Does the CAG leak defence secrets? - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Monday 23 August 2010

Does the CAG leak defence secrets?

Air Chief Marshall PV Naik, inaugurating the Phalodi air base on 6th April 2010. From the infrastructure in the photo, this was clearly a hurried job!

The first IAF fighter landing at Phalodi after the inauguration. The runway was still not fully prepared then. Was it the coming CAG report that hastened the inauguration?

by Ajai Shukla
Business Standard, 24th Aug 10

Perhaps this question relates to how inept, corrupt and incompetent the defence establishment appeared in the audit reports that the Comptroller and Auditor General (CAG) tabled in parliament on 3rd August. Within days, the Times of India carried a news report about the military’s secrecy concerns about the CAG’s public assessment of its operational readiness.

The military was particularly incensed, or so ToI suggested, by the CAG’s exposure of its poor readiness for war. The report hints darkly that the enemy would gain strength from the secrets that the CAG had unthinkingly leaked. Rather than going public about the decrepitude of our national defence, complained an anonymous military officer to the ToI, sensitive CAG reports must go only to “a select few of decision-makers” (sic).

This insidious argument raises important questions. Are there tangible benefits from our openness about military readiness? Does the public need to know what the CAG unearths? And do our potential military adversaries, China and Pakistan, pore over the CAG’s reports to discover secrets they do not already know?

To put the military’s complaints in context, remember that it is highly sensitive to public criticism. With its holy-cow status under enthusiastic attack from an activist, and often sensationalist, media, the uniformed community reacts to criticism with a defensiveness that is baffling in India’s most respected government organisation. As part of a largely unaccountable government, the military’s growing siege mentality translates into a reflexive impulse to shut out public scrutiny by citing secrecy.

That notwithstanding, there is a reason why the military --- comprising of 16 lakh citizens drawn from an increasingly corrupt societal milieu --- remains a functional and honest organisation. The credit goes to a finely structured system of checks and motivations. The motivations are mostly internal, such as the institutional process of imbuing recruits and cadets with the ideals of izzat (self-respect); imandari (honesty); and wafadari (loyalty) from the day they join. But equally important is the system of checks and balances, which includes multiple layers of audit, culminating in that of the CAG. Diluting CAG oversight, especially the audit of functional performance, would disturb a balance that has evolved over time.

To examine the questions raised let us look at two of the audits tabled by the CAG on 3rd August. The first case details how Defence PSU, Bharat Electronics Limited (BEL), obtained an MoD order to indigenise radars in India, but then simply bought them from a foreign vendor and sold them to the MoD for a premium.

That DPSUs like BEL don the cloak of “indigenisation” to obtain preferential MoD orders is an open secret within the military, the MoD and the analyst community. Soldiers joke that the only BEL-made part of an ostensibly BEL-made radar is the “Made by BEL” plaque that covers the original “Made in France” stamp.

Proving that is difficult and the MoD and the DPSUs stonewall any questions. But this CAG audit painstakingly documents how the MoD paid BEL Rs 870 crore for 22 radars in 2007, Rs 41.39 crores more than the cost of buying from the original manufacturer, Italian company Selex. The rationale for this largesse: indigenous production. But then, within three months of that contract, BEL ordered 13 radars from Selex, in CKD (Completely Knocked Down) kits, “in gross violation of its own commitment of manufacturing these radars indigenously”.

The MoD, unusually, has admitted that BEL has effectively fronted for a foreign vendor and handsomely profited from it. What use would have been served by placing this audit before the MoD, when the ministry itself is a part of this charade? The CAG report has provided a public tool (howsoever apathetic our jaded janta and media might be towards it) to pressure the government for a level playing field in defence production.

A second CAG audit dissects a two-decade delay by the Indian Air Force (IAF) in building and commissioning a strategic airbase at Phalodi, near Jaisalmer. Sanctioned Rs 29 crores in 1985, little happened until 2000, when the IAF reinvented Phalodi’s importance. This time Rs 227 crores were sanctioned --- 8 times the original cost --- including Rs 25 crores for fast-tracking the project. Then apathy again replaced urgency. By Sept 09, only Rs 85 crores had been spent. The runway, a key asset, was only 71% complete.

What happened next illustrates the power of such an audit. With a CAG indictment imminent, the Air Chief hastily flew to Phalodi in April 2010 to “inaugurate” the incomplete base. The official press release on that occasion falsely claimed, “the base is ready to undertake all types of operations of IAF.” In fact, as recently as Sept 09 (the CAG report notes) essential facilities for an air base --- radio communications, bomb dumps, blast pens, etc --- had not been sanctioned, leave alone constructed. And few noticed that the IAF photos of Phalodi depicted a runway without lighting.

