Monday, April 29, 2013

Washout of Parliamentary session nothing new – its part of a BJP strategy….

The TOI yesterday reported how the present (15th) Lok Sabha could be the “least productive” of all Lok Sabhas since 1952. Only 1157 hours of “sittings” have taken place till date (Sittings is right…..considering that most times, members are standing these days!). This is the lowest figure ever, excluding those houses which didn’t last a full term (but even in those cases, the “per year” achievement was much higher). All this is not an “unfortunate statistic”. It’s my contention that this is a part of “political strategy”, practiced most notably by the BJP.

The BJP has a great incentive to block Parliament. Actually 2 incentives. First major incentive is that hardly any business gets transacted in Parliament. There are more than 100 pending bills in Parliament, but less than 10% of that gets passed in a session. Website says that less than 40 bills have been passed by this Lok Sabha till the monsoon session of last year ( This is the lowest number ever, comparable to 70+ bills passed in the 1st Lok Sabha in 1952. The BJP directly gains if fewer bills are passed. It can go the people and claim that this government “did not function”. It can accuse it of “policy paralysis”. For example, it can claim that the Congress was never keen on passing the Lokpal Bill, when in fact, it is the BJP that never allowed a discussion on it in Parliament, even after the Government accepted most suggestions made by the Parliamentary committee set up for it. Likewise, if the Food Security Bill and the Land Bill are not passed, the BJP can heave a sigh of relief… fact, shout from the roof tops that the Government was inefficient and ineffective. This is a direct incentive to the BJP.

The second major incentive to the BJP is that a blocked Parliament gives the party a chance to “grand stand”. This is what we see happening every day of this current session. Take the “JPC report” issue. The BJP doesn’t like the report because it gives a clean chit to the PM and FM (I agree with the clean chit) and points an accusing finger instead at Vajpayee (I disagree with accusing Vajpayee; based on similar principles). What I cannot understand is why the BJP finds the attack on Vajpayee unacceptable (after all, his government did exercise its right to making policy and “tweaked” the rules to favor a few who were operating in those days), but demands that the PM and FM be held responsible for the same thing (after all, they also chose to exercise their right to make policy – that of cheap spectrum. The corruption was in Raja’s “last mile” execution of the policy). Likewise, the BJP chose to shut down Parliament on the “interference in coal scam investigation” matter even before the Supreme Court (which asked for the affidavit in the first place) has ruled on the subject. If they were so keen on “Parliamentary propriety”, then couldn’t they have waited for the SC view? But no, the second incentive for the BJP is that it gives its spokespeople the opportunity to go to TV studios and make some “principled” (but highly unbelievable) statements. Had Parliament functioned smoothly, why would they have been invited to the TV studios?

In line with the TOI story, also informs that sittings have reduced by 43% in the Lok Sabha since the early days of independence. The monsoon session of 2012 saw 79% of working hours washed away. The winter session of 2011 of course saw the whole session getting lost. What is interesting is that any political issue can disrupt Parliament. The demand for setting up a JPC on 2G cost a full session; and intriguingly, its report submission also did the same thing! The actual debate and voting on FDI in multi-brand retail may take just a few hours, but the stand-off on the issue prior to the voting will still last several days. Even Jayalalitha’s small party can hold all of Parliament to ransom on an issue that really concerns India very less (after all, they the Sri Lankan Tamils are their Tamils, not ours). So don’t fool yourself into thinking that the current reasons for blocking Parliament (2G JPC, coal) are “strong, exceptional reasons”. There is nothing strong or exceptional about them. If it hadn’t been them, it would have been something else.

One key solution to this mess is to stop Lok Sabha and Rajya Sabha TV channels completely. Footage from inside Parliament should not be made available at all. That will stop the grandstanding to a large extent. That will also get it to function, just like Parliamentary Standing Committees function. Imagine this: the standing committees do their job and pass on their suggestions to the government, but amended bills never see the light of the day. What kind of democracy is this????

