Interview with Mr. Vinod Rai
Former Comptroller and Auditor General (CAG) of India
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Mr. Vinod Rai is a former Comptroller and Auditor General (CAG) of India, known for high-impact audits on spectrum allocation, coal block allocation, PPPs, infrastructure, and social-sector programmes. He chaired the UN Panel of External Auditors and served as External Auditor to major UN agencies, including the IAEA, FAO, and UNESCO. He also headed the Supreme Court–appointed Committee of Administrators for the BCCI, overseeing governance reforms.
In the Government of India, he held senior roles including Secretary, Financial Services, Ministry of Finance and Joint Secretary, Ministry of Defence. In Kerala, he served as Principal Secretary (Finance), Secretary (Health & Family Welfare).
An alumnus of the Delhi School of Economics and the Harvard Kennedy School, he is widely regarded as a leading voice on public accountability and governance reform.
In this conversation with The Policy Edge team, Mr. Vinod Rai distils the institutional lessons from his career – from grassroots administration to public finance, national audit, global accountability, and governance reform – offering a grounded perspective on how public systems can be made more transparent, responsive, and resilient.
Kerala’s administrative culture, especially around public expectations, differed in many ways from that in Delhi or Uttar Pradesh, where you had spent your time before joining the Services. What did it demand of your administrative instincts?
Moving to Kerala, I quickly realised that the political culture was different and public expectations were sharper. Fieldwork was equally instructive: you cannot design a check dam without understanding the micro-catchment or prioritise a soil conservation scheme without understanding who is affected. These assignments pushed me to engage directly with panchayats, cooperatives, and farmers’ groups. Once I could converse in Malayalam, trust deepened, grievances became clearer, and information flowed freely.
The most defining test, though, came during a controversy over a theatrical play that some groups alleged to be against religious sentiments. Balancing constitutional freedoms with public order required transparent engagement: consulting stakeholders, explaining decisions and showing they rested on law rather than pressure. We initially permitted the play for three days, which prompted objections from one group; when restriction followed, the other side felt aggrieved. The matter reached the Hon’ble High Court, which upheld the district administration’s decision, noting that those on the ground were best placed to assess the trade-offs.
Those early years taught me that administration is a negotiation between policy and lived reality. And credibility – earned through openness, responsiveness, and language – becomes the foundation on which all future decisions rest.
Across your postings – from state departments to major Union ministries, including Finance – you have seen how funds flow through government. When departments and politicians pull in different directions, what does it take to arbitrate priorities without losing credibility on either side?
My years in departments, particularly Defence, were my first real exposure to the gap between operational needs and fiscal capacity. Defence requirements are inherently large and technically justified – modernisation, infrastructure, acquisitions – but budgets often met only 40-50 percent of requisitions. That forced us to prioritise: not everything is urgent, and not everything can be funded at once. In such situations, administration becomes the art of sequencing – deciding what must be addressed now and what can wait.
When I moved to the Finance Ministry, I saw the reverse side of the equation. Departments argue for their programmes with full conviction; each believes its mission is central to development. Elected representatives view fund flows as the primary means of honouring commitments to their constituencies. At the same time, the Finance Ministry must safeguard macroeconomic stability and stay prepared for contingencies. Balancing these pressures requires clear, consistent communication: explaining constraints honestly, defending decisions with data, and ensuring that politicians and departments recognise that rules apply uniformly. Credibility erodes as soon as decisions appear personalised.
Your tenure as CAG saw audits – from 2G spectrum to coal allocations – enter the national political vocabulary. In several instances, law enforcement agencies, such as the CBI, were also involved. How were the boundaries defined, and what role did the CAG actually play?
The biggest misunderstanding is that the CAG is an investigative agency. It is not. We do not raid premises, collect admissible evidence, or prosecute individuals. Our mandate, grounded in the Constitution, is to audit whether the government followed its own rules and whether public funds were used and effectively. The high-profile audits – 2G spectrum and coal allocations – were fundamentally about procedural compliance, and revenue-loss estimates were meant to illustrate the stakes and potential fiscal implications.
