- 8 months ago
Did the UPA government try to influence the CAG during the explosive ‘Coalgate’ audits? In this exclusive conversation, former CAG official P. Sesh Kumar reveals what really happened behind the scenes, something that he also writes about in his latest book titled -- UNFOLDED: How the Audit Trail Heralded Financial Accountability and International Supreme Audit Institutions. Watch this revealing interview that uncovers the untold story of accountability, power, and politics in India.
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00:00So it is my great honor to welcome P.Sesh Kumar. He's a former Director General of Audit at the
00:21Comptroller and Auditor General of India. For those who don't know CAG is basically an
00:25independent constitutional authority in India that audits the expenditure of the Indian
00:29government and the state-owned companies. Thank you so much, sir, for joining Asianet News
00:34for this discussion. I remember a last conversation on your earlier book, which is titled CAG,
00:41Ensuring Accountability Amidst Controversy. And I remember having discussion on a lot of
00:45crucial topics on reports getting delayed, the appointments, how they take place in CAG.
00:53But this time around, I'm going to be talking about your latest book, which is called Unfolded.
00:57Now we are, you know, moving towards a lot of digitalization. So is it happening digitally
01:02or still we are doing pen and paper? Someone want to ask CAG. I'm talking about CAG of India and what is
01:10available in the public domain. Yes. There is a strategic framework, AI strategy framework,
01:14and they're using data analysis in a big way, data analytics also. Very recently in September
01:212025, two deputy CAGs of CAG had conducted a press brief, perhaps first of its kind, other than normally,
01:29occasionally, you know, there used to be press briefs after the audit report has been placed in
01:33parliament. But this was a proactive press brief trying to explain what are the modernization attempts
01:40at improving, professionalizing, auditing procedures, standards, and methodologies,
01:45in keeping with developments in artificial intelligence and other. So they have evolved
01:50what a concept called a project called CAG Connect. So the whole idea is not to depend entirely on the
01:57paper trail, but to examine them large databases, downloading them, analyzing them through the auditing
02:05tools available, and then come to some conclusions. And if necessary, verify the outcomes also. In
02:12verification also, they are trying to consider using satellite imagery, remote verification,
02:19or hybrid methodologies, reducing the paper trail. That is the attempt. That is at least the theory part.
02:24Now, you were questioning how far it has been implemented probably. That is what you wanted to know.
02:29But that CAG has to come out with a proper report. CAG office must have circulated some
02:35conference papers or some pilot studies or results of some efforts. So, beneficiary verification,
02:41welfare, delivery of welfare, you know, all these things they have attempted,
02:48but not on a large scale on a continuous basis. You talk about how there is a greater need to move
02:54from the cash-based accounting to accrual-based accounting. If for our viewers you can explain
02:58what is the difference in how we can as a country benefit from this accrual-based accounting. I have
03:04explained in my book very in a very simple way what exactly is cash accounting and what is accrual
03:09accounting. See, accrual accounting tells us our future liabilities, our assets and what are the
03:20income that is not received before a particular date but you know that belongs to this particular
03:25period and also liabilities that belong to this period which may occur later and we are not accounting.
03:31For example, government guarantees are there, you know, and they have an implication across for not
03:37only for current financial aid, for the future financial years also. So, we do not account for
03:42what is called depreciation. We do not have valuation of assets properly done. So, these are all,
03:48there are standards in the accrual world and that the most of the developed world is progressing
03:55too bad the accrual system and we also also tried for the last 15 years or so CAG is heading an effort,
04:02a massive effort to the government CAG is interested with the government accounts accounting standards
04:08advisory board and one deputy CAG, the secretary level officer heads that board and that board is
04:15tasked with you know preparing and notifying, not notifying, at least recommending standards. See,
04:21for the shift to accrual system, we need standards and then we have, what should I say, the legacy
04:29issues, how to transition from a particular system to a new system altogether. So, it's a massive exercise,
04:35mental makeup has to be changed, the willingness should be there for the state governments also,
04:40it's not just union government, you have to take the state governments also together, standards have to
04:44be there and standards have been notified, have been recommended, at least four to six standards have been
04:50notified, government guarantees, contingent liabilities, there's so many things have been notified, have
04:55been recommended, some have been notified but you know, no pilots have started in an effective way. So,
05:01it is dragging along, the sooner it shifts to the accrual based system, the better for proper
05:07appreciation of the implications of the financial liabilities of the government, instead of hiding in
05:13the cash-based system, that is what I tried to explain. Right. Sir, you also talk about how CAG not only
05:19focuses on checking the compliance but also the performance of any policy or any project,
05:26how much percentage of that effort goes into place because a government can actually, you know,
05:31allocate XYZ crores of rupees for a project but it may not be efficient. That's a very good question.
