Saturday, September 30, 2017

Propriety Is Key To Citizen’s Quality Of Life

"Serious governance deficit in Indian public policy is now a byword."
By Sudhansu Mohanty

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Today perhaps we live in the most vexing time since independence – in a societal mindset where nothing seems to work normally; where ordinary activities that shouldbe done ordinarily as a matter of routine, never get done. So seldom are such occurrences of ordinary work that when they do actually happen on those chance occasions, they truly appear extraordinary – even surreal! So rare is the issue of honesty in public life that even when we come across an honest (but inept and inefficient) government official, we applaud him for his honesty. “He’s but an honest man!” we chime incredulously. As though he’s not supposed to be honest! As though that’s what the Conduct Rules prescribe for public servants! Such, sadly, is the depth and conviction of our collective social moral depravity!
As a democracy governed by the Constitution, the rule of law with separation of powerand checks and balances and with four columns: executive, legislature, judiciary, and the media, each with its assigned role, as also to checkmate abuse of power and transgression of bounds by other columns, the dynamic action should have held to maintain social equilibrium while ensuring change and progress. What then has gone wrong?
Peel off the epidermis and see the hypodermis. The so-called dynamic action has morphed to dynamic inaction. James Boren, tongue-in-cheek once said: “When in doubt, mumble; when in trouble, delegate; when in charge, ponder. A good bureaucrat is one who cuts the red tape length-wise!” To it, add Robert Klitgaard’s formulaic solution to corruption: C(orruption) = M(onopoly) + D(iscretion) – A(ccountability). Let me wrap my ideas around these two formulae.
Serious governance deficit in Indian public policy is now a byword. Lack of transparency, age-old Indian tradition of promoting family/clan/sub-national loyalty, culture of materialism that’s gotten more pronounced with economic liberalisation in a globalised world, and the urge to get-rich-fast, are the ingrained basis for all distorted priorities. Ethics is at the heart of the problem.
A peek at the psychology and compulsions of the early man, and it’ll tell us that the raison d’être of the social compact has been smothered – in the schematic social contract versus individual aspirations construct – and individual aspirations have triumphed. True, human aspirations and ingenuity have, from time to time, trumped compacts/contracts/rules; in short, regulations have failed the smothering primordial human urge to self-aggrandise. Are there lessons to learn here?
I wouldn’t know. The world has seriously changed with the internet highway and information technology, but I clearly see the vestiges of the past still colonising, even perpetuating most public acts. If I can’t still get over the shock of what, in my bureaucratic diapers in 1982, I’d seen – of how white ants ate away roadrollers or how cyclones were “manufactured” in the trans-Himalayan belt to score off inventories! – today I see variants of the same syndrome in new-fangled avatars. It’s as though we’re twiddling contemporary technologies with feudal habits!

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RelatedPush For National Integration? by Tuktuk Ghosh