The other key solution is not a solution really. It’s a desperate plea. To our media owners; to our editors; not to support Parliamentary blockages. They can support any political position or party; but they should not support a blockage of Parliament. Any party that blocks Parliament should be castigated. The correct forum for discussions is Parliament. I hope our TV channels can do this small bit for the country. If they accuse politicians of being self-serving and harming the country, can they please reflect on themselves and ask if they are not doing the same thing at present.

The real truth is that the opposition (mostly the BJP) is responsible for making politics inside Parliament so murky. Well, it’s a trend that it has started. If it gets to rule Parliament ever, the need for spite and retribution will drive the Congress to pay back in the same coin. So forget good governance; what we are in for is a period of great turmoil in the future. This is why S&P and other ratings agencies have down-graded India. The problem goes much beyond 2014….

Saturday, April 27, 2013

Who has more to fear from CBI in Coalgate? Congress or BJP????

The CBI filed its 11th FIR yesterday, this one against a company called Pushp Steel and Mining Limited. Its interesting to note what exactly the CBI is probing, and who all have been ensnared in it so far. Its also interesting to investigate if the Government has anything really to fear from the CBI investigations.

Here’s the highlight. In all cases, the CBI’s investigations are against specific allocations made during 2006-9; and to find out if any misrepresentations were made by the winners of these mines. It has nothing to do with the policy of “administered allocations”. It has nothing to do with the CAG’s allegations of a loss of Rs 1.86 lac crores. The CBI investigation is about corruption at the local level; the role played by the screening committee members which included representatives from state governments. And all of those who made the all important “recommendations” to the screening committee. It’s about made wrongful declarations by the applicants – of the of networth, revenues, details of group companies etc etc. The CBI investigations hardly have the capacity to embarrass the government. The PM is not even remotely connected with the CBI investigations. Nor is Ashwani Kumar, the Minister of Law. One can argue whether the policy followed was right or wrong, and hold the PM responsible for that, but as far as CBI is concerned, the PM is not even on their radar.

Besides, the BJP has more to worry with the CBI investigations than the Congress. A look at the FIRs already filed by the CBI show that:

FIR against JLD Yavatmal Energy, JAS Infrastructure Capital, AMR Iron & Steel: In all these cases, the role of Congress MP Rajendra Darda, his son Devendra and their business associate Manoj Jayaswal is under the scanner. The charges against them are essentially those of cheating, wrongful declaration of networth, wrongly indicating IL&FS and IDFC were partners and failing to declare the mines they already had. The key figure here is Manoj Jayaswal, allegedly a rogue who has made money (again allegedly) by ripping off SAIL and the Indian Railways in the past. But Jayaswal is a colorful personality. He knows everyone in the Congress as well as the BJP. As per India Today: Manoj's proximity with political bigwigs is well known. At a wedding reception hosted by him, senior leaders, including BJP president Nitin Gadkari, Delhi chief minister Sheila Dikshit, BJP leader L. K. Advani and National Conference leader Farooq Abdullah were among the guests. And look who made the recommendation in Jayaswal’s favor: As per Times Now: TIMES NOW has accessed an exclusive letter that puts BJP leader and Chief Minister of Jharkhand, Arjun Munda, in the dock for allegedly recommending a coal block allocation to one of mining baron Manoj Jayaswal's firms. Clearly, both the BJP and Congress politicians are involved in these companies.

FIR against Navabharat Coal Fields: CNN IBN reports “One of them is Nav Bharat Coal Fields Ltd of Chhattisgarh which was allotted the Madanpur North Block for a sponge iron plant. They later  sold 74 percent stake to Nagpur-based Solar Explosives Ltd. The promoter of the firm is VK Singh, whose wife Nina Singh contested elections on a BJP ticket”. Hmmm.