05:37See CAG should come out with these details in what they print, what are called the annual performance
05:44reports or activity reports, how much of the resources, how much of the time is spent in say,
05:50different types of audits. It is not coming out with such regularity and with such detail,
05:57say as happens in say developed countries like USA or UK. Their reports not only give those details but
06:04also say what is the value in terms of monetary value that their audit efforts have contributed in terms
06:11in terms of savings or in terms of, you know, finding unnecessary expenditure, wasteful expenditure.
06:18All this also is reflected in their reports. So CAG's reports don't really give it in a regular manner.
06:25So, but your question still remains, the emphasis more is on compliance audit. Compliance is,
06:30it is a regular, whether compliance with rules and regulations, whether money has been properly spent,
06:35the voucher is there or not, rules have been followed or not. It doesn't deal with the soundness
06:41of the policy or the implementation and outcomes, whether they have been delivered or not in the
06:46measure expected. So, efforts are more on compliance audit and to some extent, my feeling is at least
06:54during my time when I was in the service, I think not even 20% time was spent on performance audits.
07:01Gradually, I think that must have increased now to maybe 30-40%.
07:06You also touched upon the fodder scam in Bihar and you specifically mentioned the two courageous IS
07:13officers and I would like to name them here. A P.K Mukhopadhyay and Nand Lal Samhyal. They were
07:19actually intimidated. A lot of obstructions were placed in their path. How rampant is this kind of a
07:26hostile environment in our country? No, that is now history. Much water has flown down
07:31the Ganges. So, I will come to the point that you have raised about the current situation and what
07:36CAG's audit teams may be facing in terms of non-cooperation or other if you are trying to see
07:45some sort of a difficult atmosphere during the audit. See, audit is not a welcome
07:53activity as far as the oddity is concerned. No oddity, very few oddities would like to
08:00welcome audit with open hands, especially an external independent audit like CAG's. So,
08:06it is an occupational hazard. We have been living with it and at the highest levels of the government,
08:13nobody says don't cooperate with audit. So, they will definitely pass the instruction. They will,
08:19in their conference speeches and from other instructions. They do support CAG's audit in
08:25principle. But the point, as you rightly said, is what happens in the field, in execution. Real audit
08:30teams, what do they face? How do they tackle? Yes, one has to admit that the records come reluctantly.
08:37Records come very late. Important records may not come in time and very little time is given to the audit
08:44team because they have, they work under constraints of time, 15 days or 30 days or whatever, depending on the
08:48subject. So, they have to finish that audit. So, the tag end of the time of the, of their audit,
08:54if they are given some records, they cannot examine properly and the, the auditing may escape
08:59detailed scrutiny, which is perhaps suiting them in one way, you know. So, that sort of things is
09:05historically there. It is not that it is there in 10 years back and it is not there now. It will continue
09:11to be there, I feel. And some ways have to be found at higher levels of the audit department and higher
09:17levels of the auditing department, some regular interactions. We have got what are called entrance
09:22meetings, we have got exit meetings, especially in performance audits. So, those meetings are supposed
09:29to take care of these hurdles. In the UPA government, you also write in your book, when there was an
09:36investigation audit happening around the coal allocation scam, the auditors were actually placed
09:43in a stinking room nearby a toilet. I mean, if it is happening at the ministry level, don't you think
09:50that there is, there is a systemic issue and needs to be addressed in a different manner?
09:57See, that particular incident, we should contextualize it. See, what was the, when was the, see, this call
10:06report being prepared? You know, it was 2011-12 during that time, you see. And what was that period?
10:13It was preceded by a very sensational report of CAG on 2G spectrum allocation. Then there was also a
10:20Commonwealth Games report in 2010 and 11. You know, these two years were very crucial. And the government
10:26at the highest levels was under pressure, both from the media, public and the rival political parties.
10:32And one thing, let me tell you, let me tell you. See, CAG reports are exploited by all political parties.