A second misconception is that CAG reports are instruments for legal action. They are not. CAG reports are placed before the Parliament for scrutiny by its committees; they do not constitute court evidence. But by bringing systemic lapses to light, they generate political and administrative pressure for correction. That is how India’s accountability architecture is meant to function.
The intense public attention these reports received showed both a strong appetite for transparency and how easily complex administrative failures can be reduced to a single number. What matters most is that an audit equips Parliament with the information it needs to hold the executive to account.
The Supreme Court–mandated overhaul of the BCCI placed you at the intersection of entrenched sporting interests, new governance norms, and a highly monetised ecosystem. How did the reforms – reshaping incentives across both the national board and the state associations – actually take hold?
Justice Lodha and his team drafted a constitution with explicit governance safeguards: conflict-of-interest rules, cooling-off periods, term limits, and transparent selection procedures. Once the Supreme Court accepted that constitution and mandated its implementation, the debate shifted decisively from policies to enforcement.
Before these reforms, the BCCI had grown into a wealthy but opaque institution where informal networks shaped many decisions. For reforms to take hold, you needed not only strong rules but an independent mechanism to implement them. The committee I chaired was precisely tasked with ensuring that the new constitution was adopted by the BCCI and its state affiliates.
Resistance was inevitable. But the combination of judicial authority, public scrutiny, and firm timelines created a robust compliance environment. With state associations, we used a calibrated mix of pressure and support – clarifying requirements, helping them adapt systems, and holding them to deadlines.
The ripple effects were substantial. Transparent governance and a rational contract structure led to significant pay hikes for Indian cricketers – whose compensation had been modest, despite their central role in generating revenue for the Board. Women cricketers also saw major gains, including higher match fees and improved compensation. Stronger governance strengthened grassroots pathways, improved financial discipline, and increased international confidence.
The broader lesson is that institutional redesign succeeds when incentives shift. Once rules are clear and independently enforced, even entrenched systems begin to change.
Your audit work with UN agencies placed you inside institutions shaped not by a single sovereign authority but by donors, and global mandates. What did that reveal about how accountability operates, or falters, in multilateral settings?
Auditing UN agencies was revealing because their operational structure is fundamentally different from national governments. Mandates are multilayered, funding is fragmented across donors, and operational authority is distributed among numerous country offices. Accountability is therefore dispersed, not hierarchical.
The challenge was less about malpractice and more about structural complexity. Financial controls varied widely across regions, project oversight depended heavily on voluntary coordination, and performance metrics were not always comparable. With no single sovereign authority, the usual lines of accountability – parliamentary oversight, executive direction, statutory audit follow-up – simply do not exist.
What stood out was the global respect for the Indian Auditors. India was repeatedly asked to audit major UN bodies because our institutional framework is seen as rigorous, independent, and reliable. Many of our recommendations – on procurement norms, risk management, and internal controls – were adopted system-wide.
And it brought me back to a broader principle I believe in deeply: probity, integrity, and accountability are not philosophical statements. They are the operating conditions of any institution – whether in Thiruvananthapuram, Delhi, or New York.
Paper files are giving way to digital ledgers and automated workflows. And there is a possibility of using blockchain-based systems in the coming time. How does it alter the transparency we can expect from public institutions, and the methods auditors must adopt to keep pace?
The shift from manual records to digital systems is the most significant transformation in public finance in decades. When district treasuries first computerised, the impact on audit was immediate: transactions were standardised, leakages reduced, and the ability to analyse patterns expanded dramatically. Auditing became less about cross-checking ledgers to interpreting data flows.
Blockchain extends that logic. It creates tamper-proof, chronological records that are particularly valuable in procurement, land titles, and welfare disbursements. But blockchain is not a cure-all. Transparency depends on the quality of inputs and the design of the system. A flawed algorithm on a blockchain is still flawed.
Digitisation demands a new skillset for auditors. They must understand system architecture, data integrity, AI-driven decision processes, and cybersecurity vulnerabilities. Audit is shifting from transaction checking to systems auditing – testing whether the design embeds risks or prevents them.
The transparency dividend is real: automated systems reduce discretion, make manipulation visible, and leave audit trails that cannot be erased. But that dividend is contingent on one thing: audit institutions staying technologically ahead of the systems they examine.
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