Corruption, though, is not mere financial. As damaging as financial malfeasance is intellectual dishonesty, manifested in policy-making shrouded in official records. While financial misgivings are palpable, intellectual dishonesty – covert and subterranean – haemorrhages soundlessly till fixed; it skews and wrinkles public morality. The damage is incalculable. The clutch of scams and mega-scams that struck India circa 2008-12 evanesced citizen’s monk-like forbearance. Loss of taxpayers’ money apart, it showed how scams billowed to skew developmental agenda.
Propriety – financial and intellectual – is a key determinant of citizen’s quality of life. It encompasses legislation, governance, healthcare, education, commerce and business, agriculture and rural development, the justice system etc. Yet, the architecture of rule of law designed to fasten the order, often fails squelching unholy human impulses. Human nature – possessive, hedonistic, self-interested – has often trumped regulations. With the dishonest networked across professions, the countervailing institutions have failed, swaying to interest groups’ agenda. The people’s movement against corruption in 2011 for creation of Lokpal turned out a false dawn. Was it because the four pillars of democracy – executive, legislature, judiciary, and media – didn’t wish to disturb the applecart? How does such mindset affect governance?
Even 26 years post-liberalisation, the Indian rural folks still look up to government intervention for poverty alleviation. Governments hold the fund and welfare entities for the poor. For a feudal society with traditional bespoke mindset, state patronage remains the Holy Grail for majority aspirations. Nor are most men in the four organs of governance immune to quid pro quo: bought-out press and paid news; post-retirement sinecures; rewards and gratifications, are just a few examples. Socio-financial iniquities have burgeoned; unrest – born off a growing educated young middle class finding it hard to navigate opaque archaic government procedures and a corrupt officialdom in day-to-day living – leveraging technology and social media bristles asking moral questions: Doesn’t it diminish human beings? Doesn’t it breach basic human dignity?
The malaise is all-pervasive. In a way it’s natural, for regardless of profession, men are cut from the same societal cloth with symptoms of the same ecosystem. Look at the role of legislature and judiciary: Haven’t they been hubristic and for the highbrow as is often alleged, granting preferential treatment to the networked and the connected? How has the Supreme Court played its part in dispensing justice? Have judges transcended society’s feudal mindset? A host of recent cases come to mind: highway liquor ban, contempt notice to a former Supreme Court judge, national anthem case, judges seeking post-retirement employ, the delayed hearing in the Aadhaar case, to cite a few.
Restraint, rather self-restraint, is the authentic signifier of a mature institution. Absence of restraint even in the face of palpable injustice or manifest illegalities can corrode public confidence. The judiciary will do well to realise this. The rippling effect it creates in terms of revenue loss or employment as in the highway liquor ban case is simply beyond their ken to evaluate. The hubris of power to grant complete justice isn’t par for the course. Else, the very fabric of separation of power, one of the basic tenets of the Constitution, will be cast aside. For the protector of the Constitution, it is tantamount to the fence eating the crop!

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RelatedRidding Bureaucracy Of Deadwood by Julio Ribeiro

As one columnist wrote, “The judge’s role, in any version of constitutional democracy, is to be a gatekeeper of constitutional boundaries, an ever-vigilant defender of rights, not to author more restrictions on civil liberties… If this is the role judges seek for themselves, then they must make themselves accountable under judicial review. The immunity from judicial review under Article 13 is to reserve the interpretive authority of the court, given the inevitability of disagreement emerging over its interpretations, not to shield episodes of absurd judicial law-making.” Have they then been the Caesar’s wife? How does the judiciary morally explain its dueling with the executive on appointment of judges through an opaque “collegiate system” when the Constitution consciously divvies responsibility between the two to avoid monopoly of either and grant fairness to selection? How fair is that? Does it pass muster of disinterested observers and provide oxygen to public faith?
In an interesting piece in The New Yorker, Evan Osnos refers to an article “On the intersection of health and politics” published in Brain, the British medical journal in February, 2009, titled Hubris Syndrome: An Acquired Personality Disorder? One of the authors was David Owen, former British Foreign Secretary, also a physician-neuroscientist; the authors propose creation of a psychiatric disorder for leaders who exhibited “impetuosity, a refusal to listen to or take advice and a particular form of incompetence when impulsivity, recklessness and frequent inattention to detail predominate.”This seems to hold good across professions, across nations.
Historically, the United States has relied greatly on checks and balances and freedom of expression including dissent. Senator John McCain, the Republican who ran for president against Barack Obama in 2008, reinforced this tradition when he wrote in the Washington Post:
“We must respect [President Donald Trump’s] authority and constitutional responsibilities. We must, where we can, cooperate with him. But we are not his subordinates. We don’t answer to him. We answer to the American people. We must be diligent in discharging our responsibility to serve as a check on his power. And we should value our identity as members of Congress more than our partisan affiliation.”
Sardar Vallabhai Patel once said: “Today my secretary can write a note opposed to my views. I have given that freedom to all my secretaries. I have told them: ‘If you do not give your honest opinion, then please you had better go’.” True protocol prescribes hierarchies, and offices carry authority. Yet the separation of powers, the rule of law, and the equal value of human beings are fundamental principles of the Indian state, notwithstanding what we often run into in real life. This makes it important when officers and judges demonstrate loyalty to the Constitution and respect for the citizen’s fundamental rights! Justice H. R. Khanna perhaps is more well-known today for his dissent in the ADM Jabalpur case than any of his contemporaneous CJIs!

