The AAP’s latest attack on Reliance Industries does more than simply divert attention from their failure to govern; unfortunately for them, it also underscores the two main elements of their core ideology. On display is not only their dogged commitment to destructive populism over basic economic rationality, but also, and far more dangerous, their scornful contempt for constitutional democracy. By pressuring the Anti-Corruption Bureau (ACB) to lodge an FIR against Mukesh Ambani and others in the absence of either jurisdictional authority or an iota of evidence, Kejriwal has sent shockwaves across the international business community, which would rather steer clear of India’s shores than risk engagement with a berserk anarchist. A bare perusal of the hyped complaint against RIL reveals fanciful conjectures and childish conclusions that are grounded in neither law nor reason, but advance a bizarre counter-narrative that believes in profit being evil. Scratch beneath the surface, however, and the real picture emerges.

The crux of Kejriwal’s charge against RIL is based on the infantile assumption that capital expenditure costs were unreasonably inflated to generate higher profits for the operator and less for the government. To substantiate this charge, he cites the Comptroller Auditor General’s flawed performance audit report on KG-D6 to allege that procurement contracts were arbitrarily awarded without due competition. He forgets that the mind-boggling scale of the Krishna Godavari basin (over 7, 000 sq km) necessitates an equally gigantic survey and exploration effort which is both expensive and technically complex, meaning in turn that very few international players operate in this niche segment. Unlike a standard building contract where it is possible to have a blend of different contractors, deep-sea extraction is one of the most complex engineering feats known to man and it would be impossible to execute a project on this scale with a mish-mash of contractors. For the CAG, without any technical expertise or knowhow about the complexities of subsea exploration, to simply declare that one contractor ought not to have been picked over others, is not only irresponsible but laughable. Besides, even the global consulting firm, Ernst & Young, confirmed that any increase in capital expenditure would in fact hurt the contractor’s profitability.

However the CAG’s insistence to audit private contractors raises fundamental questions of propriety that must not be ignored. The mandate of the CAG is circumscribed by the Duties & Powers Act of 1971, which outlines the scope of their powers to audit the accounts of public corporations. This law supplements Article 149 of the Constitution, and the two being in pari materia, must be read together. The CAG’s scope of audit is restricted to accounts of the Union and cannot extend to private entities. The hon’ble Delhi High Court, in its order on the 6th of January 2014, was absolutely correct when it reined in an overzealous CAG by ordering it to restrict itself to only the revenue-sharing arrangements that private telecom companies had entered into with the GOI. The court was very specific when it said that the CAG could only audit receipts and not inquire aspects like wisdom and economy in expenditure. An example of this overbearing sense of ‘duty’ is found on page 33 of the KG-D6 report, where the CAG adopts an irritatingly patronising tone in awarding unnecessary accolades to “the efforts of the operator in executing this world class…within record time.” Constitutionally speaking, the CAG has no business to be making such silly comments – they ought to stick to their mandate.

The CAG report also ignores the legislative intent behind the New Exploration Licensing Policy (NELP), which was to provide an incentive to private contractors, to tap domestic energy sources that PSUs like ONGC and OIL could not. The driving force behind this policy shift was not merely liberalisation of the economy, but a concerted effort to make India energy independent, and to reduce the nation’s staggering fuel-import bill. In making the simplistic argument that RIL’s higher gas prices lead to a subsidy burden on the economy, Kejriwal has wilfully ignored both, the saved fuel import-costs and the substantial GDP contribution made by domestic contractors. GOI currently pays up to $15 per million British thermal units (mmBtu). By Kejriwal’s logic, India ought to pay billions of our precious and scarce foreign exchange to international gas providers but deny an Indian corporation from making a legitimate profit for the massive investment it has incurred, simply because the government subsidises the fuel. Even keeping aside the billions of dollars India saves by encouraging a domestic entity, why doesn’t Kejriwal talk about the billions that the Indian government receives as its share of profit from KG-D6? Would he rather than India be at the mercy of foreign gas-producers than achieve energy security? Even keeping energy independence aside, the creation of jobs and enhanced shareholder value aid in spurring growth and confidence in the economy that benefits everyone.

It may certainly be argued that RIL and its partner NIKO got the initial gas estimates for KG-D6 wrong, but to suggest that billions were spent by them to execute some elaborate heist is ludicrous. Subsea gas reserve estimates spread over thousands of square kilometres are often off the mark. At times production is way more than the original estimate and at other times it is less. However the production sharing contract contemplates such eventualities, which is why the safeguard of variable profits depending upon production is built into the agreement. To cry foul simply because production levels did not match the original estimates is akin to the losing side in a game of cricket asking for the rules to be changed midway. Kejriwal is understandably irate because he can’t write his own personal version of the PSC.

Lastly, the stunning allegation that RIL’s KG-D6 partner NIKO supplies gas at half the price to Bangladesh is another spin on the truth. The fact is that NIKO’s gas deal with Bangladesh has absolutely nothing to do with KG-D6. On the contrary, NIKO provides gas from an on-land gas field near Dhaka. The implication of this on cost is obviously immense – with dramatically cheaper production and transportation bills, thus resulting in a lower price.

With none of his political opponents too keen to entertain his shenanigans, Kejriwal was ultimately left with the ignominious route of pulling the plug on himself. Only time will tell if his gamble pays off electorally. But for anyone to assume that the people of India will ignore his dismal record, would be akin to gassing the truth.