IASbaba’s Daily Current Affairs – 1st October, 2015

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IASbaba’s Daily Current Affairs – 1st October, 2015

INTERNATIONAL

South Asia important for India geo-politically, but not economically: CEA

Economic integration with South Asia is not a top priority for India as its economy relies more on other regions: Chief Economic Advisor, Arvind Subramanian.

Why South Asia important geo-politically?

• South Asia has several important, growing markets, but looking at India’s current pattern of trade, India’s biggest markets are international
• Regional economic integration in South Asia is not a first priority for India.
• India’s economic fortunes are tied to the rest of the world.
• Geo-political considerations make South Asia important for India.

Drawing Lessons from ASEAN and NAFTA: The key differences

1. The levels of development in both regional groupings are very different.

Around 1990, US per capita GDP was 10 times that of Mexico. The difference in per capita levels is not that much in South Asia

2. NAFTA was created by Mexico looking to use the US as an anchor economy.

India is that anchor or if its South Asian neighbors want it to be that anchor depends on the choice neighbors will make out of two Asian giants India and China.

3. In NAFTA, Mexico got a certainty of access to the US’ markets in return for it liberalizing its economy considerably.

The situation is different here, because it will involve a situation where all the economies will have to open up to each other.

The certainty of access angle does not apply.

4. There was no competition for the US to be the anchor in NAFTA. For South Asian integration, Sri Lanka and our other neighbors have China as an alternative

Issues that hinder South Asian economic integration:

• The problems of external politics impeding economic integration,
• The problem of domestic political ramifications of opening up markets to India’s South Asian neighbors

Way Forward:

To address the problems simultaneously

• Boost economic trade between countries in the region
• Use soft options to smoothen the political wrinkles surrounding the issue.

Connecting the dots:

• What steps should India take to strong hold the geo-political position in South Asia?
• What challenges will India face in becoming South Asian anchor economically? What steps should be taken to address these challenges?

NATIONAL

Empower, not weaken the CAG

Why CAG in news?

A recent proposal to curtail the powers of the Comptroller and Auditor General of India runs contrary to national and international conventions. Rather, it is the duty of both the executive and the legislature to strengthen this constitutional office.

• It has been advocated recently that the time has come to make our national auditor, the Comptroller and Auditor General of India(CAG), accountable to Parliament through a constitutional amendment.
• This is a strange demand and such a demand had never been articulated in the past.
• On the other hand, there have been demands for strengthening the Audit Act to further empower the CAG.

In past:

The CAG’s office initiated an amendment to the Audit Act during the tenure of the first United Progressive Alliance (UPA) government.

• To enable a comprehensive audit of public funds and bodies rendering public service,
• For a structured and time-bound response to the audit reports.

But, CAG did not receive a positive response from the government.

Delayed tabling of CAG reports:

• There is a view that the CAG needed to restrict audit primarily to the compliance of rules and regulations
• The CAG’s reports on quite a few occasions were not being presented to the legislatures concerned on time.
• Thus, there was a clear undermining of the constitutional system, impeding the accountability of the executive to the legislature by not allowing the CAG to perform his or her constitutionally mandated role and serve Parliament adequately.
• The accountability of the executive to the legislature, and the legislature’s ability to adequately work on the audit’s outcome was impeded.
• Such a feedback and accountability mechanism is an essential component of the CAG’s accountability to Parliament.

Present Status:

The present constitutional structure ensures independence of the CAG to go into the entire gamut of audit functions where public interest is involved.

In the present milieu of competing displays of political opportunism, any amendment that has the scope to constrict CAG’s functional role should not be encouraged in the national interest.

Way Forward:

• It is the duty of both the executive and the legislature to uphold the CAG’s ambit, and in no way fetter it by a constitutional amendment.
• The CAG has only to be provided adequate institutional support in order for him or her to discharge this vital, constitutionally enshrined role.

If at all a constitutional amendment is necessary, it could be to amend Article 149 of the Constitution and to explicitly indicate, but in the broadest possible manner, the scope of the CAG’s responsibility. The Audit Act, suitably amplified, could supplement the proposed amended constitutional provision.

About CAG:

• CAG auditsall receipts and expenditure of the Government of India and the state governments, including those of bodies and authorities substantially financed by the government.
• The CAG is also theexternal auditor of Government-owned corporations and conducts supplementary audit of government companies, i.e., any non-banking/ non-insurance company in which the state and Union governments have an equity share of at least 51 per cent or subsidiary companies of existing government companies.
• The reports of the CAG are taken into consideration by thePublic Accounts Committees (PACs) and Committees on Public Undertakings (COPUs), which are special committees in the Parliament of India and the state legislatures.
• The CAG is also the head of the Indian Audit and Accounts Department, the affairs of which are managed by officers ofIndian Audit and Accounts Service.

Term of CAG:

Appointed for 6 years or 65 years of age, whichever is earlier.

Connecting the dots:

• In the light of recent controversy over curtailing the power of CAG. In your opinion should CAG be empowered or weaken in present context? What steps should be taken to ensure increased accountability of CAG?