The Comptroller and Auditor General recently carried out the ‘Performance Audits’ of Canteen Stores Department and of the Supply Chain Management of Ration Supplies in the Army. Incidentally, these are two separate audits, and DO NOT relate to “Irregularity in Supply of rations through CSD” as most of the newspapers are erroneously reporting. The audit reports in question have been in news because they have led to the summoning of the Service Chiefs by the Parliamentary Accounts Committee – something unprecedented, as per the same news reports. The newspapers are very sketchy about the actual findings / recommendations of the reports – those interested in reading more about them can access them HERE (Rations) and HERE (CSD) .
While the aspect of irregularities in supply of rations brooks no argument – it is a deep rooted malaise that needs to be addressed in detail. However, the other aspect relating to CSD canteens is not really one of irregularities. It relates to the fact that the Unit Run Canteens (URCs) are beyond the purview of the CAG to audit – and the CAG has serious objections to that. The Canteen Stores Department is a part of the government, under the Ministry of Defence. It is paid for out of the Consolidated Fund of India (CFI) and is therefore auditable by the CAG. Incidentally, the Canteen Stores Department itself used to function as a Public Limited Company till 1977, when it became a department of the Government of India. The URCs, however, are Regimental Institutes. They are NOT supposed to be paid for out of the CFI, but are ‘privately funded’ through Regimental Funds. The earnings arising out of the URCs are also therefore beyond the purview of the CAG.
This is the arrangement that has always existed, and it works quite well. There is a system of internal audits of the URC accounts, including quarterly audit boards and inspection of accounts during the annual administrative inspections. The SOPs for the distribution of profits to various Regimental Institutes and their subsequent utilization are also laid down comprehensively. While it would be immature to assert that there are never any frauds or discrepancies – but such instances would not be any more than those that take place in any other system that is audited by the CAG. In fact, these would actually be far lesser than some of the frauds being perpetuated to appropriate public funds across the country.
The CAG’s contention, however, seems to be that how can something as big as this not be under its jurisdiction. The CAG’s recommendations with this regard are “The URCs should be recognized as the retail outlets integral to CSD. The operational results of the URCs should be disclosed in the proforma accounts of CSD to provide a true and fair view of the complete operations of the organisation. Ministry of Defence should also take immediate steps to bring the URCs under the accountability regime that is applicable to all operations funded by the Consolidated Fund of India.”
The reasons cited for the above recommendations are:-
- URCs operate from government land / buildings, are manned by service personnel and use government transport to move goods.
- They are supervised by the unit Commanding Officer.
- Although they are the retail outlets and the face of the CSD, they are not accountable to CSD.
- URCs are subsidized through soft loans and temporary credit facility from CSD. They also receive Qualitative Discounts (shares of profits) from CSD. Since CSD itself is a government organization, these subsidies / discounts amount to the URCs being supported by the CFI.
- And the last point, which really is an amazing reason for bringing URCs under the scanner of the CAG, is that in the absence of this, the performance of the CSD cannot be fully assessed by the Performance Audit of the CAG.
By this logic, every government servant who is living in government accommodation, using government transport to commute and is availing subsidized education for his children by sending them to a government funded school, should be liable to have his personal accounts audited by the CAG – so that the CAG can assess the performance of the government as a whole.
The whole episode highlights some disparate but very pertinent and interesting issues.
- The extreme shallowness of media reporting, including some very respectable names like NDTV, whose website talks about “Irregularities in the Canteen Stores Department” with regards to “existing procedure for provisions of dry rations” and Times Now which had a ticker running all afternoon that talked about the chiefs appearing before the PAC in connection with the “CSD Scam”.
- The beating that the image of the Army / Armed Forces has taken, that such issues are so readily believed to be / accepted as scams.
- The result of this downfall in the image has also left internal regimental institutions open to questioning and liable to come under supervision, since the implicit belief in the probity of people handling them no longer exists.
One is not immediately aware of the outcome of the interactions of the Service Chiefs with the PAC, and whether as a result the CAG will have its way and bring the URCs under its purview. It will be yet another blow to the splendid organizational structure of the Armed Forces, and for all the wrong reasons. It would give a handle to the Local Audit Officer to extract yet another pound of flesh from units in return for settling the various audit objections arising because of the lack of knowledge / carelessness of the people handling the accounts in units. It wouldn’t be surprising if that happens, but will certainly be sad.