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RelatedOblong Arm of the Law by Sudhansu Mohanty

Move over and see the mode of appointment of judges in higher judiciary, which has been the subject of much debate, not to forget the NJAC case. Not too well-known though is Justice Chelameswar’s letter to the earlier CJI put out in public domain in end-August 2017 – of how successive CJIs had “treated members of the collegium as supplicants” and how ‘informal meeting’ has transformed into a collegium meeting to nominate judges to the higher courts. To wit: “It is the law of this land that no meeting can be convened without a proper notice and an agenda, be it a meeting of a panchayat board or a cooperative society or a company or other bodies, statutory or constitutional. If you (Justice Khehar) believed these collegium meetings are beyond all principles of law propounded by their court, God save this country.
“If these discussions across the coffee table are to be treated by you as meetings of collegium where important decisions in discharge of the obligations arising from the Constitution are to be taken, I feel sad for this country. But I am of the view that such a procedure falls short of the legal requirements of a meeting. I believe collegium meetings are too solemn events to be conducted so casually.”
He inter alia writes in his 12-page letter that members of the collegium “are not participants in the decision making process but supplicants” making requests to the Chief Justice. “With great respect, I must tell you that it is not so. The judgment in the second judges’ case is the law declared by this court even today. It obliges the CJI to consult his collegium, either two or four, as the case may be depending upon the purpose of the consultation. Each participant is entitled to make suggestion and objection to the proposals. It is only after an appropriate discussion any final decision could be taken – not on personal requests of members of collegium and grace of the CJI… It is this understanding of the successive CJIs that the puisne judges (senior-most judges) who are members of the collegium (for that matter even others) are lesser mortals which creates all those problems which we are going through. Chief Justice is nothing more than first among equals. The other consulate judges, whether they are members of the collegium or beyond the collegium, are equal participants in the decision-making process, entitled to make suggestions and ask for information.”
Also responding to the CJI’s veiled threat to remove him from the collegium, Justice Chelameswar was categorical that the CJI wasn’t constitutionally empowered to do so. “I do not have to cite any authority for that. The second judges’ case not only obliges the CJI to consult the members of the collegium, it also obliges the CJI to consult in certain circumstances those judges of this court who are outside the collegium but well versed with the affairs of a particular HC as and when any decision regarding that HC is to be taken.” And, on the ex-CJI’s threat to expand the collegium, he wrote, “Membership of the collegium is fixed by a constitution bench of nine judges of this court and clarified by the third judges’ case. I am astounded to know that the CJI believes that such a position could be altered by a mere administrative decision. Such an authority was denied even to Parliament by the judgment of this court in NJAC case (a five-judge bench headed by Justice Khehar had by majority struck down NJAC).” Further that if any recommendations were forwarded by the collegium without his comments and if the government acted on it, “they would be utterly unconstitutional.”
[…to be continued]
(Reproduced from Indus Dictum where it was published on Sept 30, 2017) 

Tuesday, September 19, 2017

Defence is an Important Ecosystem Amongst Many Others

I must confess upfront that I was bemused to read Arun Prakash’s piece (Agenda for the Raksha Mantri, IE/Sept 13, 2017). As a retired IDAS officer and a former controller general of defence accounts (CGDA) and a former financial adviser defence services (FADS) in the MoD who demitted office last year, let me put things in perspective.

