Fiscal Crisis

Every year for the past three years I have made a simple straightforward resolution. I restrict my ambitions to this one aim and fervently hope to abide by the solemn vows taken on January 1. The stifling, restrictive environment of my room is the primary reason I have lost out on that promise once more. That's what I tell myself. It's a sorry state all right...

The past few months have seen several peculiar challenges faced by the eccentric author of this blog. The most gripping and clearly the most critical of these has been what I call the surplus problem.

Now, most governments in the world are stuck in a recessionary gap and are struggling to generate enough demand and buoyancy in their countries to revive their economic fortunes. Our own country has been beset by a nasty slowdown. The elections may throw up any radical Prime Minister with vision, strength and character. Nothing will improve for the next three years as I see it. But I leave that for another post.

No, the reason why I allude to these worldly problems is my own crazy predicament of a huge surplus. That's right - I am in an inflationary sprawl and this is how the current situation looks like:

Forget those boxes. That stack of newspapers has to be read.

Needless to mention, I must read all of the 150 newspapers or so that are awaiting my scrutiny. Within a month. If I don't then I risk causing great damage to my plans of upgrading from 4 newspapers a day to a far cooler 5 per day (don't ask).

H

The exciting conclusion to the crisis of the century!
http://hamstersqueaks.blogspot.com/2014/09/a-balanced-budget.html

Change

Less than a month remains before I wrap up my two year sojourn at a job.

I can study again.

(Last part in this series: http://haarisian.blogspot.in/2014/02/change.html)

Haarisian Archives - An Essay on the CAG

Note from H: I wrote this essay in June 2011, or so my diary says. It was an investigation into the functioning of the CAG at a time when it was firmly in the spotlight with the grim emergence of a number of scams in the country. The content was mostly written in one sitting but it was never shared on any public platform. I look back on it and find certain points that I could have possibly added, and some other arguments that would have made my stance more rigorous. That's probably the hindsight bias in play and I believe that I wrote as well as a person could write in a day with most of the research coming from general knowledge rather than proper research. This feature then, shall be a compilation of the innumerable pieces, short stories, essays and accounts of contests that I wrote at some point in time. I hope you enjoy them. I have made no changes and all errors that were present originally are maintained in these reproductions.

Role of CAG in Meeting Challenges of

Good Governance

There was once a time when India’s occasional embarrassments could be shrouded under the pretext of it being a young country. Even then, more than sixty years back, we were instantly the largest democracy in the world. Add to that the prospect of having a heterodoxy consisting of enough languages and cultures that could not be matched even with the Euro nations considered together as a single entity. For the world, it was an interesting case study, an experiment into the viability of universal adult franchise. Democracy is not an easy term to define. It can be interpreted in a plethora of manners and each such definition carries subtle differences that simply change the fabric of the governance structure of that country. It is no wonder then that the statesmen who framed our Constitution took great pains in ensuring its efficacy in all eventualities and contingencies. The debates that rang between the members of the Constituent Assembly were spirited enquiries into the nature and implications of individual articles, of possible improvements and safeguards that could enhance the various constitutions of countries like France and the United States.

The Constitution is a remarkable document. It is an exhaustive “manual” for each citizen of our country and leaves very few areas of doubt as to the responsibilities, rights and mandated powers accorded to all stakeholders in the Indian democratic system. The Executive, the Legislature and the Judiciary have the job of ensuring the smooth functioning of the government, and they act as counterbalances to check any errors or excesses committed on any side. Of course, the beauty of our country’s Constitution doesn’t stop here. The document provides for the formation of a few important independent statutory bodies, whose functioning involves an impartial outlook towards indispensable functions of state, such as that conducted by the Election Commission and, as the subject of this essay, the Comptroller and Auditor General of India.

Current Role in the Indian Governance structure

The Comptroller and Auditor General of India (CAG) is the supreme auditor of the Indian government, and it is his job to ensure that the revenues collected from the people as well as spending of public money is carried out in a way that follows all laid down rules and regulations. It is also his prerogative to check if the policies adopted by the government are the most efficient ones and that they give the best returns whether they are tangible ones, such as revenue collections from spectrum auctions, or intangibles, such as the state of public hospitals across India.

Naturally, the CAG has an enormous responsibility in the Indian polity. To a certain extent, it mirrors the operations of a corporate auditor. The main aim of any corporate auditor is to give assurance to the management that all transactions and operations are in compliance with the laid down policies and procedures.

