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Chidambaram differs with CAG suggestion of opportunity costing

Press Trust of India
Sep 18, 2012 at 02:39am IST

New Delhi: Differing with CAG's suggestion of opportunity costing, Finance Minister P Chidambaram on Monday said government is not in the business of trading commodities, but facilitates allocation of resources for generation of more power and production of more steel and cement for common good.

When asked about CAG's method of opportunity costing, which means that a commodity should be traded at the market price, he said if prices of coal were higher, costlier would have been the end-use products, impacting buyers.

"But if you are looking at opportunity cost, government is not in the business of trading coal or trading spectrum. We are not allocating these things in order to trade in them," Chidambaram said.

FM differs with CAG suggestion of opportunity costing

Chidambaram said if prices of coal were higher, costlier would have been the end-use products, impacting buyers.

"We are in business of allocating resources such that the larger people purpose is served, so that there is more power, more cement, more steel, there is more capacity for telecom. So, I am not very sure how the theory of opportunity cost... with the government's allocation of resources," he added.

"If the coal had been higher priced, the ultimate price would have to be borne by the buyer of cement, the buyer of steel, the buyer of electricity. Someone has to pay," he said.

Government auditor CAG recently said private companies might have benefited to the tune of Rs 1.86 lakh crore from 57 blocks allocated to them without auction.

Chidambaram said the task of the auditing body should be confined to looking at the "efficiency and integrity of the government expenditure" and to make "passing comments" if there is any loophole in the policy.

"Point is CAG is to look at the efficiency and integrity of the government expenditure. The UK Act clearly says that the policy objectives of the decision of the government cannot be questioned by the CAG. Of course if the CAG wishes to make a passing comment with the policies wrong, that is acceptable," Chidambaram said.

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