It was double trouble for the Manmohan Singh government on Thursday when the two reports of the Comptroller and Auditor-General of India, one relating to Air India and the other to the Directorate General of Hydrocarbons and the petroleum ministry, were placed before Parliament. The earlier draft reports, which were “leaked”, were reportedly harsher than the final reports. Even so, the final versions are quite damning of the callous fashion in which the government, whose accounts are already so heavily in deficit, colluded in clearing the purchase of aircraft way beyond the needs of AI and without any groundwork on requirements.
The CAG report hints at the government being forced to buy the Boeing aircraft, which bailed out Boeing, a company which, and this was public knowledge, was on the verge of bankruptcy. This purchase was even touted as one of US President Barack Obama’s major victories during his India visit as it meant several hundred new jobs in the US. It burdened Air India, which has a capital base of a mere `225 crore and a debt of `40,000 crore. Among the several financially devastating decisions highlighted in the report were the questionable ones of giving the airline Emirates a rise in seat capacity from 18,400 seats per week to 54,200 and the increase in the points of call for Emirates in India from 10 to 14, all at the cost of Air India.
In the case of the Directorate General of Hydrocarbons and the ministry of petroleum, the report pointed to the violation of the production-sharing contract with Reliance Industries. A huge loss was caused to the government exchequer by allowing RIL to raise its capital expenditure for KG-D6 from $2.4 billion to $8.8 billion because, according to the contract, RIL must share profits only after recovering all this inflated expenditure. RIL did not show a commensurate increase in production, as promised, and, on the contrary, reported falling production to 40 mmscmd, and again the ministry and the DGH did not recover the unused acreage.
Former civil aviation minister Praful Patel has found several discrepancies in the report and says faults can always be found in hindsight. Besides, all his decisions had the backing of the group of ministers convened by the Prime Minister. The government will have its defences for these calamitous failures of governance and its failure to protect the country’s national assets, which it holds in trust. Since public money is involved, all oversight will have to be investigated. The reports will now go before the public accounts committee, which will examine them and ask the relevant players for explanations. But, given the present mood in India, there is sure to be a lot of public interest litigation seeking the court’s intervention to see the guilty punished.