Vinod Rai, the CAG Behind Astronomical Figures in 2G Case

What do we know about the man, dubbed the “courageous” CAG who exposed the alleged 2G spectrum scam?

5 min read
Vinod Rai, the CAG Behind Astronomical Figures in 2G Case

Vinod Rai has been called many things in the wake of the 2G spectrum allocation audit – a rare civil servant, a courageous man, a BJP stooge, and a commander general when it comes to conducting audits.

While his theory of 1.76 lakh crore national loss was rejected by the CBI special court today, there is no denying that he gave a new raison d'être to an otherwise toothless organisation called Comptroller and Auditor General of India.

He propounded astronomical figures that common Indians had never heard of – the Rs 1.76 lakh crore 2G scam, the Rs 10,673 billion coal scam, the Rs 141 crore Commonwealth Games scam. As his audits threw these numbers, life became difficult both directly and indirectly for the then Congress-led UPA government.

By attacking government policy and not just its expenditures, Vinod Rai may not have been going beyond his constitutional mandate, but he was clearly prioritising the CAG’s SOPs.


With Justice O P Saini, of the CBI special court, acquitting all 18 accused in the 2G spectrum allocation case on 21 December, not only have Rai’s numbers come to question, but also his role as the chief auditor.

It was, after all, on the basis of his report that the CBI launched its investigation and played a decisive role in who India voted for in the 2014 General Election.

So what do we know about the bureaucrat, who Forbes magazine dubbed as the "courageous" CAG.

From IAS To "Courageous" CAG

An IAS of the 1972 batch, Rai began his career with a posting in Kohima, Nagaland.

In Nagaland, according to the IAS officer from Kerala, Rai showed signs of “unusual independence” for someone his age, reads a Mint article.

Rai was then moved to the Kerala cadre of the IAS, where he spent three decades, with his “most significant” field posting being the collector of Thrissur.

I landed at the Thrissur railway station burdened by a steel trunk, a bedroll and a tennis racquet, over 30 years ago. When I departed after my stint as district collector, I had acquired a wife...three children (and) household articles to fill more than a truck.

Rai in an interview

Rai was then serving his central posting under the Finance Ministry, and following his retirement from IAS in 2008, it was P Chidambaram, the then finance minister who appointed him as the CAG.

Little did Chidambaram know that in months to come, he would question the appointment of Rai as the watchdog of the government’s accounts.

It was during his six-year tenure that the CAG blew the lid off what came to be known as the 2G scam, Coalgate scam, CWG scam, lapses in Air India Ltd ’s acquisition of aircraft, holes in defence spending, the sale of sugar mills in Uttar Pradesh, and anomalies in the award of contracts to exploit natural gas reserves.

Most of these audit reports had a direct or an indirect impact on the functioning of the then Congress-led UPA government.

The Business Standard, quoting political observers, reported that “this was the first time the apex auditor had shown the courage to take on the mighty”.


Pushing for Reforms Within CAG

One of the first reforms that he pushed for was not to focus on audit of every government expenditure, but on the "outcome" of such expenditures.

"We no longer focus merely on audit of government expenditure. Our focus is on the outcome of such expenditure" Vinod Rai said in an interview.

Not just the telecom spectrum audit, but the auditing of the capital expenditure of Reliance Industries Ltd’s (RIL’s) K-G Basin gas fields, the Commonwealth Game expenditure were all reportedly pursued with this rationale.

“So, rather than simply conduct mere compliance and financial audits of 64,000 government entities, Rai had been increasingly gearing — and empowering — his 48,000-strong organisation toward more thematic audits”, wrote Economic Times .

"If I'm losing Rs 100 or Rs 1,000, it doesn't matter when compared to the loss of Rs 2,500 crore," Rai told Economic Times in May 2011.

He reportedly wanted CAG to be able to "inspect" all government expenditure, unlike earlier when they did not have access to those organisations that were not "strictly government" establishments.

Under Rai, the CAG became more media-savvy, with him holding a press conference, every time he submits a report to the Parliament.

The former CAG also oversaw the creation of small booklets on his various reports, akin to Enid Blyton's “Noddy” books, for the better understanding of "audit" for parliamentarians.


The 1.76 Lakh Crore, the Result of a Forced Signature?

Forbes described Rai as being among that "rare breed of civil servants who knows how to get work done in the government."

TN Chaturvedi, a former CAG said that he has been "correct in his approach" in auditing the 2G spectrum allocation.

He has been correct in his approach, keeping with his general tenor. His job is to show a mirror to the government, which he has done, in keeping with the way he has been in his career.

TN Chaturvedi to Economic Times

However, the Mint reported in 2011 that RP Singh, the man who headed the CAG team that audited the 2G spectrum allocation, “did not have a hand in compiling the final report.” Singh reportedly asserted that the report was “forced” on him and that he was not the one who put the “figure” of Rs 1.76 crore in the report.

Rai’s astromomical figure, again, did not go uncontested.

Notably, the then Union Minister Kapil Sibal drew flak when he made a statement back in January 2011 that the 2G spectrum allocation had caused no losses to the government.

But after the verdict on Thursday, Sibal lashed out at those who had criticised him for his ‘zero loss’ statement.

Those who criticised me for my ‘zero loss’ statement should also apologise. I speak after giving a lot of thought, not without any basis.

Kapil Sibal

Post his retirement in November 2013, Rai still dons many hats. He is the chairman of UN Panel of External Auditors, honorary advisor to Indian Railways, and was most recently appointed the president of COE of the BCCI by the Supreme Court. In February 2016, Rai was appointed the chairman of Banks Board Bureau (BBB), the body which advises the government on top-level appointments at public sector banks and ways to address the bad loans.

Rai graduated from the Delhi University and holds a Masters in Public Policy from Harvard. Incidentally, he was a student of Dr Manmohan Singh, whose cabinet he went on to shake.

(With inputs from Business Standard, Economic Times and Live Mint)

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