Democracy all over the world functions through a universal principle of separation of power and a system of checks and balances to uphold the rule of law, where no organ is omniscient and omnipotent. In India, we have four columns: executive, legislature, judiciary and the fourth estate (media) – each with an assigned role to play within its legitimate bounds to checkmate the other. Embedded in each column, there's a system of checks and balances. Finance is one such. Its role is integrated but putatively adversarial (not my words but of eminent commentators), but a necessary one to carry out due diligence of taxpayers’ money. Yet, despite all such sanguine architecture to checkmate unholy impulses, we still have plenty scams, most notably the AgustaWestland helicopter scam, where one former Air Chief Tyagi was jailed and charge-sheeted. The middlemen are galore in MoD; doubtless they function with insiders’ connivance and help. Keeping procurement clean is every stakeholder’s job; and a system of checks and balances is dire.   

Prakash is right on the issue of lack of expertise and domain knowledge on the part of most bureaucrats in the MoD and this doubtless is an area that needs addressing. Bureaucrats with no idea of the vast defence ecosystem must have a first stint at Deputy Secretary/Director level – not as Joint Secretary, where work pressure is too high to leave room to learn and acquaint. Training in Defence Services Staff College and National Defence College too will help.

But his vision is blinkered on the role of IDAS officers' functioning as “Integrated Financial Advisers” in the MoD. Their role, as per finance ministry’s order of June 1, 2006 goes much beyond assisting in “budgetary planning” and in “expediting financial decision-making”. Their role as rep of ministry of finance in the administrative ministry entails examining issues from financial angle to ensure value for money and improve quality of expenditure. It’s akin to a Chief Financial Officer’s in a corporate structure: to ensure fiscal prudence and sound financial management and to accord priority to macro management in achieving the outcomes set by ministries as goals. They’re crucial for the successful planning and implementation of various schemes/projects and to ensure budgetary integrity. This needs to be understood. I concede many IFAs fail to fully comprehend their role, failing to play their role – acting more as auditors. They need to be a part of the issue/solution, not a part of the problem. But it isn’t wise to deride their role and throw the baby with the bathwater. The need to place right IFAs on merit by invocation of a transparent arm’s length system can’t be over-emphasized.

The “advise” hasn’t been abandoned. No, not yet! Even at the cost of sounding presumptuous, I’ll add that MoD (Finance) shoulders an outsized responsibility in the ministry of all four departments, all the three Services and the many inter-services organizations. It simply can’t abandon its responsibility; it’s their credo of relevance, their bounden duty. This has nothing to do with lying in ambush as “auditors” and waiting for someone to make a mistake before pouncing. These are harsh, sweeping generalizations, stemming from a complete ignorance of extant orders. Audit is quite a distinct function, including internal audit that the IDAS officers and the defence accounts department do as an aid to defence management, and is always done ex-post; it can’t be done ex-ante, because it’ll be an anachronism. While it’s essential for bureaucrats to understand the defence ecosystem, it’s equally imperative for the services to acquaint themselves and appreciate government orders and civilian bureaucracy’s ecosystem. 

Nor is Prakash right in saying that there is an acute lack of military expertise in the MoD and an absence of collegiate consultation between civilians and Service HQ. The contrary is the truth. From my own experience, I can say ex cathedra that at every stage including budget-making and delegation of financial powers, there are discussions and dialogues galore, apart from the structured collegiate decision-making in the contract negotiating committee (CNC) for procurement of capital and revenue items. The delay, when it happens, hence has to be shared by all –not the MoD alone.

Let truth be said. There are vast areas, which aren’t just cases of differing perceptions between the civil and defence bureaucracies. There are many glaring cases of abuse of personal entitlements (leave travel concessions/official tours and disability pension) on the part of senior service officers pointed out by the MoD in the recent past where actions by the services headquarters haven’t exactly measured up to the impeccable standards they pretend to have set. These personal cases, I guess, have festered over time and have become sore points now. And given the visibility the ex-servicemen command in the media, little wonder these rants spew out often in the public domain. Modesty forbids me though from articulating and putting them out in the open.  