FIR against Vimmi (or is it Vini?) Iron and Steel Udyog: Again from CNN IBN: Vimmi Iron and Steel Udyog, which is linked to former chief minister Madhu Koda is also facing CBI allegations of getting two mines using Koda links. Now Madhu Koda is another interesting character. He has been associated with the BJP for long. In the first government of the state of Jharkhand in the year 2000, led by the BJP (CM: Babulal Marandi), Madhu Koda became the Minister of State, Rural Engineering Organisation (Ind. Charge). Later in 2003, Arjun Munda of the BJP took over as CM and in this government Koda became the minister of Panchayati Raj of Special Arrangement. Later he quit the BJP, but continued to extend his support to the BJP-led NDA. Later again in 2005, Arjun Munda of BJP-led NDA became the CM again, whom Koda supported and he was appointed as the Minister of Mining Geology and Cooperative. At this point, he switched sides and went over to the UPA: The UPA decided on him as consensus candidate to become Chief Minister and Koda became the next CM of Jharkhand on 14 Sept, 2006. The Congress supported him from outside. (all this sourced from Wikipedia). Its clear that for the bulk of his political career, he has been connected with the BJP.

FIR against SKS Ispat: Congress politician and minister Subodh Kant Sahay’s name is linked to this company.

FIR against Vikash Metals: While the promoters have suspect credentials, there doesn’t appear to be any political connections. The charge against them is about suppressing information regarding prior litigations with the IT and Excise departments. The Indian Express reports: In its FIR against Vikash Metal, the CBI alleged that "poor credentials" of the company which included the tax litigation were suppressed by its directors while applying for the coal block at Moira-Madhujore (North and South) in 2009 in West Bengal.

FIR against Grapes Industries: Cant get much info on this company or its promoters, but that indicates that there isn’t any political linkage. The TOI reports: The Managing Director of the company and unknown officials have been booked for cheating, criminal conspiracy and prevention of corruption act in the fresh FIRs, added sources.

FIR # 9,10: Cant get much details off the net. However, one of these companies appears to be NSL Powers & Infratech Limited, a Rajasthan based company. As per a CNN IBN report as carried in, the CBI is probing the role of Rajasthan government and company executives. The Rajasthan Government  was of course headed by BJP’s Vasundhara Raje Scindia until Dec 2008.

FIR against Pushp Steel & Mining – this is the latest FIR. It’s a Chhatisgarh based company headed by two brothers – Atul and Sanjay Jain. As per PTI: It was alleged in the FIR that the company got mining lease on the basis of recommendation from the Chhattisgarh government despite having no experience and lacking enough capital required for starting mining operations. Clearly, the role of the Chhatisgarh Government headed by the BJP’s Raman Singh (ruling since 2003) needs to be investigated.

The real truth is that in most of the 11 FIRs filed by the CBI so far, the role of BJP politicians has been central. There have been some Congress politicians named as well. Both parties stand equally exposed. Hardly the background for the BJP to mount the offensive against the Congress. And most importantly, the PM is not even in the radar of the CBI. The BJP better answer why it is demanding the PM’s resignation (for the 35th time!) and not letting Parliament function????

Friday, April 26, 2013

CBI affidavit embarrassing alright, but does it change the facts????

So the CBI “shared” the contents of its draft report on the coal scam with the political executive after all. This is embarrassing for the Government. But embarrassing for what? Surely not for having altered the report, for nothing seems to indicate that it did that. Not for having pressurized the CBI in any way, except for sharing the report. Its embarrassing for saying (perhaps inadvertently) something wrong to the Supreme Court. And for re-inforcing the perception that it meddled in the investigation. So while this revelation has embarrassed the government, created a media flutter, and given the BJP probably it’s 35th opportunity to demand the PM’s resignation (!), we, the truth seekers, should remain focused on the larger picture. Was the coal scam a scam at all?

But before we go to that, a few interesting things that come out from this episode are worth looking at:

1)    Remember how the BJP had protested against Ranjit Sinha when the UPA had made him the CBI Director? Today, the party must be feeling mighty embarrassed about that! And also of course, thanking it’s stars! Clearly Ranjit Sinha is no push-over.
2)    The mechanism of justice works. No matter who tries to break it. There are checks and balances that make it work. It was an NGO (not the opposition) that figured that the political executive had been shown the report. It was the SC that demanded an affidavit from the CBI. So at least in cases that are monitored by the SC, the CBI does function independently. Why this is important is because many in the media and civil society are making this out to be the “eureka” moment for their demand for the CBI’s independence. They are seeing this as “proof” that the government interferes “in all cases”. Such extrapolation is bizarre, because if the government had indeed been interfering in all cases, it would have been nabbed earlier itself. Besides, in several other cases as well, the CBI has made revelations not exactly glorifying to the Government. Does this not prove that the CBI – at least under the watchful eyes of the courts – is already independent?

