TAG: GS 2: POLITY AND GOVERNANCE
THE CONTEXT: The Comptroller Auditor General (CAG) of India has shed light on two projects initiated by the Union Ministry of Environment, Forest and Climate Change (MoEFCC), amounting to a cost of Rs 4.47 crore to the public exchequer.
EXPLANATION:
- The report underscores significant procedural lapses leading to the failure of these projects.
Project 1: Development of Polyols from Plant-based Oils
- Background and Approval:
- MoEFCC approved a two-year project in 2013, costing Rs 2.58 crore, for the development of polyols from plant-based non-edible oils.
- Collaboration with the Indian Institute of Chemical Technology (IICT), Hyderabad, and an industrial partner.
- Procedural Lapses:
- Lack of a signed memorandum of understanding (MoU) defining responsibilities.
- Delay in signing the bipartite agreement between IICT and the industrial partner until November 2017.
- Absence of intermediate milestones and deliverables.
- No financial safeguards, despite recommendations from the project monitoring committee (PMC).
- Project Outcome:
- IICT developed technology for polyols, but the industrial partner failed to install the pilot plant.
- MoEFCC released payments despite non-completion, resulting in a total expenditure of Rs 1.04 crore.
- Ultimatum and Conclusion:
- MoEFCC issued an ultimatum in January 2023 for project completion, leading to its failure.
- Industrial partner’s inability to establish the plant resulted in the project’s non-commercialization.
Project 2: Plasma Technology for Waste Destruction
- Project Details and Approval:
- MoEFCC approved a project in 2010 costing Rs 6.26 crore for plasma technology-based waste destruction in Gujarat.
- Foreign collaboration, with Rs 3.71 crore as grants-in-aid from MoEFCC.
- Procedural Lapses:
- Change of foreign partner in 2013.
- Misuse of ministry funds (Rs 1.6 crore) for RF torch purchase by the project proponent.
- PMC meetings not conducted for five years (2015-2020).
- Financial Mismanagement:
- Expenditure of approximately Rs 2.42 crore on non-approved items such as building, land development, salary, etc.
- Lack of monitoring by PMC and absence of legal agreements led to the project’s non-establishment.
- Project Failure and Ultimatum:
- PMC and Central Pollution Control Board deemed the project in poor state during a trial run in September 2022.
- MoEFCC issued an ultimatum in January 2023 for project completion, which remained unfulfilled.
Overall Implications: Financial Burden and Lack of Accountability
- Financial Impact:
- Unnecessary expenses of Rs 3.43 crore due to the failure of both projects.
- Specific mention of Rs 1.6 crore spent on the RF torch in the plasma technology project.
- Lack of Monitoring and Legal Agreements:
- Highlighting the absence of clear responsibilities, penalty provisions, and legal agreements.
- PMC’s failure to monitor and guide project progress contributed to the overall failure.
Comptroller Auditor General (CAG):
- CAG is an independent authority under the Constitution of India.
- He is the head of the Indian audit & account department and chief Guardian of public purse.
- It is the institution through which the accountability of the government and other public authorities (all those who spend public funds) to Parliament and State Legislatures and through them to the people is ensured.
Constitutional Provisions for Office of CAG:
- Article 148 broadly deals with the CAG appointment, oath and conditions of service.
- Article 149 deals with Duties and Powers of the Comptroller and Auditor-General of India.
- Article 150 says that the accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the CAG, prescribe.
- Article 151 says that the reports of the Comptroller and Auditor-General of India relating to the accounts of the Union shall be submitted to the president, who shall cause them to be laid before each House of Parliament.
- Article 279 –Calculation of “net proceeds” is ascertained and certified by the Comptroller and Auditor-General of India, whose certificate is final.
Annual audit plan as approved by CAG’s office is implemented in the field offices. The office conducts three types of audit viz., Compliance Audit, Performance/Theme Audit & Financial Attest Audit.
- Compliance Audit: Compliance audit is an assessment as to whether the provisions of the applicable laws, rules and regulations made there under and various orders and instructions issued by the competent authority are being complied with.
- Performance Audit: Performance audit is an independent assessment or examination of te extent to which an organization, programme or scheme operates economically, efficiently and effectively.
- Financial Attest Audit: Financial attest audit is primarily concerned with expression of audit opinion on a set of financial statements. Financial attest audits are designed to reduce the possibility of a material misstatement in a financial statement and, therefore, assure credibility to such statements.
Conclusion: Urgent Need for Improved Oversight and Accountability
- The CAG report emphasizes the urgent need for enhanced oversight, legal agreements, and meticulous monitoring to prevent procedural lapses, ensuring the efficient utilization of public funds in future projects initiated by MoEFCC.
- The lack of these critical elements has resulted in financial losses and the failure of projects with potential environmental and technological benefits.