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multilateral trading system and the role of the kind of trade governance that we do have in development. The turn to plurilaterals is not new. In fact, the history of the post-war trade system is almost entirely a story of plurilateral agreements. The Uruguay Round and the single undertaking that it embodied stands out as the exception. As such there is a considerable historical record from which one can understand

the likely implications of the current much vaunted shift towards plurilaterals following the DDA impasse. This record is sobering for LDCs. While plurilateral negotiations have undoubtedly been a means of securing forward movement in trade opening, this has provided few benets for less powerful states, particularly the LDCs. Throughout the DDA negotiations India has placed itself as a champion of the interests of

the wider developing world. If it is to full this role, India must resist the turn towards plurilaterals and the sidelining of the LDCs that this approach implies. The DDA promised development. Plurilaterals will not deliver.

Note
1 Not another mysterious word but a collective noun for any agreement or movement by states involving less than the whole group.

CAG: A Necessary Evil or a Bulwark?

T S R Subramanian

In the past ve decades, the CAGs audit reports, however incisive, were received with general apathy by the government. Contrast this with the follow-up on the Commonwealth Games, Adarsh, 2G and Coalgate reports, which have all triggered criminal cases of one kind or the other. The institution of CAG has suddenly come of age and has realised its public responsibility. A startled government in power has been oundering to nd a credible reaction. There have been two predictable lines of response to question the jurisdiction and mandate of the CAG and to question the presumptive loss computed by the agency, implying that the reports have no credibility. In other words the main approach has been to shoot the messenger.

T S R Subramanian (tsrsubramanian@gmail.com) is a former cabinet secretary to the Government of India.

