In Speaker Om Birla's presence, CM Satheesan questions credibility of anti-corruption movement against Manmohan Singh regime

At a time when a political movement is rising against the BJP-led Union Government, Keralam Chief Minister V D Satheesan on Tuesday questioned the CAG report that triggered the India Against Corruption movement that eventually caused the fall of the Manmohan Singh regime in 2014. The Chief Minister made these sharp remarks in the presence of Lok Sabha Speaker Om Birla, during the inauguration of the Conference of Chairpersons of Public Accounts Committees held in the Keralam Legislative Complex on Tuesday.

"I wish to draw your attention to the fact that the CAG's (Comptroller and Auditor General) audit approach sometimes shifts in a manner that defeats the very purpose of the audit," the CM said, referring to the CAG reports on 2G Spectrum and Vizhinjam Port.

Satheesan said that the headline figure of an estimated loss of ₹1.76 lakh crore "was not an actual realised loss, but a hypothetical presumptive projection". "It extrapolated potential revenue based on later benchmarks, such as 3G spectrum auction prices and later 2014 re-auction realisations, rather than actual market conditions in 2008," the CM said.

In January 2008, the Union Department of Telecommunications had issued 120 new licences for unified access services on a single day. These licences were issued at 2001 prices. Issuance of 120 licences in just one day and at a price discovered in 2001 together aroused suspicion. Questions were raised about the transparency in the allocation process and the failure in maximisation of revenue generation from the allocation of spectrum, which is a national asset.

The Report for the year ended March 2010, too, had acknowledged that its projections were presumptive. "The presumptive value of 2G spectrum on account of grant of 157 licenses in different circles during 2007-08 would be in the range of approximately ₹67,363 crore and ₹1,76,645 crore," it said.

Satheesan said that the CAG report had extrapolated potential revenue based on later benchmarks, such as 3G spectrum auction prices and later 2014 re-auction realisations, rather than actual market conditions in 2008. "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," the CM said.

Satheesan said the CAG report on the Vizhinjam Project was yet another example of the highest audit body applying wrong standards for what was essentially a public-private-partnership (PPP) model. "The Judicial Commission directly objected to the CAG bracketing the Vizhinjam port project under the Public Sector Undertaking category," the CM said.

"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 foundational legal and financial architecture," he said.

Moreover, he said the methodology evaluated the port as a standard, standalone 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 standalone basis during their early lifecycles," Satheesan said.

If he was critical of the CAG on these two counts, he was equally censorious of the previous LDF government for dismissing the CAG's remarks against Kerala Infrastructure Investment Fund Board (KIIFB). Such a move, he said, amounted to curtailing the powers of the Assembly Public Accounts Committee (PAC).

The PAC is a committee of selected members of the Assembly that audits the revenue and the expenditure of the state government of India. It will serve as a check on the government, especially with respect to its expenditure bill, and one of its primary functions is to examine the CAG report that is laid on the table of the House.

"The Keralam Assembly formally excluded KIIFB audit findings from the scrutiny of the PAC through an unusual procedure in January 2021," the CM said. The Assembly passed a resolution that officially rejected and expunged specific adverse observations of the CAG report. Satheesan said that this had effectively bypassed the standard PAC review mechanism for the CAG findings.

"Under normal parliamentary procedures, once a CAG report is tabled in the House, it is automatically referred to the PAC for a detailed scrutiny. However, the Keralam Assembly disrupted this process," Satheesan said. He said no legislature in the country had the Constitutional right to do such a thing. "If you have a majority, you can take any decision on the basis of your numbers. But you are not constitutionally empowered to dismiss a CAG report on the basis of your majority on the floor," Satheesan said.