However, the CAG’s role doesn’t end here. A properly functioning democracy is one which has the elements that keep a check on it. In India’s case, these are constitutional bodies that act as self-correcting mechanisms in the government structure. It is imperative that these bodies are given full autonomy and just as importantly, that the results of their investigations are made completely public. In the current context, the potential for the CAG to become a weapon of choice against corruption is immense. Its mandate allows it to audit State and Central revenue collections and expenditures and raise questions about any impropriety occurring therein. It can be a part of the larger framework in administrative, legal and investigative vigilance. Everything procurement or transaction should be liable for independent scrutiny.

In an increasingly volatile world, where wars have been replaced by economic turmoil, problems of inflation, and ever increasing accounts of corruption, it is necessary to look at the challenges facing the CAG in the 21^st century.

Challenges, realities and expectations

As mentioned at the beginning of the essay, India is starting to run out of excuses for its recurrent failures in improving socio-economic conditions of the country, not to mention the exorbitant excesses committed by the public and private sector alike.

With the recent mass outcry against corruption culminating into a national debate over the Lokpal bill, the writing on the wall is clear. Corruption has to be tackled immediately. People, even at the grass root level, are giving more weightage to the malaise of corruption in the Indian system. The ongoing 2G scam, the over the top Commonwealth Games expenditure and the mining land fiascos have firmly brought the issue into the limelight.

The role of CAG is especially important here. After the 2G scam reports, it was clear that a growing number of dubious deals are arising as a result of a nexus between elements in the private and public sector. The value of these deals has in all probability caused a massive loss to the public exchequer. The earlier phase of India’s corruption story focused mostly on small time bureaucratic corruption. We have now entered a phase of large scale embezzlement and unfair trade practices.

In this situation, it is becoming more important for the CAG to monitor such public-private interactions, especially when it concerns auctioning or allowing usage of valuable national resources, such as spectrum or mineable land. It would be a good step to allow the fulfillment of these deals only after the approval of the CAG and after giving the green light over any possible mal-utilization. India is relatively fresh into the domain of a liberalized economy and hence close monitoring of private gains through the government has to be constantly questioned and checked, before completion. The assets of our country are valuable and even an unfair deal cannot be acceptable.

Another area of attention is in the proper implementation of poverty relieving programmes. A pertinent example of this is the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The programme has been well received, and in principle, is an excellent step to ensure employment for a large number of Below Poverty Line (BPL) families. Another such example is the Public Distribution System, which is much older, and aims at providing basic nutrition to poor families. In fact, there are several such programmes which aim at the people at the bottom of the pyramid, and work towards improving health, hygiene and sanitation while also improving mortality rates. The Integrated Children Development Scheme (ICDS) is yet another programme that targets malnutrition in children. Malnutrition is in itself a problem that is often forgotten, but it claims a number of lives every year.

The biggest problem associated with these programmes is the misappropriation of funds at all levels. The CAG should be given a much larger responsibility in this regard, so that audits of the fund allocation can be achieved. The problems of rising inequality have been a persistent feature of growth story and better monitoring of the system is required. It would be very difficult to have direct auditing in each village but a way out can be formulated. In particular, social audit by the local community can be thought of, which can be in turn reported to each district, where the auditing process through the CAG can begin. It is important for funds to reach the poorest sections of society and in a way which conforms to the guidelines stipulated in the act governing the scheme.

New avenues

India is a welfare state and hence, special emphasis is laid on public expenditure often in the form of Five year plans. These schemes are present in a multitude of domains and they are often very complex and have a wide scope. This presents a problem in measuring their results. The feedback from such projects is of two types. The first is the human development, socio economic changes which measure the benefits or failures of the plans. For example, on this basis a child nutritional scheme such as the ICDS shall be judged for its effectiveness on the basis of child mortality rates and on the number of cases of various deficiency diseases. This is a fundamental aspect of any development programme. It also falls outside the purview of the CAG.

The other feedback is about the efficiency of such programmes. This includes proper deployment of allocated funds in the right areas, and on targeted groups that are comprehensively covered by the implementation team. It is very important for such public expenditure to be monitored. Old schemes that aren’t producing results and are sucking away public money should be flagged for suspension or eventual termination. The participation of the CAG should begin right from the annual budgeting stages when funds are allocated for various sectors. It is the responsibility of the CAG to ensure that the funds are being used effectively and efficiently. This is a complex task. For it, output and output expenditure has to be defined. The costing and budgeting of this also involves the quality of output. Realistic estimates have to be made and must be compared with actual performance on an annual basis. It might not be possible for the CAG to monitor all such sectors but it can always consider taking a few select cases on a rotational basis. A public revelation of a scheme’s impact will do wonders for our democracy. In fact, it would be best if the CAG takes on itself the task of ensuring fiscal prudence in every budgetary session.

