Rs. 3,200 crore already funded.
Yet again, the
admission by Mr. Singh that Air India was losing money on short haul
international flights and ways had to be found for cutting wasteful expenditure
ratifies the original findings of the CAG. In fact, the plan for a new pay
structure within Air India by itself shows that the CAG was on the right track,
says its internal assessment.
The CAG’s assessment
cites more than a dozen other announcements, analyses, media reports and
debates to conclude that its Air India report, “unlike normal audit report, was
technical and used a lot of technical concepts. The full implications of the
concepts and audit observations emanating out of them would have been clear
only to persons willing to analyse them with an open mind. The government’s
subsequent actions have only collaborated this.”
Constitutional
powers
In relation to the
Prime Minister’s comment seeking to limit the CAG’s mandate under the
Constitution, the CAG in a background paper, argues that “when audit is viewed
as a partner in good governance, allegations of trespass into executive
territory lose their relevance.” It further points out that the CAG has
statutory obligations to question policies affecting revenues of the state and
making appropriate recommendations.
In fact, Article 149
dealing with the CAG does not attempt to define audit but instead states that
the CAG “shall perform such duties and exercise such powers in relation to the
accounts of the Union and of the States and of any other authority or body as
may be prescribed by or under any law made by Parliament. The Parliament, in
approving Section 13 of the CAG DPC Act, followed the same tradition and
concluded that ‘it is the duty of the CAG to audit all expenditure from the
consolidated fund of the Union and the States and all the transactions in the
constituency fund and public account’.”
No comments:
Post a Comment