The sorry Phalodi tale is hardly news to Pakistan. Commercially available satellite imagery would have kept Pakistani intelligence fully informed about the IAF’s sluggishness on what it had advocated as an essential counter to Pakistan’s stepped up construction of airbases across the border. But this is news to the Indian taxpayer. And, importantly, the CAG audit has goaded the IAF into action; once populated, Phalodi will quickly be completed.

CAG performance audits are an essential step towards greater public scrutiny of India’s closeted and hidebound defence establishment. They supplement the MoD’s own Annual Report and the reports of parliament’s Standing Committee on Defence, in throwing light on the handling of a massive chunk of taxpayer money. Whether the public and the media can use this information to pressure the MoD into positive action is another question.


  1. Desire for secrecy by the inefficient and corrupt is an old phenomenon and is normally rejected by the people in mature democracies. SO should we!

  2. CAG has been criticised everywhere on public forums and personal interviews, but CAG has done a very nice job in exposing the pathetic condition we are facing and some of organisations putting veil on original position we stand. Atleast now some of organisations will try to prevent the lapses put forward by CAG.

  3. Constitutional bodies like the CAG are essential in a democracy.Seeing the level of accountability and efficiency being in India, it is desirable that such bodies function effectively.Even if at times the CAG reports appear to be a bit exaggerated or alarmist, they serve a vital function. They give the babus and govt a kick in the butt with at least the hope that they be goaded to rectify some of the issues highlighted. In our country until the problems comes on our head nobody bothers. Look at the CWG games fiasco.The Ministry of Sports and Govt. are taking steps now.What were they doing all these years which passed by? Was the fact that CWG are to be held in Delhi revealed to the govt. in 2010!
    Our enemy will not attack just because some of our weapons are not in order.They will attack when they see us a country with a weak leadership,weak institutions and without resolve.Our forces will do their duty with whatever they have,they have no choice.But we hope that the babus and politicians who do havethe power to make choices take the CAG reports seriously.

  4. Those news are really upsetting. CAG is doing good for the taxpayers of India. At least we are aware of what unwanted developments are going on in the MoD and our defense procurement.

    The main thing is that in India common people are loosing their faith on gentlemen(?) sitting on the respectable position. They have forgotten the honesty towards their job and lack the ethic that they should have.

    In the morning you will wake up and see the newspaper or browse the internet, your mind will fill up with so much negative feeling.

    Today, the CAG is doing good, but what if tomorrow they get compromised. Where we put our hope of punishing the culprit ?

    Unless until we start showing honesty and sincerity towards our responsibility, irrespective of the person or job what we are doing, India can never prosper.
    Otherwise we will be the same poor, hungry Indian. Its time to wake up our individual ethic.

  5. I like your usage of urdu words...." izzat (self-respect); imandari (honesty); and wafadari (loyalty)". Does hindi have similar words?

  6. MPatel:

    This is not my choice of words. These are the words that the Indian Army uses.

    For your information, the language that the Indian military communicates in is not Hindi, but Hindustani. It contains a happy mix of Hindi, Urdu and a sprinkling of English.

    That's not "Indian" enough for you?

  7. CAG is a must in a democracy like India.
    Though as you said it is only the first step. the nest steps are unfortunately absent. we seem to prefer some shouting after each CAG reports then forget all about it.

    I remember the last one where army apparently bought golf carts in the name of reconnaissance . no idea what happened after the report.

    can you make a report on civil-military relationship in china, since you are interested in china?

  8. very well written sir...

  9. This is absolutely shocking. I am feeling so let down by our Armed Forces.

  10. Ok so CAG has given its report, what is next action ? who will take action on that ?? GOI ? Whats use of CAG when no action is taken on their report. Its just frustrating for people of INDIA.

  11. Well Done. This article should clear any animosity in the people who wish well for INDIA.

  12. "With its holy-cow status under enthusiastic attack from an activist, and often sensationalist, media, the uniformed community reacts to criticism with a defensiveness that is baffling in India’s most respected government organization."

    Like that line. Good that there are Ajai Shukla's to rightly attack the holy cow ! Watch-out for Hindutva boys! You just enraged them by attacking a cow :)

    यूँ तो हम Pro-BJP हैं पर अगर अजय जी आप डिफेन्स मिनिस्टर बनने के लिए चुनाव में खड़े रहे तो हम Congress को वोट दे देंगे !

  13. Really nice and well formed article Ajai Sir. CAG should have its report. If i dont do my job properly that should be my problem not the auditor's problem, who is trying to do a good job.

    Defense is corrupt too. I have a friend who is a contractor there, he tells us things which are not easy to believe.