CAG is also expected to undertake more non-routine audits. It is time that it tries to expand its definition of audit from merely an account of collection and expenditure to one where socio-economic parameters are considered. India is not a corporate house. It is a country with a strong mandate for the promotion of the welfare of its people. Similarly, the supreme auditor of our country has to expand its purview to cover issues that are relatively difficult to audit, such as the effectiveness of acts and policies passed by the government.  Social audits are required which can judge how the formulation and implementation of a policy can be executed in the most efficient manner.

As another example, we have the case of poor reserve food grain storage which was in the limelight recently. Government godowns across the country store food grains in silos which are improperly constructed, have issues of excess moisture and are inadequately protected from pests. An audit report of the measure of damage inflicted on the people can act as a timely jolt to our decision makers. The crucial aspect here is that all such reports should continue being available publicly.

The accompanying ecosystem

A lot has been said and suggested about the future role of CAG in the improved governance of our country, even in this essay. CAG’s success in these respects however, depends tremendously on the ecosystem in which it operates. As stated by the present Comptroller and Auditor General in an interview, a vibrant media is a must.

This fact cannot be stated enough. It falls upon the citizens of the country and on the fourth estate to keep a vigilant eye on what’s going on around them. The media has in the recent past, exposed several cases of mismanagement and profligacy in various dealings of the government structure at the State and Central level. Some credit has to be given to the various media agencies that brought the issue to the fore and helped develop a strong public opinion against it. As is evident today, the issues that were often relegated to the backburner are now irrepressible as a result of the continual campaigns of media fronts.

As the CAG engages itself in more areas and fields, it is necessary for it to maintain a good system of collaboration with the other autonomous bodies of our democratic system, such as the judiciary and the election commission. This ensures that the process of auditing can be conducted without any friction between other statutory authorities. Also, in exceptional cases, a good relation with the other bodies expedites an impending issue more efficiently. Conflicts will surely arise in the future, as government dealings become even more complex, and involve more than one aspect of governance.

CAG should also look to be a pioneer in the web domain. It can have a public interaction forum, or a redressal portal online. People, especially those with access to the internet, are extremely pro-active in reporting issues of concern and in providing inputs and suggestions on a regular basis. The image of CAG has heightened immensely after recent events. The trust that the people have on it should be rewarded by increased activity on the web through the auditing body. Public dissemination is a valuable avenue to increase awareness and develop an objective public opinion.

At the farther end of possible measures, laws already passed should be revisited for their efficacy in remedying existing problems. A lot can be achieved by empowering CAG with more powers to investigate issues of common public interest. For instance, in the past several years India has had a large fiscal deficit. In such cases, it falls upon the CAG to ensure fiscal prudence in public expenditure. In the short term, routes such as disinvestment can help keep the deficit in check. It, however, leaves much to be desired in terms of better planning of expenditure and austerity in certain other domains. The CAG should be empowered to keep a tab on fiscal prudence so that the dangers of heavy deficits do not mar the future of our nation.

Conclusion

It is a time of great turmoil in our country. Only this time the upheaval is concerned with a changed mentality of the common citizens of India. Issues such as corruption and public accountability have taken centre stage; people pay more attention to issues of profligacy. It is under this setting that CAG takes enormous responsibility for the aspirations and hopes of a billion people. Self correcting mechanisms such as CAG rekindle the faith of the common man in the spirit and power of democracy. Earlier the concept of auditing itself was held as a negative activity done only to expose wrong-doings in a system. That perception has now come round to the opinion that the process of auditing is an indispensable tool for the health of our democracy.

India is still growing. We have our share of worries- rising inequality, poverty, high inflation and back breaking corruption. We have hope, however, and faith (to varying extents) in the power of democracy, in the safeguards that our constitution has provided us and in independent authorities such as the CAG.

Change

Looking back on the past 6 years, from the moment I joined college to the point where I sit on a gadda in a cluttered, semi-dark room with Arvind Kejriwal's voice blaring from a room next to mine, having eaten some over-buttered pav bhaaji and wondering if I'll relieve myself of the stress consuming my senses, I realize one simple, depressing fact.

I have changed.

Update: The last post in this series. 

Must Reads - 2013

I have a draft on a look-back at 2013 and how it went but it's still incomplete and very depressing. To brighten things up, I publish a list of my favourite books from last year. The list is a short one and consists of new releases and some old classics which I could read again. Of course, a comprehensive list of all the books I read would be a far more demanding exercise but I don't reckon you'll read past item number 25.