As a mature society, it’s rather we accept it doesn’t pay to stridently point fingers at each other – the MoD and the Services’ Hqrs. In a parliamentary form of democracy, both work together under the direction and superintendence of the political leadership, the people’s representatives. It’ll help to view India holistically as one whole rather than in segmented parts, since the responsibility of governing the nation is the PM’s and his council of ministers, and they carry with them the whole burden of nation’s concerns in other sectors (health, sanitation, agriculture, environment, HRD to name just a few) that are just as important as any other like defence, home or external relations. We need to live like one, rather than as an Indian twin-nation – India and Bharat – co-living in stark disparate pockets and differing stages of human development. Living and thinking apart is far from ennobling – and certainly not very edifying.

(A redacted version of this piece titled In Defence of the Bureaucrats was carried in The Indian Express, September 19, 2017)

Wednesday, September 6, 2017

What Nirmala Sitharaman Can Do to Revamp the Opaque Defence Ministry


An overview of all defence scams and scandals can be traced to opacity and secrecy. Within the confines of confidentiality and secrecy, there is a need to inject transparency through disclosure and deterrence.
A new full-time defence minister – Nirmala Sitharaman – has been given charge at a time when the government has decided to implement several of the recommendations of the Shekhatkar Committee. I will not touch upon them since I haven’t gone through the report (it is not available yet in the public domain), and it would be presumptuous on my part to comment on it. Instead, I’ll list issues I’m familiar with that are often missed by committees as either insignificant or plain uncomfortable, or for going beyond the terms of reference.
An overview of all scams and scandals in the Ministry of Defence (MoD) would suggest that their origin can be traced to opacity and secrecy, shrouded in an obfuscating mix of technicalities and procedures. Opacity, born of secrecy, breeds manipulations. Much hullaballoo is made in the name of secrecy in today’s time, when the world, thanks to technology, knows what other nations (especially their perceived enemies) are acquiring. The services qualitative requirements (SQRs), field evaluation trials (FETs) and the porous system we have in place where selective (but crucial) information is conveniently leaked while officially remaining a secret can be largely redressed through a process of transparency. How the move towards growing openness and transparency can be calibrated and determined, and when and what can be uploaded, shall be a challenge that will need meticulous working out, including elaborate discussion within the MoD. But transparency is doubtless the answer to getting rid of scams and scandals in defence procurement.
This is not to say that all issues can – and should – be put on the Internet. But the possibility of sharing information among important stakeholders in the services intranet could be explored. Sunlight is the best disinfectant available and must be leveraged. Even ex post scrutiny of performance will put the fear of punitive action in public servants’ minds, perhaps leading them to desist from going through with their questionable ideas. Yet, within the confines of confidentiality and secrecy, there is a need to inject transparency through disclosure and deterrence. Given that most revenue non-salary procurements need to be done through e-procurement, as per subject orders, it is imperative that supply orders or contract agreements are generated in auto mode on a real-time basis and access to the same is made available to all stakeholders – such as a higher competent financial authority and an internal audit team. In such a scenario, the internal audit team will be enabled to do concurrent audits, facilitating payouts as soon as goods materialise and invoices are preferred to the paying authority.
Incurring expenditure on capital items through revenue procedure (CBRP), which has been going on for about a decade, is a very questionable – even reprehensible – practice and must be stopped. The comptroller and auditor general has already flagged this issue. To me, the ideal thing is to merge the Defence Procurement Manual (DPM) and the Defence Procurement Procedure (DPP) into one procedure, the DPP, and with the need for trial for established capital/revenue procurement items eliminated. It will put in place the same rigour for revenue items as for capital acquisition – something completely missing on CBRP items.
Leakage of government revenue