10:38Who is in power, who is not in power, doesn't matter. Those in power will exploit it to their advantage,
10:43pointing out the opposition's faults and opposition points out the fault of the ruling party. That has
10:49been happening across, across the decades. It's not new. So, with this background, if, what is, what,
10:57what can we expect from the audit in the ministry? The ministry at the lower level functionaries,
11:02they are supposed to be taking care of these audit requirements. The joint secretaries and above,
11:07this is not a day-to-day matter. They have other urgent matters to tackle and, and they would leave it
11:12to their subordinate officers to manage, if I may use the word, to manage the audit deck. So, they did it
11:18in their own way. And see, the other point is, in ministry, those days, space has been a constraint.
11:24See, even joint secretaries used to fight with, for better rooms, probably with toilets attached,
11:29which were very few. And the toilets were definitely stinking all across ministries, not only the school
11:34ministry. So, unfortunately, for the audit team, it's happened to be a room, which was adjacent to
11:41a stinking toilet. And that caused quite a bit of discomfort to the audit team at that point of time.
11:46So, that is what I tried to highlight. It's not, maybe it is, the toilets are better now,
11:51they may not be stinking. And audit teams may have been given a little better rooms these days.
11:55And see, the audit teams also should take it up with the higher authorities, if they are so
11:59inconvenienced. The concerned, the director or the head of the team, they should meet the joint
12:05secretary and raise these points. But unfortunately, in both sides, it didn't happen. And they neglected,
12:11and the team had to suffer. That is what I was trying to add.
12:14The former prime minister of the country, Manmohan Singh, in parliament, gave a few
12:18arguments and you speak about that in your book. So, how do you substantiate when the prime minister
12:23of the country speaks in parliament that, no, this is not something which we can go with, the state
12:29governments are opposing. And if we go ahead with this, it may be an undemocratic process. But there
12:35were discussions which were taking place. So, there was a lot of delay in the discussion and actually
12:39implementing these policies on ground. See, the point of CAG, whatever CAG wrote emanated from
12:47the policy file which was produced to the audit team, again by accident as I mentioned in my report.
12:53So, that file clearly says, and all that evidence has been produced in the audit report of CAG verbiting.
12:59So, there was a chance for the government to introduce auctions.
13:03But then, they have obtained the law ministry's opinion also. Law ministry favored that it can be done
13:10through ordinance. But then, in their wisdom, they have decided that ordinance may not be the route.
13:15They will take the normal statutory route and bring in a law and amendment. For that amendment,
13:20the government's stand was, we need to consult state governments. It's a time-consuming process
13:25and it's not so politically feasible. And so, it took time. Hence, we delayed and we brought it in 2010.
13:31See, ultimately, the policy was initiated and maybe post-haste because of the CAG's
13:39already report available in the public domain by that time. So, ultimately, see, the government did
13:46introduce the auctions through a proper amendment of the act. And that happened in 2015, the first
13:53sanctions, first auctions. And as you may be aware, you know, about 35 or 36 coal blocks,
13:59they are supposed to have the capacity to potential to realize or contribute 1.95 lakh crores over the
14:07lifetime of those particular blocks, which is matching with the figure that CAG brought out
14:13in his report on the earlier period. When you talk about integrating AI in CAG,
14:19how does India compare to the other countries? Of course, there's a lot of data crunching that AI can help
14:25CAG with. But apart from that, we can also look at anomalies and patterns which you point out in your
14:30book. So, how efficient the entire process can be? How soon can we get there? And of course,
14:37if you can give a comparison? See, from the limited research I tried to do while attempting this chapter
14:43in my book, I found that even small countries like Estonia, they are way ahead in terms of actual
14:51execution and delivery of the positive impact of use of data analytics, big data, and even artificial
14:59intelligence. The USA and National Audit Office in the GAO, Government Accountability Office in USA,
15:08National Audit Office in UK have also progressed much beyond beyond our efforts. We are also learning
15:16from their efforts. And we have a strategy, we have a framework, we have done some pilot studies,
15:21that is what is available in the publications of CAG, they are available in the public domain.