Now lets come to the substantive parts of the case itself.

1)    Did the CBI actually change the draft report? Well, we will know very soon. The ball is with the SC and the SC is no one’s handmaiden! From what the Government claims, it did not alter the report. Let’s go with this premise for just a bit. If this is true, and if the CBI is indeed independent – at least as far as this case is concerned – then what does it show? That the big scam is not really such a big scam after all? From what I gather, the CBI has filed several FIRs about specific cases of misallocations, but those are really cases of “local” corruption involving members of all political parties. Hardly the big Rs 1.86 lac crores scam that it has been made out to be.
2)    When will we learn in this country to differentiate between corruption and policy decisions? The coal blocks were not auctioned because it was a policy decision taken keeping legal hurdles and the views of opposition parties. The 2G spectrum was not auctioned because it was a policy decision intended to increase tele-density. Some may feel these were bad policy decisions. Some others like me may feel they were good decisions. No problem with that. Yes, the exchequer may have “lost” substantial sums of monies (though in my mind, it wasn’t a loss at all. It was just another subsidy the government gave as part of its policy, just like it gives diesel or kerosene or fertilizer subsidies). At what point did this loss become a case of corruption? Is it anyone’s point (because that’s the public perception) that the Congress pocketed Rs 1.76 lac crores in 2G and Rs 1.86 lac crores in coal allocations? If that’s true, then who paid these huge sums of money? The telcos who offered cheap tariffs, and are struggling to maintain even bare minimum profitability? The private power plants who had to bid for the cheapest rate at which they would supply to SEBs to get their coal allocations? Where is the money trail? The whole mess is a purely political creation. It was our inability to separate the chaff from the grain that pushed the government into a policy paralysis. Large parts of the bureaucracy are still in paralysis. We need to be a little savvy here. The media needs to be a little savvy as well. We need to separate the two issues out. There was a very large part which was a policy decision (if you don’t like it, don’t vote for this party), and there were local cases of corruption. Mixing the two doesn’t help anyone.
3)    Besides, where is the involvement of the PM in all this? Yes, he was responsible for the policy of continuing with administered allocations. How does that make him guilty? He was the one who thought of auctions. The governments before his (including the NDA government) did not even think of that. If they had been in power, they would have perhaps continued with administered allocations. So why hang the guy who made changes for the better? Besides, we know the reasons why auctions couldn’t be held earlier (read my post of April 24th: Getting the facts on Coalgate right….and asking just how involved is the BJP in it????) – a) because of legal issues and b) because the opposition ruled states were not in favor of auctions. We also know that the opposition parties were part of the decision making process for choosing the “allocatees”. Did the PM even recommend one mine be given to his friend or relative? C’mon guys….politics is fine….but don’t jettison the truth so casually.

The real truth is that nothing changes in the coal case even though the most recent issue does cause embarrassment for the Government. Lets not forget it was Manmohan Singh who thought of, and eventually implemented coal auctions, much against the wishes of the opposition (including BJP). He’s not the villain. He is the hero here….

Thursday, April 25, 2013

Why is Modi keeping away from Karnataka????

The brave visionary and future PM of the BJP is keen to shun Karnataka. Knowing perhaps that his party has no chance of winning there. What does Modi have to gain by going to Karnataka? Nothing. What does he have to lose? A lot, considering how the media would jump to say that his charm didn’t work!