Putting in place a mechanism to ensure that revenue generated through the commercial utilisation of defence land or buildings is credited to the government and to stopping the leakage of government revenue often escapes attention of the ministry. Given the size and resources of the organisations, the revenue is huge. Sadly, the bulk of the revenue generated through commercial utilisation of defence land is siphoned off to non-public/regimental funds, with a pittance credited to government accounts. What galls is the ingenious ways adopted: splitting the license fee into two – administrative charges (rebate) and license fee – the bulk (rebate) going to the non-public fund/regimental fund and a minuscule percentage (license fee) to the public exchequer. The Public Accounts Committee’s scathing observations on the loss of government revenue in 2013-14, directing the ministry to formulate policy within six months to realise government dues from the commercial utilisation of defence land, seem to have had no effect yet, even after four years. A rough estimate would point toward diversion of thousands of crore in the last few decades – possibly more, if indexed to present money value.
There is nothing wrong with considering rents and the lease of defence land, wherever there is an excess, for semi-defence/government/community use like technology parks, industrial areas etc., with appropriate earnings through user charges or lease rent. The prospect of categorising cantonments and making them cost-neutral centres, and also enabling them to become smart cantonments, must also be considered. Further, there is a need to mandate the use of alternate sources of non-conventional energy (including solar energy) as an alternative to the conventional energy consumption within the armed forces. The need for an energy audit wing in the services to review and suggest ways for lower consumption of energy cannot be overstated. Considering the vast availability of defence land, the use of solar energy in a large way would help align with government commitments towards efforts to reduce climate change.
With heavy capital expenditure being incurred by the ministry in the last ten years, the burden of maintenance for the systems acquired is going to weigh heavily on the finances of the ministry in the years to come. There a doubtless need to articulate a proactive policy for maintenance of inducted weapon systems, both Indian and foreign, keeping in view the Make in India policy initiated by the government. In this regard, there is a need to look at measures to streamline the process with respect to policies for maintenance (through Indian-deemed original equipment manufacturers or through foreign manufacturers or government-nominated agencies); develop a benchmark for cost of maintenance; and agree on escalation percentages with foreign vendors to bring down the repair and maintenance costs, as these vendors clearly seem to be taking advantage of monopolistic situations. An analysis could also be made to explore possibilities of opening these monopolistic items to Indian industry with an assured order to kick-start indigenous production of spares. The escalation percentage for annual maintenance cost of repair in dollar/rouble terms would need revisiting depending on the ratio of indigenous/foreign components and the dollar/rupee exchange rate, in view of the changed geopolitical dynamics.
In view of the increasing use of technology and higher life expectancy, there is a need to review possibilities of enhancing the retirement age at various levels to increase utilisation of manpower for a greater number of years. Considering the low age of retirement for jawans and officers, increasing the age by 2-4 years would be a great saving in the form of delayed payment of retirement benefits. Exploitation of trained and disciplined human resources discharged from the services early and rehabilitating them to utilise their competence in appropriate positions in civilian employ in the MoD for mutual benefits is one of the salient challenges confronting the services today. It will not only reduce the burden on pension liabilities but would also help in placement of personnel in a familiar ecosystem. Also, given the burgeoning pension burden that has already touched about 24% of the total defence budget in FY 2017-18, there is a need for the armed forces to join the National Pension Scheme (NPS) that has already been introduced for all civilian employees from January 2004. A separate NPS for the armed forces can be worked out, taking into account all elements of entitlements peculiar to the services. While on this subject of enhancement of retirement age, I must flag that it is rather surprising that the prime minister’s directive issued 14 months ago under Rule 12 of the Transaction of Business Rules, 1961 to increase the retirement age from 60 to 65 for CHS doctors hasn’t been invoked for Armed Force Medical Services doctors yet.
Ordnance factory and DRDO orders
