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