CAG not adversary to govt, says Chidambaram

Finance Minister P Chidambaram on Tuesday said he intends to work with CAG to erase the impression of adversaries in an attempt to restore trust and confidence in all institutions.

Addressing a Comptroller and Auditor conference in New Delhi, Chidambaram said the official auditor and the government have been cast as adversaries to each other in the aftermath of recent audit findings.

"Unfortunately, however, some dissonance has crept into the public discourse and for reasons which are inexplicable, the CAG and the government have been cast as adversarial to each other. Perhaps this in the nature in the functions of the government and CAG," Chidambaram said.

"It is my intention and desire as Minister of Finance to work with CAG to erase the impression of adversaries and restore trust and confidence in all institutions of government," he added.

Chidambaram said that the CAG has played a key role in addressing issues of good governance and the government is obliged to take necessary actions to address gaps in governance.

He said since policymaking by government is often through trial and error and audit is a post decision exercise, hence the both come up as adversaries to each other.

"Policymaking is often through trial and error. Decisions are taken often without full info and in an environment of uncertainty. Audit is a post decision exercise. Perhaps because of the nature of functions, they are cast as adversaries to each other," he added.

Highlighting that institutions and individuals are in learning process, Chidambaram said, "The recent opinion of the Supreme Court has brought about a great degree of clarity".

The Supreme Court in its September 27 opinion had said that auctions are not the only permissible method for disposal of natural resources across sectors.

The CAG had used auction as the benchmark for calculating undue benefit to private companies in allocation of coal blocks without bidding.

Chidambaram said that the office of CAG is under the Constitution of India.

"The authority of the CAG to perform duties and discharge functions is under a law made by Parliament. Thus, while it is correct to describe the office of the CAG as the Constitutional office, it may also be remembered that the CAG owes its authority to a law made by Parliament," he said.

Chidambaram said while tax policies are prerogative of the government, tax laws are prerogative of Parliament.

"Government looks to the auditor's report to improve its systems and procedures so that both on the revenue side and expenditure side government is able to meet its budgeted targets," he said.

Chidambaram said the government would work to soon put in place a modern financial reporting system.

He further said that through the Finance Act 2012, Parliament entrusted to the CAG the review of compliance of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003.