a recent Supreme Court (sc) order on monetary compensation for a forest that is cut for non-forest purposes has raised more questions than it answers. Is the Central fund that an earlier order wanted set up to collect this money even constitutionally acceptable? What are the custodial arrangements to set up the Compensatory Afforestation Management and Planning Authority (campa), the body that will control these funds?
"The order does not properly address the issues I raised in court," says constitutional lawyer K K Venugopal, referring to an earlier hearing in May 2005. Arguing on Kerala's behalf, he had said since campa lacked the authority of a law passed in Parliament -- and so, its audit could not automatically be entrusted to the Comptroller and Auditor General -- it is "in the teeth of the constitutional provisions to safeguard these monies". This means holding money in the fund is unconstitutional.
Most of the 70-page sc order issued on September 28, 2005 by Y K Subharwal, Arijit Pasayat and S H Kapadia, is in response to numerous affidavits concerning the basis for charging of net present value (npv) of forests and pleas for exemption submitted by various ministries, state governments and public sector undertakings. The order also calls for an expert committee to look into how to calculate npv. The main problem though, lies in what the order does not deal with.
According to Aparajita Singh, an sc lawyer working with amicus curiae Harish Salve, "the order gives additional reason for why the fund need not be part of the Consolidated Fund: npv is not a tax, but a fee, levied under entry 47 of List iii of the 7 th Schedule of the constitution and the fund is set up as part of 'economic and social planning' which is entry 20 of the same list".
But Venugopal and others in the Union ministry of finance (mof) claim in its present form, campa fund lacks accountability and financial discipline. "They have simply found a way to bypass the consolidated fund and allow for a body which has no parliamentary or legislative control to manage thousands of crores," says Venugopal. "Now they are saying they will have it audited, but the solution proposed is not adequate," he points out, referring to the proposed internal auditing and "corporate accounting based on double entry system".
Meanwhile, mired in controversy, campa is still to be formed and npv payments made -- amounting to about Rs 1,000 crore according to the Union ministry of environment and forests (moef) -- are lying idle in accounts at the state level.
Anurag Bajpai, assistant inspector general of forests, moef, says this is because the Cabinet approval is awaited. The question is why was the approval sought just a month and a half ago when the notification on campa came out a year and a half earlier? R P Kapoor, principal chief conservator of forests, Rajasthan, says this issue was raised by the financial advisor to moef in a meeting on campa about a year ago. In fact, it appears that in its hurry to abide by sc 's directions, moef issued a notification to set up the body "without due diligence".
According to mof sources, "the notification is not worth the paper it is issued on without putting in place a structure which would give effect to the body". A notification requires Cabinet sanction for which a Cabinet note detailing the custodial arrangements -- for banking, expenditure, auditing -- needs to be prepared.
Without custodial arrangements in place, the fund cannot be operationalised in the way it was envisioned, says former financial advisor to moef Niranjan Pant. "This sort of action on the part of moef will only serve to compound the problem. The court order does not say dispense with due diligence. They are not serving the court's order like this," he says.
Venugopal says he "assumed that there would be a subsequent hearing, but the order comes without a discussion on the issue of financial control." It is feared that bypassing the Constitution on campa fund may lay open huge sums 'held in trust for the people' to possible financial indiscipline.