That’s what the media (and BJP) said when Rahul Gandhi’s campaign in Bihar came acropper during the last state elections there. But look at the difference. The man, who is being derided for “lack of experience” has the courage to go to a state where the Congress has traditionally had no chance. He wasn’t afraid of being branded a failure. He was a man on a mission, keeping his eyes on the long term. As a true leader, he also recognized his role in leading his team and motivating them to putting in their best efforts. But the same considerations don’t seem to be in Modi’s mind. In fact, if anything, its just the opposite. The fear of losing Karnataka after having canvassed aggressively stalks his mind. A true blue leader indeed!

Losing and winning are part of the game but a leader gets tested in all such situations. We saw last year in UP how Rahul Gandhi canvassed aggressively, and lost. But it was Rahul Gandhi who had won UP in 2009 for the Congress, winning as many as 22 Lok Sabha seats from the state, a feat no one expected. The BJP of course was nowhere in the state. And its not as if the UP had been favorably disposed towards the Congress – the party hasn’t ruled the state since 1989. Yet Rahul Gandhi had gone and canvassed aggressively. That was a battle he had won. This recent assembly elections in UP….that was a battle he lost. But as a leader, he didn’t shy away from anywhere.

The CNN IBN poll telecast yesterday (I don’t believe most of these polls though) says that the BJP is fighting hard not to be the 3rd party in the state. It also says that the Congress is most likely going to get a simple majority. Think of this. If Rahul Gandhi wanted to burnish his reputation, he would have made a dash for the state. That’s what weak leaders do. Go to “safe” states and fight from “safe” constituencies. They can lecture the others about being brave and fighting in tough terrain, but when it comes to themselves, they want to be in the safe, no-fire zone. But Rahul Gandhi is made of a different code. He is doing his bit in Karnataka (a few rallies), but not overdoing it to hog the limelight. He is happy to have the local unit take the credit for the success. Only a true leader does that. Only a true leader is humble enough and secure enough for hom to allow his team to take the credit, while he himself comes forward to take the blame for failures.

What do we see in Gujarat. A sure state for the BJP, it was Narendra Modi who took all the credit away!

Its not the first time we are seeing this kind of cowardly behavior from Modi. In the last UP elections, he didn’t canvass in the state. Of course, he wasn’t a member of the party’s Parliamentary Board, and his responsibilities were limited to his home state, but surely that’s hardly a restriction for canvassing. If he was the dynamo he is made out to be, surely the party would have benefitted from his canvassing there? But no. Not one rally in the state. Why? One reason: he is afraid and he runs away from the real battles, preferring to stay ensconced in “safe” states. 2nd reason: Not only would he not have helped his party, his mere presence would have made matters worse. UP being polarized the way it is, Modi would have ensured a further depletion in votes for his party. In any case, the party fared poorly, losing seats from its already low levels.

But be sure that Modi will be seen prominently in the MP and Delhi elections to be held later this year! Especially in MP which is seen as a safe zone. It would give Modi a great chance again to show how much of a magnetic personality he is! Unless of course Shivraj Singh Chouhan, CM of the state, and the one who lost out to Modi in the stakes for a place on the party’s Parliamentary Board, decides otherwise (most likely he will be over-ruled). So expect to see the PM aspirant of the BJP in full glory in safe MP!

To be fair, most politicians would do what Modi is doing. They are all aware of their limitations. They are smart enough to stay where they are on firm footing. But the peculiarity of Modi and the BJP is that they take a public posture that is the exact opposite of the reality. And they attack others as a strategy to deflect attention from themselves. So rather than keeping silent on Modi’s absence from UP, they will attack Rahul Gandhi for failing in that state! But the people are smart. They know when someone talks too much and delivers too little. They know how to remove the grain from the chaff. That’s why they branded Modi “Feku”. And that is why there is so much credibility gap the BJP faces. Even in the face of an extremely poor poll scenario for the Congress, the BJP isn’t winning. It’s strange, but the both the ruling party and the main opposition party are expected to lose in the forthcoming 2014 elections! Oh ok….the BJP may gain a few seats, but that should still be called a loss, considering that they will be far too short to even stake claim to form a government.