On DPSUs  and ordnance factories, it is wise to tackle the root problems and address concerns. This is what needs to be done: tighten the standard estimates in DPSUs and ordnance factories, which is the matrix and an important cost determinant to set the tone for efficiency in a production organisation; timely revision of percentage of unavoidable authorised rejections as and when technological advancements happen on shop floors, to move towards greater efficiency and timely production; e-procurement; and backward integration with vendors through trust and open examination of vendors’ cost sheets to ensure quality of product(s), timely delivery, economy of expenditure and creating necessary synergy for harnessing future technology. Before apportioning the blame on ordnance factories for less production or delayed materialisation of items, it’s only fair and important to threadbare examine the reasons for the delay – year after year, in the last many years/decades – in the placement of indent, especially in its processing and approval in the MoD. Often indents are placed months after the production year has begun leaving no time for the ordnance factories to materialise the raw material required for production of the items, let alone produce them. This is not to overlook the frequent changes made by the services. These issues need serious and immediate attention.
The Defence Research and Development Organisation’s (DRDO’s) development processes and services’ requirements need syncing through joint ownership and accountability from the very beginning and till the goal/mission fructifies to create a convivial ecosystem for seamless jointness. Realistic project development costs (PDCs) need working out much as the flip side of time and cost overruns have to be capped through strict monitoring and adequate deterrence (financial and technical) to emphasise the importance of timely completion of tasks undertaken. Every instance of a delay in PDC needs to be owned conjointly and explained, deliberated by the DRDO and the concerned service. While the role of the DRDO ought to be exploited to the fullest by the services to achieve objectives of translating ‘Make-in-India’ into a reality, it is also absolutely essential for the DRDO to focus on critical core areas by ridding its deadweight avoirdupois that has procreated 50-odd labs/centres/institutes to fatten itself over the past decades. In the spirit of earning bang for tax-payers’ buck, the need to shun conspicuous consumption, to embed accountability by hugging Fiscal Responsibility and Budget Management principles to ensure transparent fiscal management in revenue items like travel and office contingencies, better coordination between them and the three services/other departments of the MoD, cannot be over emphasised.
There is a need to delegate more and more powers to cut down on time without any value addition and make every layer responsible for their decisions. While the DFPDS-2016 has set the tone with higher delegation, it has also suggested greater accountability through more transparency by leveraging technology, duly aided by concurrent audit that will, throw up instances of bad/poor decision-making to act as deterrence on malfeasance/misfeasance and consequential mismanagement of public funds. Going forward, more innovative and non-intrusive ways of Internal Control Risk Management (ICRM) framework and oversight mechanism will need to be injected into this dynamic equilibrium/system.
And this is where the role of the Defence Accounts Department (DAD) assumes greater significance. Far from the public gaze and little known outside the ken of defence ministry, the DAD quietly audits defence services’ ledgers in the nature of internal check on defence receipts and expenditure. Helmed by the Controller General of Defence Accounts (CGDA), a Secretary-rank officer, it carries out internal audit of expenditure of army, navy, air force, ordnance factories, border roads, coast guard, CSD, and the DRDO, through a crisscrossing network of offices spread across the country.
Speaking from personal experience, more than 35 years ago, it was this mechanism that provided me insight into how cyclones are “manufactured” in trans-Himalayan belt or how road-rollers are “eaten away by white ants” and many such others, each as incredulous as the other. Yet, today internal audit remains fuzzy and wrapped-in – an everyman-for-himself and Devil-take-the-hindmost audit-auditee game – rather galling in times of transparency and legislative focus on outputs and outcomes. Doubtless there is a need to shift paradigm, to converge financial propriety, computerised accounting techniques, administrative mandate for good governance, and to refine skill-sets to make it a pulsating tool for concurrent corrective mechanism done transparently.