The selection process has no rigorous reasoning behind it so don't try to find one:

1. Manon Lescaut

The Story of Manon Lescaut was a book that instantly elicited gasps of horror from the highly polished French elite. It falls, therefore, in the same esteemed bracket as Lady Chatterley's Lover or Madame Bovary in that the book was banned months after being released.

It's about this promising young lad who's got a successful life ahead of him and who's much respected and admired in society and tipped for the big time...but he falls in love with Manon Lescaut. And therein lies the tragedy of his feverish attachment for a girl who cannot reciprocate the same fidelity as her lover. The book's only about 100 pages long so I'd definitely recommend a read online. And that is also why I desist from giving out the plot - it's too short anyway. 

One of the reasons why avid readers devour the classics is to experience that belittling realization - that for all the technological progress in getting to the moon and making energy from chunks of glow-in-the-dark rocks we haven't changed much when it comes to our emotions and actions. Manon Lescaut was published by Abbe Provost in the 1700's but readers will find too many parallels with contemporary novels and more importantly, with actual life.

Read the book and shake your head at the frailty of human determination in the face of baser instincts. Some things will never really change.

2. Waking the Giant

Topping my list of non-fiction books is Bill McGuire's very intriguing work on the effect of climate change on increasing the likelihood of earthquakes, volcanoes and other natural disasters. That's right, Waking the Giant is a review of the research done by scientists to discover possible links between, say, rising sea level and an increase in tsunamis. It turns out there is a constantly expanding body of literature on the subject. One of the difficulties of geology is that you can't really know exactly how the earth will behave to external forcings and it's even more difficult to judge exactly when the effects would start surfacing. McGuire does a neat job of picking analogous circumstances from the planet's geological history and builds a thought-provoking case for a consideration of the earth's sensitivities to the eventual outcomes of more carbon dioxide in the atmosphere. It's very readable and a good way of brushing up your basics on the geological periods.

3. Civilization and its Discontents

Statutory warning: Reading Freud might be injurious to your mental acuity. If you feel you're hanging over the abyss already and would rather not want to tip over, don't read this book. You'll never come back out. 

I debated over the choice of Civilization and Its Discontents on my list because it's dangerous stuff - the best time to read it is actually when you're very happy in life. There is a chance, then, that you might escape its endless mind-warping implications. I ended up including the book because I am generally surprised at the condescension most people show to Freud without ever having read a lot more than the Oedipus (or Electra) complex.

First things first. Freud was a genius. I've chosen this book because it is again a little less than 100 pages long but you only need to read it to realize how meticulous and careful Freud was in building his case. He is persuasive and uncomfortably correct when it comes to how we think of the world. He only proceeds to take those axioms to their logical conclusions. It gets difficult because you have to spend a lot of time understanding the underlying assumptions behind the ideas and then it might only end up convincing you even more.

Briefly, the book deals with the concept of the individual's inner antagonism against the concept of civilization. It dwells on how the evolution of civilization actually ended up shackling man and made him, to put it simply, sad. I'm not only talking about libido here and there's a lot more you'll end up learning including the prospect of the ultimate clash between Eros and the masochistic self-destructive human impulse. Yup, it's that simple. 

4. The Last Guardian

I wrap up with a moment of personal indulgence and inexpressible, exorbitant grief. Artemis Fowl, a childhood companion, a personal idol and an inspiration will cease to exist. Artemis Fowl...deserves a separate blog post. 

Must read series.

The book falls short of coming anywhere close to the better ones in the series but read it for the memories and a final, maddeningly fleeting glimpse of the criminal boy genius.

Worth a brief mention: I re-read Dracula. Horror has never again been so classy; A collection of short-stories by Herman Melville included the poignant tale, Bartleby; Henry James wrote several complex, detailed and indisputably beautiful short stories. Daisy Miller is a must read.

What was your favourite book last year? I'd love to know...

H

Some thoughts after today's final

After Friday's semifinal match, most people had already handed over the Norman Brookes Challenge Cup to Rafa Nadal. With reason. His supreme command against Roger Federer was astonishing and only an entrenched fool could not give some credit to the devastating, utterly unremitting Spanish bull that he is on these occasions. Federer may be a player way beyond his peak (and 32) but even his best would have had many issues in dealing with Nadal's form that night.

The final was a significant match, in hindsight. A win at the 2014 Australian Open would have brought Nadal at 14 Grand Slams, matching Pete Sampras¹ but crucially also giving the Spaniard at least two wins at every Major in the circuit. The French Open would have been next and it would take a brave man, even now, to bet against him. It's not a wild assumption that most journalists would already have begun a long, winding account of the greatness of Nadal and the way he was surely on his way to becoming the undisputed greatest of all time much before the match began.

Except none of this materialized.