The real truth is that Modi is playing it safe by avoiding Karnataka. He is reportedly doing only one rally there. As a leader, he should be able to take a loss on his chin. He cannot be seen as running away. The state CM wants him to come for more rallies. He has a great chance to prove how much of a “Loh purush” he is. His party would have a better chance too (if we believe the party’s rhetoric). Then why is he keeping away? Why did he keep away in UP? Why will he go aggressively to MP? Unfortunately, all of this paints Modi as being a coward….not exactly the trait one seeks in a PM

Wednesday, April 24, 2013

Congress must spurn BJP’s support on China border issue….and continue with soft diplomacy

I don’t normally write on foreign affairs. My subject of interest is Indian politics. But when I read in the Indian Express that Rajnath Singh, President of the BJP, had offered “support” to the Government for taking a hardline on the Chinese incursion into Ladakh (disputed), it raised my hackles. I thought it was apt to pen down some thoughts.

The last thing we need at this point in time is aggression on the border. Not only with China, but also with Pakistan, Sri Lanka and Bangladesh. What we need is a cool head and a lot of gumption. Gumption that guides us to find a satisfactory and amicable solution without disturbing the peace with the country, and without (more importantly) distracting us from our long term goal of economic growth, removal of poverty and the like.

The BJP’s stand on such issues of foreign policy changes depending on whether it is in power or outside! But then let’s be fair to the party. This fickle behavior of it’s is not limited just to foreign affairs. It is true for all subjects! When the BJP is out of power, it advocates a hardline approach to matters of national security. And after it comes to power, it changes its stand. Before it came to power in 1999, the party was a strong advocate of a hardline approach towards Pakistan. Yet, when the NDA was ruling, it made peace overtures to the neighbor! When it is out of power, it takes a hardline stance on terrorism. Yet, when it was in power, it sent its Foreign Minister to Afghanistan to deposit arrested terrorists back with their masters! Likewise, the current advice of aggression with China is being made because it is out of power. If it was in power, it would have done no different from what the present Government is doing.

There are a few TV channels as well – one of them I call Scam TV since its entire positioning is based on real and imagined (mostly imagined) scams – that advocate a hardline stance. Such channels however do it for far more near-term material benefits – an enhancement in their TRPs. One such channel in particular specializes in putting together formal army generals from both sides (typically in a  Pakistan-India debate) and making them hurl verbal and other abuses to each other. We saw this happen during the recent flare up with Pakistan on the “decapitation” issue. We had panelists threatening each other with a nuclear war, and abusing each other’s leadership like they were street goons. The points of views of such news channels are also best ignored.

When it comes to handling foreign affairs, it is best to keep a cool head. It may appear a little “pansy” or “cowardly” not to react immediately with aggression. But in the long run, this works better than anything rash. This is equally true in our politics. Aggression in oratory (Narendra Modi is an example) makes an immediate impression and people say “Wow. What a great man”, though actually they have only been taken in by his speech. His speech is great; but he may not be great himself! In contrast, a man like Manmohan Singh is often derided because (and simply because) he is not a good orator. If oratory is what we vote for, then maybe we should search for a different kind of people!

The US political parties offer a good comparison. The Republicans are known to be aggressively “nationalistic”. This is not to say that the Democrats aren’t. However, the Democrats would be expected to carry a cooler head in the face of provocation. George Bush avenged 9/11 by attacking the wrong country, and getting thousands of American soldiers killed, but for him, that immediate action was more important. The flash of anger that guided his decision in those moments of time ended up harming US interests. But in the Republican thinking, immediate action is more important than thoughtful action. It’s a tad similar with the BJP.

The Government should not fall into the trap of making jingoistic statements, the BJP’s “friendly” offer of support notwithstanding. What Salman Khursheed is doing is the right thing. It is being described as a “difference of perceptions” about where the border actually lies. Diplomatic efforts are underway. The “procedure” is being followed. The flag meetings are part of that procedure. There is no need for the PM or the Foreign Minister to jump in at this stage (as advised by Prakash Javdekar of the BJP). It’s perfect for our Army to make recommendations for “strong action” – because this sends a good message to the other side. But its important that this confidence of the Armed forces be balanced with a cool diplomatic and political response.