Yet beyond this audit function, the DAD is an important cog in the defence financial advisory system. The more the delegation, the more pivotal their role gets, and more the need for transparency. Sadly, all efforts made towards transparency have been flagrantly given a go-by. With no transfer policy in place for IDAS officers despite it being in the works the past two years, networking and nepotism are rife. This is indeed portentous especially in times of higher delegation and devolution of financial powers, when wrong selection of personnel manning these posts of integrated financial advisors can play havoc with the system and become the nurseries of future scams. Needless to say, invocation of an arm’s length system, long overdue, is extremely dire.
Budgetary outlays being an estimate of the likely expenditure for the financial years, there is always the likelihood that as the year rolls out, certain needs for spending funds on certain items budgeted for, are either less or found not necessary. The focus hence should be on the quality of expenditure through diligent scrutiny and not on the need to expend the funds on grounds that the budgetary outlays have to be spent since non-spending leads to lapse of funds – a sure sign of management failure, as is the common perception. Care has also to be taken to move out of the colonial mindset and the many relics of the past to make the organisations pulsating realistic set-ups, which, while reposing faith on incumbents to act in national interest as public servants, abhors invasion of market economy values into a regimental order. In short, outcome-oriented qualitative expenditure with clear deliverables (tangible and non-tangible) ought to take centre-stage rather than the quantitative utilization of budgetary outlays.
I’m aware that I’ll be accused of dissimulation if I do not highlight one other serious weakness of the MoD (as with other ministries): often there is much to be desired in the selection of the right personnel for senior posts. Defence is an extremely vast and an entirely different ecosystem with mixed and varied personnel drawn from very diverse services and backgrounds, and with (to just highlight a few) protocols and shibboleth exclusively its own vis-à-vis other ministries. This, by no means, is to understate the importance of and diminish the role and importance of other ecosystems. The first, even foremost, (naturally) is the familiarity with the subject of defence with all that it entails, and necessarily first-hand experience with the men and material. Unlike other ministries, technicalities are aplenty, the acronyms befuddling, and the vocabularies used arcane (or exotic depending on your familiarity) and nuanced for a novitiate. Dealing with huge public funds (about 17-18% of the union government’s budgetary outlay) as it were, also calls for integrity well beyond the financial – intellectual – because of the humongous spends on modernisation of services’ equipment/platforms spread over years, with likelihood of multiple cascades and with potential to ripple around.
While it would be invidious on my part to point fingers at the questionable acts of any personnel or organisation as an important stakeholder in the procurement process, I would merely allegorically allude to the fact that the distribution of opportunity has typically become an insider trade. Or how else can one explain the egregious “wrongs” perpetrated in the AgustaWestland procurement case when the Defence Acquisition Council (DAC) headed by the RM and with the three services chiefs, defence secretary, financial advisor defence services, DG (acquisition) and CISC as members, blundered through in their judgment – especially in the face of finance ministry’s serious reservations – to recommend the case for cabinet approval? Warped motivations and a sleight of hand of and the grime of corruption is all over the place – haemorrhaging quietly for years on end. Therein lies the nub.
Initiating reforms as suggested above could be done individually at the department/services level (bottom-up approach) or as a complete programme through a formal empowered mandate of the government (top-down approach). Given our national ethos and proclivity, even at the cost of sounding banal, I’ll like to stress that the quantum/levels of discretion must be highlighted to the implementers to minimise distortions. It would necessitate creating favourable conditions on the demand side (awareness, trainings, competence-building) as well as on supply side (e-recordkeeping, openness and transparency) to discourage abuse of discretion. The idea is to harness the ‘power’ of discretion by controlling and channelizing it in the direction the MoD intends taking with emphasis on Make in India, more indigenisation, need for innovation through strategic partnership, and holistic and ingenious recalibration of financial resources tempered with transparency. That would lend balance and pragmatism; it will require going into these aspects as also other co-related issues that are likely to surface on deeper scrutiny and analysis.
Sudhansu Mohanty worked as Controller General of Defence Accounts and then as Financial Adviser, Defence Services before retiring on May 31, 2016.
(Reproduced from The Wire)