Stanislas Wawrinka played the match of his life. For one hour or so, he was bludgeoning balls and had completely outplayed and outmatched Nadal. The back injury, when it came, was a factor only later. Wawrinka earned the title. Improbably he becomes the first man in over twenty years to beat the top two seeds en route to winning the Australian Open. And lest we forget, today he beat a man against whom he had never won a single set in all their previous 12 meetings.

You would still tip Nadal to win many more Majors. But the match brings many more facts into perspective. To remain injury free is just as important as playing on an incredibly high level. As much as we may generate sympathy for Rafa, his constant inability to remain fit will become as important a factor as anything else when the final verdict on him is given. Injuries cannot be slotted in the category of mere bad luck - they are as much the responsibility of a tennis player as his/her backhand. The way Nadal plays is nothing short of astounding and it's true there are very few people who can beat him when he plays his best (the only exception must be handed over to Djokovic who beat Nadal very convincingly in his magical 2011 season which stretched next year to a very close 2012 French Open semi-final between the two).

The question in my mind really goes like this: How much longer will Rafa play his attritional gruelling brand of tennis? And how much more will his body take before we see his decline?

The decline will come. Of that we can be sure. Rafa Nadal is soon to be 28 years of age. He has two years by my guess to win his Slams. His body will crumble before his game does.

If I'm wrong, then I'll have no qualms about calling him the GOAT.

1: I think's that's why he was called to present the trophy tonight in anticipation of Nadal's feat. This is exactly what happened when Federer won his 14th in the 2009 Wimbledon.

Don't read this

The blog that was to be a territory of erudition and enlightenment has metamorphosed to a sad and pathetic animal lying half dead in front of you. Wouldn't it be better to just pull the plug?

Unfortunately, I'm a sucker for second chances and the blog will regain a fresh lease. We shall again try to tap in the vast and chaotic whirlpool of stuff that I do. And we begin with some memorable words from Yeats,

Turning and turning in the widening gyre

The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere

The ceremony of innocence is drowned;

The best lack all conviction, while the worst

Are full of passionate intensity.

Yeats wrote the above poem purportedly to describe post-War Europe but notice how the lines are readily applicable for today's world. Orwell did say (and I paraphrase) that every generation is in war with the last. Deeply held conventions are uprooted mercilessly. Debates that were clinched by axioms are no longer as easy as they were before. The axioms become mere opinions, and the opposite view has to be accepted as another opinion to be respected.

Of course, it shouldn't really be all that bad. The problem that I see is the fact that people hardly use facts to argue. Their stand is based on hear-say and their arguments based on a natural extension of their thinking patterns. I have intelligent friends who believe some things should exist simply because they are logical. But they don't. It was Cicero, I think, who said that logic is the last and weakest tool of a debater because it doesn't convince people as emotions do. I have other friends who have an orthodox set of beliefs and every act is based on the verity of these "indisputable cornerstones". Their judgement attains acceptance because of their success.

Is that a contradiction for the traditional debater?

Debates are artificial environments. They're rings where there are rules to be followed. It is a cult in a broader sense. For who can say if logic is the way the human world works. It has become fashionable to use irrational behaviour in economics and Kahneman won a Nobel for proving that we don't think straight.

It is essential but challenging to raise a routine individual's level to a logical base to argue. It's impossible for the masses. Underneath the mask of good intentions is a selfish beast that feels jealousy and threat; it attacks the enemy to attain dominance. To get past all that one has to assume that one can convince the opposition to argue with logic. What if they refuse?

This isn't a far fetched concept. Here's an analogy. As the system of more equality of opportunity arises for, say the middle class in India, the more is the scope to disparage previously held notions of class, propriety and art. The obvious fuel that charges these proponents in their thinking? Success. Success essentially means money and those who have money are assumed to be far more intelligent, far wiser and far more capable of giving advice than those who aren't having so much with themselves.

(Are you now mounting the thought that I must be a failure in life and this blog post is the result of pent up disgruntlement? My point exactly.)

So, the current craze for exercise and fitness can be analyzed socially as an accessible way of attaining social acceptance within a clan of people who cannot think about learning another language (physically boring), singing (high investment; late returns) and heaven forbid, going to a museum (what?!). It's much better to go out trekking.

Is this my stand? Hardly.

I'm a disgrace to the whole concept of taking a stand. I'd love to go out cycling but I might just enjoy time in front of the canvas too. I do want to know why we're talking more about fitness these days. And I'd love to know why people put the "you're too judgemental" clause when they're being analyzed.

And about being analyzed. Can you have a frame of reference?

Can you get out of this world and judge anything? Is logic really sacrosanct?

How random was that post?