  14. MoD Babus and Defense PSU parasites sucking our tax payers blood should be charged with criminal negligence and hanged to death. Incompetency in handling our Tax Money is not an excuse, It is a Crime.

  15. Other countries have military-industrial complex. India has politician-babu-military complex that is far more dangerous and completely useless.

  16. At least someone is reporting this. In China, they are crowing about their military but it is a sack of shit. Soldiers still run around with red flags on the battlefield and communicate with metal whistles. They spend 75 billion a year that goes to generals with 5-6 drivers which they rent out to businessmen who want to skip traffic jams, and then use their aides to oppress the farmers to sell their and to churn a profit.

    75 billion and what do they have? they spend twice as much that on internal security as well.

    one day, a common sergeant will look up and say, "simi lan chiao" and then the fun will start.

  17. Is there anyway to talk only to your own people. Plain NO. So good job with your work but hand over the work only to the govt.

  18. One can blame the civilian leadership and bureaucrats till kingdom come but its imperative that we also recognize and respond to the growing levels of nepotism, corruption and lethargy that seems to afflict our armed forces. The uniform cannot and should not act as a smokescreen for the ills that plague the armed forces. After all as someone has said - sunlight is the best disinfectant.

  19. Ajai,

    In my interaction with the Armed Forces i see a common trend - absolute lack of introspection. Any mistakes, issues, delays are always the fault of
    -Lazy MOD
    -Useless DRDO
    -Good for nothing DPSU
    -Civilian media is always to blame for sensationalizing things

    I am no fan of the blunderbuss CAG but dont you think the defence services need to open up more, and realize they are part of the problem and not just victims.

  20. @Arun Urs!! You are absolutely on the dot and that is what Ajay is saying here. If armed forces really believe and practice Izzat Imandari and Wafadari then why should they be worried of the media glare????

  21. i agree that CAG is doing a good job or else these babus and netas are good enough to bankrupt the system....CAG should also spare sometime on Defence Accounts of the most corrupt if not the most............

  22. What beats me is inspite of the years of work done in this field and the infratructure to support the world's military leave aside india's, the DPSUs and OFB have nothing to show. The same guy who is responsible for giving orders is the one responsible for running these so called Navratnas. Thats a joke in itself. Why not put these institutions under the Ministry of Industries and then let them be accountable for their output. Ensure a level playing field for the Private companies who no doubt have profit as their motive but will atleast ensure the quality fo output. They know that without performance their products will not be bought whereas that is not the case with these government companies. I hope that there will come a Defense Minister , a Finance Minister and a Prime Minister who will one day stand up and take all of these guys to task. Till then carry on Ajai. Always a pleasure reading your blog.

  23. One major difference in this year's report has been explicit naming of names, not just the systems or weapons but also the firms involved. I wonder why this is not being discussed.
    While a serious defence watcher could have previously easily able to make out which system was being talked about, this level of transparency leaves the firms a bit more vulnerable!
    I am also against the level of info that lead to serious defence watchers guess which systems were being talked about!

  24. Dear Colonels,

    "Not playing by rules and not expending as per laid down regulations" is the biggest bane of the country at every level and in all deptts. Rule of law is still a far cry>

    In a parliamentary system of democracy such as ours, it is the representatives of the people who exercise (or should be exercising) what is called as "Political Control" over the executive (govt). Besides legislation and the right to seek explanations, the mainstay of political control is "Financial Control". Not a penny more than approved and expenditure only on items approved, expenditure as per laid down financial laws and regulation is the mantra of this control.

    It is there that the CAG being a Constitutional authority, not being under Executives, discharges its responsibility by audit which is finally tabled in the Parliament.

    This a very sacred constitutional duty. This forms the basis of right to know and right to control of the Parliament over the Govt. It should not be derided. So far as the position of Govt is concerned it should either make Defense Budget as "Not Auditable" such as many other items or fully accept the consequences of the budget audit. It is not the fault of the CAG that he reveals every thing what is required to be audited. He would, in fact, fail in his duties if he does not.

    Alas ! where tha CAG has been failing in the Country mostly is where most of the money lies. Nowadays about 70 per cent of union budget is spent in the states and local levels. For examples, NAREGA and other bust schemes, other schemes of the central govt being managed at district level.

    These "vast money areas" unfortunately are out of the reach of the CAG ans he can go to more than 600 districts. That is where the bureaucrats and local politicians make the killing. That is where the Daridra Narayan's welfare is destroyed and he pushed more down the ladder.

    CAG's proposals to go down to district level so far have been effectively blocked by the bureaucracy and the politicians.

    We must, in fact empower the CAG much more in a corrupt system like ours. At least some deterrence would be obtained.


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