Date:28/08/2007 URL: http://www.thehindu.com/2007/08/28/stories/2007082862041300.htm

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Overhaul economic diplomacy: CAG report

Sandeep Dikshit

Specialised wings yet to be set up in four top trading destinations
Administrative expenses account for two-thirds of total allocation

NEW DELHI: The Comptroller and Auditor-General (CAG) has asked the Government to pay more attention to the economic aspects of the relationship with other countries.

The CAG report, which examined the functioning of the commercial wings in diplomatic missions abroad, found that the Government had failed to restructure the wings despite changes in the international trade scenario. Several proposals to restructure and streamline these wings to make them efficient and market-oriented remained unimplemented.

“This resulted in inadequate commercial presence in countries that have emerged as growing markets,” it noted.

Specialised commercial wings were yet to be set up in four of the country’s top 25 trading destinations while South Korea, which has substantial trade with India, had just a local citizen handling trade-related work for the Indian mission in Seoul.

On the other hand, commercial wings functioned in Bulgaria and Serbia & Montenegro though trade with these countries has been steadily declining and today it stands at just Rs.150 crore.

Only two per cent of the budget was spent directly on trade-related activities while administrative expenses accounted for two-thirds of the total allocation.

This affected the main aim of providing impetus to India’s trade and economy through specialised staff directly connected with the work of trade promotion. Staff sanctioned and posted exclusively for commercial work was utilised for other work. In Moscow, the Commercial Attaché was also Attaché Accounts and the First Secretary (Commerce) was also the First Secretary (Information).

There was little effort to base allocation of funds on criteria such as the volume of trade or future trade prospects. Commercial representatives could not comply with the instructions about preparing annual action plans and regularly submitting reports. Very few conducted market research or kept track of trade disputes involving Indian companies.

“As these were important management tools to monitor the proper implementation of the Government’s economic policies and programmes, non-compliance with the provisions resulted in underperformance of the commercial wings. Reporting and monitoring mechanisms were ad hoc. Consequently, the Ministry of External Affairs and the Department of Commerce could not ensure whether the commercial wings abroad were discharging their functions effectively and efficiently,” the CAG report said.