Economic & Political Weekly EPW

he three basic pillars of the Constitution, viz, the legislature, the judiciary and the executive, have the primary responsibility for managing the affairs of the country; however the role of other signicant constitutional and statutory bodies in ensuring quality of governance cannot be underestimated. Institutions like the Election Commission (EC), the Comptroller and Auditor General (CAG), the Central Vigilance Commission (CVC), etc, have a major part to play in ensuring quality in administration. Till the early 1990s, the EC, even though a constitutional authority, functioned more or less as a wing of the executive branch a mild friendly agency sympathetic to the party in power, unwilling to express itself strongly to full its dened role as the guardian of purity in the electoral process. With the advent of T N Seshan, the Chief Election Commissioner became an active, independent, strong-willed umpire to oversee fair play in the electoral process. Seshan gave teeth to the organisation it is widely perceived now that the EC has a strong bark, and a vicious bite when occasion demands it. While muscle power has by and large been eliminated from national elections, the EC awaits the advent of a new incumbent, Seshan in a new avatar, to eliminate money-power from the electoral process.
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Much the same picture applies to the CAG its place as a constitutional agency has been transformed with the arrival of Vinod Rai on the scene. Successive CAGs over the decades, most of whom came from the ranks of the civil services, perceived their role as an extension of their government service career. Otherwise able as they were, they saw themselves as government servants, rather than as servants of the Constitution, or Parliament or the people. The institution in the pre-Rai era did bark now and then, though with no serious intention to bite it was a friendly poodle in service of the government, a toothless tiger; rather than a erce watchdog of the peoples interest in ensuring propriety in governmental income and expenditure. Vinod Rai did a Seshan to the institution of CAG. While the nation has seen many scams in the past, the CAGs scrutiny of the expenditure in the Commonwealth Games (CWG) of 2010, and soon thereafter the analysis of the 2G spectrum allocation have changed the way we look at the books of government. The Antrix-Devas cozy arrangement exposed by the CAG was a precursor of the 2G scam, even though the report on the latter preceded the former. In a sense the Antrix-Devas episode was an even more blatant abuse of the trust reposed in our agencies and departments the infamous deal got aborted before it fructied, and then dropped out of the public psyche, unlike the 2G matter. It should also be added that an active TV media played an important role in heightening public consciousness on the enormity of the scams. We now see an eerie parallel in the unfolding Coalgate saga. During this
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period, the CAG has also brought to light the callous, unscrupulous machinations of the Adarsh affair. These reports, all coming within months of each other, have brought out the essential venality of those in power in recent times the present head of the CAG needs to be credited with the achievement of bringing a constitutional agency to realise its public responsibility, and perform in a free, fearless, impartial public service mode. In the previous ve post-Independence decades, the CAGs audit reports, however incisive or accusatory, were received with general apathy by the government; none in ofce took them seriously they were seen as irritants, to be tolerated, or ignored or mildly acted upon depending on the circumstances. One cannot recall a single instance in the past when any serious action was taken against any public servant based on a CAG audit para(s); the system brushed these off. The CAG itself did not pursue its own comments with vigour; as far as anyone can remember, no prosecution of any sort followed a CAG report. Contrast this with the follow-up on the CWG, Adarsh, 2G and Coalgate reports, which have all triggered criminal cases of one sort or the other. The institution of CAG has suddenly come of age. A startled government in power has been oundering to nd a credible reaction to a newly-transformed CAG, hitherto a reliable friend, suddenly turned into a erce critic. There have been two predictable lines of response to question the jurisdiction and mandate of the CAG and to declare that he has no authority to question the right of government to make policy; and secondly to question the presumptive loss computed by the CAG, implying that the reports have no credibility in other words the main approach has been to shoot the messenger. It may be useful to dwell briey on these two lines of attack. Mandate of the CAG The post-Independence origin of the ofce of the CAG derives from Articles 148 to 151 of the republics Constitution this is in a sense a continuation of the powers exercised by the auditor general of India
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immediately before 1947 in relation to the accounts of the dominion of India and of the provinces respectively. The CAG (DPC) Act passed by Parliament in 1971 denes the powers, duties and conditions of service of the CAG. The Act gives authority to CAG to audit all expenditure from and receipts into the consolidated fund of India and the states. Section 23 of the Act empowers the CAG to determine the scope and extent of the audit. Among other provisions, the DPC Act lays down the principles determining whether or not an entity falls within the purview of CAGs audit. The Act empowers the CAG to make regulations to give effect to the provisions of the Act in regard to the scope and extent of audit. This was followed by an ofce memorandum from the Ministry of Finance in 2006 clarifying the role of the CAG in doing the performance audit. In pursuance of these provisions, the CAG has been conducting a performance audit in addition to nancial and compliance audits. The performance audit by denition includes audit of economy, efciency and effectiveness in the receipt and application of public funds. It is abundantly clear that the mandate is wide; the interpretation of its own role in respect of the audit is within the purview of the CAG, which is a constitutional authority; much like the freedom the judiciary has to dene its own role in the interpretation of the Constitution. The government sources have levelled allegations implying that the CAG is dabbling in policy matters, which are exclusively in province of the executive there is deliberate obfuscation in levelling this accusation. A reading of various recent reports does not give any credence to the allegation that the CAG has suggested any specic policy prescriptions or questioned any particular policy adopted by the executive in each case. Clearly, while not commenting on the policy itself, the mandate of the CAG permits him to comment on the efciency, and nancial impact of each policy decision, without questioning the legitimacy of the decision. It is not merely within the jurisdiction of CAG to make such comments, this is part of its mandate, indeed duty to point out the nancial
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implications of policy decisions on public funds. Thus, if the purported objective of a particular policy is to reduce the cost of a service to the general public, it is perfectly legitimate for the CAG to address the question whether the public actually gained through that particular policy measure, or whether the margin was siphoned off by individual beneciaries who were allotted the relevant scarce resources whether windfall gains were deliberately or otherwise handed over to favoured individuals. One needs to refer to the role played by private auditors, who are by denition friendly, while auditing the books of private companies. Those auditors, who value their reputation, enter into every aspect of the companys policies, procedures and performance, often not too gently. Thus internal risk management policies, systems and procedures come for detailed comments; conict of interest situations as also for example, the mergers and acquisitions policies performance, and presumptive loss are commented upon along with a critique of the methodologies followed. Qualications are expressed when found necessary. It is for the board of the company to take appropriate remedial action, and for the shareholders to take a nal view. The CAG, with a constitutional mandate, is not expected to do any less, especially when the people are the shareholders. It is expected to criticise strongly when occasion demands it is its duty. In the context of Coalgate, it is necessary to note that the government on its own volition had decided in 2004 to go in for the competitive bidding route for allocation of coal blocks. Indeed, the indictment of the screening committee procedure followed till then by government, was from its own ministrys secretary, who wrote strongly in 2004 about interferences and undue inuences, as also windfall benets to the chosen allottee. These angles were not invented by the CAG. It was perfectly legitimate for the CAG to point out that the government did not follow its own prescription its own decision and preferred to continue a discredited (by itself) screening procedure for the next six years. It was not only within the
