Air India-Indian Airlines merger under CAG lens

After oil and telecom ministries, it’s now the turn of the aviation ministry to be under the lens of the Comptroller and Auditor General’s (CAG) special audit.

The apex auditor is busy preparing a report on the Air India-Indian Airlines merger and modernisation of airports through public-private-partnerships (PPP), both carried out during the previous term of the United Progressive Alliance (UPA) government.

While the outcome of the CAG investigation is not clear, the UPA government has been at the receiving end after each CAG report.

While the audit into 2G spectrum pointed out irregularities in awarding airwaves to telecom players, the draft report on production sharing contracts in gas exploration is generating controversy after leaked documents suggested that the government auditor had expressed reservations over some of the oil ministry’s decisions, as it may have resulted in providing undue favours to private sector partners.

Incidentally, special audits on the three instances were initiated by the CAG on government directives.

According to official sources, the Air India-Indian Airlines merger is one of the developments being looked into by the CAG. The performance of PPP in airport modernisation is also being looked at on a pilot basis.

“We are looking into the airlines merger. In the case of airport modernisation, we have been asked to audit just one airport as a test case,” a CAG official said.

Being a public sector entity, Air India comes within the purview of CAG audit. These special audits are often conducted over and above the routine annual audits, mostly when referred by the government.

For instance, CAG took up the audit of production sharing contracts of oil exploration blocks after M S Srinivasan, then secretary in the ministry of petroleum and natural gas, requested for it. The ministry had wanted special audits of specific blocks, as large stakes of the government, in the form of royalty and profit, were involved in these deals.

Similarly, audit of the Air India-Indian Airlines merger is expected to bring in clarity on the benefits or losses derived from it. The official declined to give the current status of these special audits.