Tuesday, August 28, 2012

Cant cancel coal block allocations – bad for economics and politics….

Obviously the BJP will demand the cancellation of coal blocks. This has nothing to do with any concern for the nation. It’s simply the next step in its campaign to gain power. But the government would be advised to consider the impact of cancelling the blocks….

If the government thinks that canceling the blocks will send a message that it has nothing to hide and is willing to prove its credentials and be transparent, it is mistaken. Because the BJP will immediately turn the tables on the Congress with a “See the allocations must have been wrong. Why else did they cancel them”. This kind of convoluted logic is common with the BJP. It did the same when the government sacked Raja. The government may have done it as part of “perception management”, but wait a second…..the man has to be tried and for proved guilty. Until that happens, he is not guilty. But the BJP said the same thing “He must have been guilty. Why else did they sack him”. So canceling the licensing will make the BJP mount even more pressure and demand the resignation of the PM with even more ferocity.

The Congress made a big mistake by not challenging the SC’s 2G verdict canceling 122 licenses. Had it challenged it, there is a very good chance that the larger bench would have reversed it. Already, the indications from the SC are that auctions cannot be the only way to allocate resources – a point that the SC’s 2-judge bench had itself pronounced earlier. But the Congress made a mistake. By not challenging the SC order, it was trying to do what a baniya does – make the best of the opportunity. It thought this was a good way to bridge the fiscal deficit. (Kapil Sibal said the other day that we have killed the telecom industry. But then why did they not challenge the SC? Why did they willingly go ahead with auctions?). By not challenging the cancelations, it opened itself to similar demands in the coal case. The Congress has to learn a little bit of real politics…..

The cancelation will also be terrible for economics. As Kapil Sibal explained on TV the other night, it takes 54 months for exploration, etc before mining can actually commence. That’s 4.5 years. So that explains why only one mine out of 54 has commenced mining. He also explained that there are many other hurdles to be overcome before the 54 months starts – environmental clearances, land acquisition, naxal issues etc etc. In India, these processes take years. Canceling without considering these reasons will make the government look very weak. And unjust. Having taken a decision to allocate the blocks by the committee system, the government has to hold on to it. It cannot do an about turn under political pressure. That would be foolhardy and political harakiri.

The government must undoubtedly see if there has been any wrongdoing in the allocation process. So if any private company has furnished false information, that would be a valid ground for cancelation that allocation and mounting a legal case against it. The CBI is doing the right thing in pursuing such matters. Such allocations would in my mind be a small part of the overall allocations, and may be more indicative of the real corruption rather than the BJP’s interpreatation of the CAG report. If anyone thinks that all decisions were motivated by corruption, that’s baloney.

In my mind, the Congress has done the right thing by defending the PM, by counter-attacking the BJP, by challenging it to introduce a no-confidence vote, and by managing Mamata, Mulayam and Mayawati so far. But now it has to go a step further. The Congress fails in its ability to communicate with the people. The BJP invariably puts slicker spokespeople on English news TV – which a lot of decision and opinion makers watch. The Congress’s spokespeople with some exceptions can’t even speak good English. In the world in which we live, if you can’t express yourself fast and smooth, you are assumed not to have a point at all. When the Congress puts out Ashwini Kumar, Salman Khursheed, Kapil Sibal, Chidambaram or Manish Tiwari, it makes an immediate impact. Aggressive and motivated anchors are put on the defensive. But instead the Congress puts out Renuka Chaudhury (who spends more time managing her pallu and fake smile), Narayanswamy (who is like an offensive bulldog) and Keshav Rao (English language problem), they are no match for Ravi Shankar Prasad, Arun Jaitley or even the lighter weights – Smriti Irani, Kirron Kher, Chandan Mitra or Shaina NC.

The other think the Congress has to do is to reach out more to its constituency. It has to reach out to the people in a mass contact program where it will get a chance to explain its position.

And lastly, the Congress must now realize what the bigger BJP’s larger plan is. By raising one issue after another, by disrupting Parliament all the time, the BJP wants to ensure that no legislative action takes place. It wants the Congress to be in a crisis mode all the time. In the past, it used Anna and Ramdev in a guerilla action. Now its mounted a direct attack. In a scenario like this, the Congress has to rely more on administrative decisions. It has to increase diesel prices (an ET story showed that more than 50% of diesel subsidy is being pocketed by the elite classes), allow FDI in aviation (concerns only the well off – why should Mamata object?), liberalize the rules for single brand retail….and most importantly improve speed of implementation of various projects stuck at various stages. Concern for the environment is a bogus excuse for projects getting delayed. If it could engage the nation in more positive tidings on the economic front, it would be able to regain the upper hand.

The real truth is that reversing the clock should never be an option. In my opinion, the SC made a mistake by canceling the 2G licenses. The Congress made a bigger mistake by not challenging it. It lose ground politically and the country lost ground economically. It should not repeat the mistake with coal blocks….

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