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mandate of the CAG, but its duty to raise these questions, as the watchdog of public nances. Credibility of Loss Figures The other major plank of attack relates to the charge that the CAGs public loss gure of Rs 1.86 lakh crore is heavily exaggerated. The main arguments are variations of the following themes: the CAG ought not to have given any numbers; there was no loss to government as hardly any coal had been extracted; the notional sale price was not discounted over the income stream period of say 30 years; the cost relating to each mine would be different depending on the difculty of extraction and it was inappropriate to apply one number for all, etc. All these arguments are supercial and specious. Even a rst reading of the coal report would yield a clear statement of the assumptions made by the CAG in the calculations, and the methodology used by him in reaching the gure of Rs 1.86 lakh crore. The CAG clearly points out that this is an indicative gure, probably an underestimate. However it brings out the enormity of the mismanagement (deliberate?) of the allotment process. None of the assumptions made by the CAG in reaching this number can be seriously questioned in substance. However, it is entirely possible to make another set of credible assumptions, which may lead to differing gures. In an economy where there is already a shortage of coal to meet the requirements of the power, cement and steel sectors, there is every likelihood of strong escalation in coal prices over the next couple of decades; it is a credible scenario that the rate of market price escalation would outpace any likely cost-of-nance discounting percentage. From this perspective, there has been an underestimation of the gains accruing to the allottees. It is interesting to note that the market price of coal has already shot up in the past couple of years; indeed the current landed price of imported coal is many times a multiple of the price assumed by CAG in his presumptive loss calculation the argument that coal is sitting in mother-earth is frivolous, specious and an insult to ones intelligence.
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The CAG has claried in his report that he has used the gure for reserves and cost, as computed by Coal India itself, which is a public sector body. Any alternate gure of windfall prots or presumptive loss could be computed by any interested individual, so long as the assumptions are reasonably credible the CAG gave his version, well within his mandate it is open to anyone to question the numbers on merit; it is not open to anyone to challenge CAGs right to make reasonable assumptions and estimate gain or loss. It is interesting to note that in a recent opinion, the apex court has clearly indicated that the CAG is not a munim of the government it is a constitutional authority with a signicant role as the watchdog of public nances. The CAG does performance or efciency audit, as part of its mandate. However, the audit is not forensic in nature it does not point ngers at any government servant or private entity for windfall gains or loss to government as the case may be. The Coalgate issue is not merely one of deliberately engineering windfall prots through the crony route it involves aspects relating to misgovernance, possibly deliberate failure to implement governments own policy, possible conspiracy apart from fraud and misrepresentation by some or many of the allottees. Any such report of the CAG, which is an audit of nances and accounts, needs to be followed up by an investigation as to how such a major lapse occurred, leading to a massive leakage of public funds. The First Information Reports registered by the Central Bureau of Investigation (CBI) do not do full justice to the scope of possible fraud, misdemeanor or criminality, and other acts of commission and omission by public servants and others. It is imperative to have a major investigation carried out by a special team to look into all aspects of this matter, not only to punish the guilty but also to explore optimal systemic changes. This was not within the scope of work of the CAG, whose mandate stops at submitting the report to Parliament it is for the executive to usher in punitive and reform measures in the wake of this massive scam. A new era in the functioning of CAG has dawned. It would be recalled that
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nearly three decades ago the then Prime Minister Rajiv Gandhi had commented that only 15 paise per rupee of rural development expenditure reaches the intended beneciary the rest is siphoned off by the political, bureaucratic and other intermediaries. The country spends massive amounts on rural development through many programmes. On the specious ground that the expenditure is undertaken by the state governments (rural development is a state subject), the CAG so far has not considered it necessary to investigate such large leakages. It is taken axiomatically that it is normal, acceptable, and legitimate(?) for the state machinery and its cohorts to take a large cut of public nances, and no questions need be asked! It is now time to visit this area, usher in new innovative methods to drastically reduce the leakages, using technology as appropriate. The CAG needs to take an increasingly important role in this area, as large public funds are involved. A whole new regime to supervise public developmental expenditure needs to be put in place the CAG has a pioneering role to undertake in this regard, however thankless and onerous the task may be. New questions have arisen whether the public-private partnership (PPP) projects would fall within the purview of a CAG audit. The answer has to be in the afrmative. A reading of the current mandate of the CAG clearly indicates that it is when public funds are involved, the CAG has a legitimate role. It is to be noted that large-scale lobbying has already commenced to keep PPP projects outside CAGs purview. Indeed even in the unlikely situation of a legal opinion that PPP projects are not currently covered by CAGs mandate, it will be imperative to change the mandate, for inclusion. Given the past record of successive state and central governments, given the large risks and expenditures incurred in ghting for public ofce, it is reasonable inference that the genuine motivating factor, with perhaps some exceptions, is the opportunity for making illegal gains. Given this obvious background and experience, it is likely that the trend to go in for PPP projects, on the pretext of superior implementation,
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will accelerate to provide a new major vehicle to meet political needs. One is not arguing against PPP projects all that is being stated is that since public funds will be involved, audit by a vigilant CAG would be an imperative requirement. One other element needs to be mentioned. Hitherto, the selection to the post of the CAG and some other key positions, has been exclusively in the province of the government of the day. Sadly one has seen how this privilege has been seriously abused in so many critical instances in the past decades. The theory that the CBI is the governments best friend will nd a ready echo in the minds of most citizens. Indeed the apex court had to intervene some years back to establish a selection committee for the post of the CVC. One has to look at many states, where selection to critical

