CAG preparing report on impact of demonetisation, likely to be ready before budget session

The Comptroller and Auditor General (CAG) is auditing the impact of the controversial demonetisation on the Indian economy and may complete its report on it before the budget session of Parliament early next year.

However, sources said since it will not be a full-fledged Budget Session with 2019 being an election year, it is not clear if the government will table the report in Parliament.

Last week, 60 retired bureaucrats had written to the CAG, alleging that the report on demonetisation was being "deliberately" delayed to not "embarrass" the Central government till next year`s Lok Sabha elections.

Calling it an "unconscionable and unwarranted delay", they said there was no sight of the audit report on demonetisation promised by the previous CAG Shashi Kant Sharma over 20 months ago.

Sources in the CAG office said that while it was outside the ambit of the CAG to audit the Reserve Bank of India (RBI) or even the public sector banks, it was looking at issues which had a bearing on demonetisation and on the impact that arose out of the disruptive action, executed on November 8, 2016.

"We don`t audit RBI. That is out of the ambit of the audit. We don`t have a mandate to audit RBI or even the public sector banks. Issues which have a bearing on demonetisation, those are being looked at and that comes in the report which is usually tabled in the Budget Session," a source said.

He said the findings will be a part of Report Number 1, which is always presented in the Budget Session.

"But there is no full-fledged Budget Session this time. We will send it when the report is due. Whether they (the government) lay it (on the table) or not, that is a different thing," the source said.

Former CAG Shashi Kant Sharma had told the media in March last year that while demonetisation, per se, was a banking and money supply issue outside the CAG`s audit jurisdiction, but it was well within its rights to seek audit of the fiscal impact of demonetisation, especially its impact on tax revenues.

He said the audit report would cover linkages of demonetisation with the public exchequer, expenditure on printing of notes, RBI dividend to the Consolidated Fund, and the huge amount of data generated by banks and the Income-Tax Department in the wake of demonetisation.

"It is more than 20 months since the previous CAG made the above statement but there is no sight of the promised audit report on demonetisation," the former bureaucrats told the CAG in their letter.

"An impression is gaining ground that the CAG is deliberately delaying its audit reports on Demonetisation and the Rafale deal till after the May 2019 elections so as not to embarrass the present government," they said.

They added that the CAG`s failure to present the audit reports on demonetisation and the Rafale deal in time may be seen as a partisan action and may create a crisis of credibility for the institution.

"In the past, the CAG has been criticised for nitpicking and focusing on trivial issues on the one hand, and for audit over-reach on the other. But there was never any occasion to accuse the CAG of being influenced by the Government of India or having to remind it about the timely performance of its Constitutional duties," they said in the letter.

Apart from the audit report on demonetisation, the report on Goods and Services Tax is also due during the Budget Session.