Right step

The Supreme Court’s order enabling the Comptroller and Auditor-General of India (CAG) to audit the account books of telecom companies is a logical extension of its earlier judgment that spectrum, which is the source of the companies’ revenues, is a scarce national resource.

The state should get the legitimate share of its revenue-sharing arrangements with companies. The companies’ objections to this would have been credible if their record of book keeping and accounting were good and above board.

There has been evidence of misrepresentation of revenues, ostensibly for no reason other than deny the government its dues.

Telecom firms are required to pay an annual licence fee of 6-10 per cent of their revenues and 2-3 per cent spectrum usage charges. So they can make substantial gains by under-reporting revenues.


One company had reported different numbers to its share-holders and to the regulator.

A special audit of the accounts of major telecom companies four years ago found that they had under-reported revenues to the tune of Rs 10,000 crore.

The Department of Telecom has sought recovery of unpaid dues of over Rs 1,600 crore over this.

Therefore, the companies have no sound reason to oppose audits by a reliable third party.

The CAG is, in fact, a neutral third party and is not a government agency.

It cannot be accused of being on the govenrment’s side, if its record is any guide.

Its fairness and expertise are well accepted. The companies’ argument that the CAG is authorised to audit public entities is only technical.

The SC’s view that the constitutional mandate of the CAG can be extended to all areas where public money is involved cannot be faulted.

The expansion of the scope of CAG audits might bring many other areas where public-private partnership exists within the ambit of the body.

They include areas like power, mining, roads, ports, gas and oil. It is already inspecting the books of Delhi’s power distribution companies.

Reliance Industries had resisted a performance audit by the CAG of the KG-D6 basin production sharing contract.

Why should companies oppose such audits if they have nothing to hide?

Audits do not hamper business because they are undertaken after the business is done.

Companies would not have invited them if they had kept their books clean and credible.

Parliament, to which the CAG reports, has the right to ensure that public money and resources are not misused and wasted.

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