posts is a mockery the way the posts of the chief secretary and director general of police, are lled up in many states would raise eyebrows. It can be argued that by consistently abusing its selection powers, the government has forfeited its moral authority to select people to high places, particularly in constitutional and statutory posts. Hitherto, the CAG was seen as an appendix to government. Now that it has assumed its legitimate constitutional role, the process of selection has to be reviewed, to bring in impartiality along with merit, with a selection process outside the direct control of government. If this is not done soon on the governments own initiative, there is every likelihood of the judicial system reminding the government that fair play, transparency and impartiality have to be enforced as a working procedure.

Conclusions It is needless to stress that a countrys governance is only as good as the quality of its major instruments of governance its constitutional and statutory agencies. Given the essential vulnerable nature of the individual human being, systems and institutions need to be strong, robust, independent, impartial, fearless, and imbued with a sense of public service. Some previous governments have contributed to the emaciation of key instruments of governance for example, the civil services when the constant need is for the government of the day to ensure that the instruments are maintained in good shape on a continuous basis. That the CAG has gained in stature in the past couple of years is a good sign, and augurs well.

The Muslim Political Parties in Uttar Pradesh and Assam

Mirza Asmer Beg

A comparative assessment of three Muslim-based political formations in Uttar Pradesh and Assam reveals varied performances by these outts in assembly and Lok Sabha elections.

Mirza Asmer Beg (masmerbeg@gmail.com) is with the department of political science, Aligarh Muslim University, Aligarh, Uttar Pradesh.

he Muslim League, which was renamed as the Indian Union Muslim League after the countrys Partition, with the objective of becoming an all India party, never received country-wide acceptance and managed to survive and get a respectable standing only in the state of Kerala. Several decades later, politician Syed Shahabuddin did try to form the Insaf Party with the same aims, but he too failed. His belief that Muslims, other religious minorities, those from the scheduled castes, the scheduled tribes and the backward classes could be mobilised under one overarching umbrella, did not actualise. Some Muslim intellectuals have come round to the view that it was easier and more viable to form parties catering to the Muslim interest at the regional level, rather than at a pan-national level. Others have suggested that Muslims need not form any political party for their own, as regional parties have mobilised Muslims politically.
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It is this view that is seen in action in states such as Uttar Pradesh (UP) where large sections of Muslims have alternately aligned with either the Samajwadi Party (SP) or the Bahujan Samaj Party (BSP). Yet, over time, the community seems to have realised that these political parties as well as the self-proclaimed Muslim leadership have used each other for their self-seeking political and vested interests at the cost of most of the community who continue to remain educationally and economically backward. The Muslims realise that they have been used and looked upon as a vote-bank and the issue of a Muslim-led political party has not been given serious consideration, partly because historically except the Muslim Majlis led by Faridi which was successful in the 1960s and 1970s, there have not been any Muslimled outt that has seen any political success in UP. The Muslim community has also been guided by the need to keep the communal Bharatiya Janata Party (BJP) out of power and to do so it has consciously avoided the formation of a Muslim party that could aid the BJPs agenda of consolidating the Hindu vote. But with the relatively poor performance of the BJP since the early 2000s, the Muslims have been organised and mobilised by outts like the Peace Party (PP)
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