15:26And CAG has also come with a strategy, what they expected to do, what are they planning to do in
15:32their, I mentioned a little while ago in the press brief in September 2025, that is available in
15:38the public domain. I don't have access to more than what is available in public domain. So, my conclusion,
15:43if I want to summarize, I would say that India is a little behind, quite way behind, maybe two to five
15:50years behind in this process. And at least now they have realized that they have to emphasize not only
15:57giving presentations, papers, conferences, and doing pilot studies, but to escalate it to a little
16:03higher and a better level, you know, of actual delivery of the outcomes of these initiatives.
16:10And in order to reach there, we'll also have to train the officials to get their hands-on.
16:15Absolutely. See, one of the problems with CAG's audit is, it is post-facto. Some reports come five
16:23years, four years after the events have happened. And they have no utility, either for mid-course
16:29corrections or improvements. They are only fault-finding. That is one of the major grunts or
16:34grievance against the CAG from the executive department. I have also worked on the executive
16:38as a joint secretary in the government of India for five years. So, what they would look, the
16:44executive would look is some pat on the back, some good things that CAG has noticed in its audits.
16:49They should come upfront and also disclose and indicate that in the report. One is delay,
16:55they don't report the good things. And, you know, lot of, even if replies are given,
17:00we say the fact remains that and we don't consider the replies properly. So, obviously,
17:05there will be quite a bit of friction and the resistance to produce and cooperate with the CAG audits.
17:12So, basically, the recommendations are given by CAG, but it's not often that we see that
17:16any action has been taken on those recommendations. In my earlier two books, in fact, you know, after
17:22that first book on which we spoke, I came out with a second book. It is called CAG,
17:27what it ought to be auditing. Yeah. See, in that, I have raised very basic questions
17:33on what happened to all those reports, type of reports which used to come in 2010, 11, 12 and all
17:40that. After that, we don't hear and the media has been asking me also, since I have written a couple
17:45of books, why this is happening. So, that book was an attempt to suggest what areas CAG should examine.
17:51For example, there are very many all India performance audit topics, social welfare schemes,
17:56where thousands of crores have been spent every year and their outcomes are not analyzed properly.
18:02their concept or not examined, the assumptions behind the scheme, the monitoring methodology,
18:09the role of the government of India ministry is not examined. We don't have the concepts of all
18:14India performance audits in the way it used to be about 10, 12 years back now. See, we are only
18:19concentrating on outcome audits. That is, what is happening to the states. We will, if we can choose
18:25some states and say that what is happening in those states, we will report and say this has not been
18:30achieved money has been sent to them. But what is the mistake or what is the lack, you know,
18:34or what is the deficiency of the ministry in government of India, which has, which has made
18:40these schemes in the first, some schemes are made in a hurry. There are hundreds of schemes have been
18:44announced and most of them in a hurry. So, that aspect, what went wrong in the conceptualizing,
18:52the laying down the process, procedure, monitoring, where are the dashboards, where are the actual
18:57outcomes, no outcome surveys independently has been done, except from CAG does occasionally. So,
19:04these problems continue to remain. So, what is the solution of that, if I may ask you?
19:09The solution for that is, you know, CAG has to concentrate on all India performance audits,
19:14number one. That is, examine the policies and the assumptions behind the policies, deficiencies in
19:21policies and, you know, in monitoring those policies without consulting state government.
19:26CAG is an establishment, old establishment. It has got more than 22 secretary, additional
19:32secretary level officers to guide and advise the CAG, though it's a single member led institution.
19:38And we have got very bright, exceptionally talented and well qualified and very
19:45IT savvy personnel, right at various levels to take forward this concept. So, they are not lacking in
19:52personnel or intelligence, capacity or ability. So, it's only somebody who has to take the initiative
19:59to advise that CAG that these are the things which should be done. So, that is probably where
20:05nobody is probably belling the cat. So, we don't know the internal procedures, how they have evolved,
20:11but what little I remember and I know, there is a senior management and in that senior management,
20:16mostly it is monitoring. So, it depends on the confidence that I generate in the CAG that I can
20:23take some new subjects and tell. But unfortunately, my tenure as deputy CAG is hardly one year or not
20:28even two years. So, the CAG's tenure is six years. So, we have to develop that matching compatibility and,
20:37you know, confidence in each other and then identify some subjects. Definitely, the senior management is
20:42doing its best, but then maybe it is not in their priority. I don't know. All India performance of
20:47it should not be abandoned. That is my wish. Sir, in your book, you also talk about blockchain
20:55implementation. If that can be done, it will be even more transparent. This is something which is
21:00un-erasable. Talk to us a little bit about how blockchain can be included in the operations of CAG.
