Overseeing defence spending

by Ajai Shukla

(Business Standard: 19th March 08)

A couple of years ago, the Comptroller and Auditor General (CAG) stopped posting on the internet the department’s annual audit report on defence. That came after the Ordnance Factory Board (OFB) lost a large export order from the United States, after US officials read a CAG audit report criticising the OFB. But while the CAG obliged the Ministry of Defence (MoD) by confining its audit report to Parliament and to booklets distributed to officials and the media, MoD officials continue to treat the CAG with disdain. The latest CAG report on defence, which again draws attention to the dismal state of planning and accounting within the MoD and the military, includes telling statistics on the MoD’s lack of cooperation with India’s top audit body. Before finalising any audit report, the CAG must send a draft to the concerned ministry; the ministry’s response must be included in the CAG’s final report. But when the draft audits in this latest report were sent to the MoD, the Defence Secretary ignored them altogether; only the OFB bothered to respond to some of the audits relating to their factories.

The same hauteur surrounds the MoD’s approach to earlier audit observations. The Public Accounts Committee (PAC) had mandated that the MoD must submit Action Taken Reports (ATNs) on every audit within four months of the time the report is tabled in Parliament. The latest CAG report lists out 90 audit observations since 1996 for which the MoD has not bothered to send ATNs. Over the years successive CAG reports have been successively stonewalled by MoD officials, who routinely run rings around the PAC while testifying before parliamentarians with little or no expertise in defence. The PAC’s ability to follow up effectively on CAG audits is also circumscribed by the sheer volume of reports that come before it.

Like elsewhere, the judiciary is stepping in to fill the executive and legislative vacuum; the Supreme Court is already hearing public interest litigation based upon the CAG’s report on irregularities in defence purchases during the Kargil conflict. In the absence of effective parliamentary oversight of the MoD, judicial intervention could accelerate. Parliament itself remains noticeably disinclined to discuss, reform or actively oversee the defence of the realm. The defence budget was passed this month without even the most cursory discussion, even though that expenditure was almost twice as much as the heatedly debated farmers’ loan waiver. The Parliament’s Standing Committee on Defence, under Mr Vikhe Patil, has met an average of twice every month, but there again, in the absence of military and strategic knowledge or experience, effectively overseeing the MoD remains a difficult proposition. Standing Committee members complain that the MoD deploys technicality to obfuscate in even the simplest of questions like equipping the army in J&K with appropriate protective equipment.

Now the MoD must respond before the PAC to the CAG’s report. The PAC can visit military units and installations that have been audited in this report; MoD officials can be called in to testify. Parliament remains the only instrument through which the MoD can be effectively called to account. And CAG’s reports can be used either as an effective flashlight for probing and reforming less visible areas of defence; or, as is increasingly happening, as a weapon with which to embarrass the government of the day and to launch witch-hunts that ill serve the defence of India.