CAG raps external affairs ministry for losses in OCI card scheme

The use of incorrect exchange rates in fixing fees for Overseas Citizenship of India (OCI) cards by Indian missions in Europe and the United Kingdom resulted in a loss of ₹58.23 crore for the government, the country’s audit watchdog said on Tuesday.

The comptroller and auditor general (CAG) said in a reported presented to Parliament that even as the external affairs ministry revised the rates for issuing fresh OCI cards, 17 missions in Euro Zone countries did not make the change, while three missions in the UK adopted a lower exchange rate for charging the OCI fee, thereby resulting in the loss.

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The external affairs ministry, while admitting the CAG’s observations, said the mission abroad are responsible for revising the OCI card fee in terms of local currency based on rate of exchange (RoE) fluctuations. The ministry contended “a notional revenue loss” had occurred as the missions didn’t implement the revised RoEs “due to misinterpretation of the instructions that fixation of OCI scheme fee is guided by” the union home ministry.

The CAG dismissed the stand taken by the external affairs ministry and mentioned in its report: “The contention of the ministry that the loss of revenue was notional is not correct since the failure of the missions/posts to revise the fee structure for the OCI scheme in time and in accordance with prescribed norms resulted in loss of revenue of ₹ 58.23 crore to the government.”

The CAG put the cumulative loss in the Euro Zone– a currency union of 19 members of the European Union (EU) that have adopted the Euro – between April 2017 and March 2020 at ₹16.26 crore. The issuing of fresh OCI cards at a lower exchange rate in the UK between February 2017 and March 2020 resulted in the loss of ₹41.97 crore, it said.

The watchdog pulled up the Indian missions for failing to take cognisance of the directions of the home and external affairs ministries about fixing the fee for the OCI scheme, which stated that the methodology for deciding the fee in the local currency was to be the same as that for determining visa fees.

The CAG also said the external affairs ministry incurred “infructuous” expenditure of ₹41.93 crore on purchasing and renovating and refurbishing two properties for setting up Indian Cultural Centres (ICCs) in Paris and Washington. The ministry could not get both properties renovated in time for use as cultural centres, it said.

The centre in Paris was acquired in 2011 while the one in Washington was purchased in 2013. “Due to inherent deficiencies, such as significant structural concerns and issues of encroachment at ICC Washington, the expenditure incurred on purchase of property along with its renovation/refurbishment aggregating ₹41.93 crore remained infructuous,” the CAG said.

“Similarly, the property for ICC Paris procured at a cost of ₹30.03 crore remained unused as of June 2022 with an irregular expenditure of ₹14.89 crore on hiring a local security agency for an under-renovation building,” it added.

The property in Washington was purchased for $5.75 million and an audit in June 2020 revealed that even after the lapse of nearly nine years, the structure was “in an abandoned condition and is unsuitable for conduct of any cultural activities.”

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The CAG further pulled up the Indian embassy in the Chinese capital of Beijing for making an “avoidable payment of ₹8.53 crore on account of escalation” to the construction firm China Railway Construction Group Company, which was hired to build the embassy complex. The payment was made “even though the clause regarding escalation was not applicable as per the terms and conditions of the contract”, it said.

“Further, due to the issue of faulty lift, it withheld contractor’s payment for a period ranging between three and five years, which led to avoidable payment of interest of ₹1.58 crore to the contractor,” the CAG said, referring to the completion of all payments in 2018. Work on the embassy complex started in 2007 and the mission took over the building in 2011.

The payments of ₹8.53 crore towards escalation costs and of ₹ 1.58 crore for interest were “completely avoidable”, the CAG said.

The CAG further mentioned that after the external affairs ministry approved renovations of India House at Kingston in Jamaica and instructed the mission to follow procedures for tendering in line with the General Financial Rules, the mission “invited bids by opting for single bid system without any estimate and detailed scope of work” in 2016.

The ministry cancelled the tender and the work was subsequently awarded to the contractor selected earlier. However, in the period of five months between the two bids, the contractor escalated the prices, ranging from 16% to 175%.

After the renovation work began, additional work was given to the contractor without the ministry’s approval. The tendering done in “disregard of the ministry’s instructions and extant provisions necessitated retendering, resulted in time and cost overrun which led to avoidable expenditure of ₹ 51.76 lakh, coupled with an ad-hoc approach in execution of the work and arbitrary changes in agreed items of work costing ₹ 49.52 lakh”, the CAG said.