21:06See, I have tried to explain blockchain in a very simple manner because that is still an evolving
21:13subject and it has people confuse blockchain with cryptocurrency and cryptocurrency generates a lot
21:20of, should I say, skepticism, some sort of a fear and even government at highest levels have not yet
21:26decided whether we should accept that. So, blockchain isolated from cryptocurrency is what I am trying to
21:32attempt at. But then, where are the international experiences happenings in the area of blockchain
21:39technology? Everybody is talking, not even advanced countries are using it in a large way. And our data,
21:44our spread, geographical spread is such that, you know, we need to use the blockchain technology. I think
21:50CAG Connect, a project which CAG has announced in 2025, will take into account artificial intelligence,
21:56definitely. Big data, data analytics and probably they will also dabble with what can be done in blockchain.
22:03But that requires a lot of effort, planning and courage and confidence. No, the senior management in CAG will not
22:10think five years or ten years ahead, I feel. Wish they do that. And we have younger officers, bright officers,
22:16who should be trained in these developing fields and then they should come and guide and then take the concept
22:22forward in some committee, you know, for senior officers and all that. Probably they are working at it,
22:27but we are not aware. How do we ensure that there is self-accountability in CAG? Because you talk to
22:34us in the book about the 2024 incident where there was a complaint against CAG officials and their conduct
22:44in a foreign mission. So, how do we ensure that the people inside of CAG, the officers are not corrupt,
22:51and how do we maintain that self-accountability? See, CAG has got a well-established system of
23:00monitoring the integrity and there is a, there is a concept of, there is a declared vigilance officer
23:09who has to monitor and all rules of the government of India in terms of vigilance, integrity, our
23:15procedures are there. This was just an aberration. I wish it was an aberration.
23:20And belatedly, though the CAG found a way at that talk, that the delinquent official, at least they
23:27considered him as delinquent a little belatedly, he was called back from his foreign posting and he
23:32was suspended. Some enquiry was also instituted. I am not aware. But it was delayed for some time.
23:39Yes, it was delayed, yes. Unfortunately, and everybody knew about it in the CAG. Even senior
23:44management was upset. A lot of letters here and there, emails, WhatsApp messages were exchanged.
23:49It came into the media also. So, why I mentioned about that incident? Well, that was, I think, perhaps
23:57one of the saddest in my view and in view of many serving and retired officers. Many serving officers
24:04have expressed anguish, concern and deep, what should I say, concern, actually, about these events. And
24:12they could not do much. That was unfortunate. See, the CAG is a single person driven organization. And
24:18the senior management may have been constrained. They tried, some of them have tried. In fact,
24:23there is evidence in public domain. But ultimately, luckily, you know, good sense prevailed. And, you know,
24:29that has been, that person has been called back. We don't know what the merits of the case, what is the
24:35allegation, how far they are correct and what happened and all. That's part of investigation. It's
24:39not in public domain. But the allegations were there. He was called back. Inquiry was made. He was
24:43suspended. And what happened, we are not aware. Are you planning to write another book on this topic?
24:50Should we anticipate more books coming out? Yes. See, I have these ideas. These books cannot happen in just
24:57one year or two years. True. They have been there in my mind for the last five or six years. In fact,
25:02I have two more books in the pipeline. One would be, what ails the India's medical education system.
25:09That is because I was fortunate to have been associated with the Oversight Committee on Medical
25:14Council of India in 2016-17 for about one year. So, that subject interested me and I kept
25:22researching and following it up. So, on that, I am coming out with a book maybe a month or two.
25:28Then, I had worked as a Joint Secretary in the Ministry of Micro, Small and Medium Enterprises for
25:33about five years. That was also some time back. So, what ails the India's MSME ecosystem and startup
25:40system is one subject which is dear to my heart. I am trying to bring out another book on that maybe in
25:45the next six months. These are the two books I am. Great. So, looking forward to these readings also.
25:52Yeah. Thank you so much once again, sir, for speaking with Desha Net News and hope to connect
25:57with you soon. Thank you and I appreciate you have read my book. Thank you. Yes, sir. It was quite
26:04interesting. I tried to skim through it so that we can have a meaningful conversation and get something
26:08offered. Thank you so much once again.
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