The issue will blow over because it is also in China’s interests not to escalate matter. China has too many problems of its own. It’s scuffle with the US is not something it can ignore. It’s skirmishes with Japan likewise. And then there is North Korea where the Chinese will have a very direct role to play. China doesn’t want any distractions. The settlement of the issue is as much in China’s interest as in India’s. But because of the kind of political body it is (single partly; almost dictatorial), its response will be different from our. They will go through their own procedures; but in the end, things will return back to normal.

The real truth is that the advice, support – call it whatever – of the BJP on this subject is avoidable. The party’s credentials are such that such an offer needs to be seen with due caution….

Tuesday, April 23, 2013

Getting the facts on Coalgate right….and asking just how involved is the BJP in it????

Since a lot of muck has been flying around regarding the coal “scam”, I think its important to take stock of what all has been happening. Here is a summary of facts, lest you have forgotten them:

1)    As the Standing Committee of Parliament for coal headed by the TMC’s Kalyan Banerjee pointed out in its report yesterday, “everything in the coal allocation process was wrong since 1993”. The report is bizarre as I wrote yesterday. But it is right in one thing. That the process of allocations through “screening committees” started way back in 1993. Actually in July 1992. As per Wikipedia “A number of coal blocks, which were not in the production plan of CIL (Coal India Limited) and … SSCL (Singareni Collieries), were identified in consultation with CIL/SSCL and a list of 143 coal blocks were prepared and placed on the website of the MoC for information of public at large”. So there was no hush-hush here. Information was provided to anyone and everyone who was interested in getting a mine. Whoever fit the criteria could apply. No scam here.
2)    Wikipedia reports: The guidelines for the Screening Committee suggest that preference be given to the power and steel sectors (and to large projects within those sectors). They further suggest that in the case of competing applicants for a captive block, a further 10 guidelines may be taken into consideration. The 10 criteria comprise inter-alia a) stage of completion of project b) net worth of the applicant c) production capacity of the end plant d) date of commissioning of mine and of the end plant e) technical expertise in operating mines f) recommendations of the administrative ministry (power, iron & steel) g) recommendation of the state government where the mine is located and h) financial track record and strength of the applicant. Does anything look amiss? Does it look like the Government bent the rules to favor a few? Do you smell a scam????
3)    The Committee was composed of government officials from the Ministry of Coal, the Ministry of Railways, and the relevant state government. Make note of the last point. The state governments were represented on the committee. Any decision taken by the screening committee was taken after discussion with the state reps. Who ran the state government? Non-Congress parties including the BJP, RJD, BJD, Left front etc etc in most cases. So should we not include them in the corruption scam as well?
4)    Upto 2005, 70 mines were allocated, out of which 41 were to the private companies. Do note that a bulk of the time in the “pre-2005” period was ruled either by the BJP (6 years), JD(United) for 2 years. The Congress ruled at the Center for 3 years. If any blame fixing needs to happen, it should be in the same proportion. The BJP gets the most blame. Besides, it did not even think of auctions. That was Manmohan Singh’s wisdom.
5)    Between 2006-8, as many as 66 mines were allocated to the public sector and 32 to the private sector. In no small measures, these – and the ones allocated before 2005 – contributed to the remarkable growth in coal production by 31% in just 4 years by 2009-10. On the back of this coal production, installed thermal capacity went up from some 80000 MW to some 150000 MW between 2005-6 and 2010-11 (source: page 16 of CSO report “Energy Statistics 2012” available at Does this indicate the policy worked or didn’t? Where is the scam? Or do you see any corruption motive here????
6)    The CAG’s biggest thrust was that the Government had the legal option to auction coal mines starting 2005. While the CAG may find that the legal sanction was there, it was not such an open and shut case. There was also opinion that the laws (CMN/MMDR) needed to be changed. Hence the Government chose not to go ahead with auctions then. This kind of thing happens all the time. Want a current example? The Government wants to allow more private banks to come in right? The Government feels that the RBI can allow this even under extant laws. The RBI feels the laws need to be amended and its powers to override the Board of the banks strengthened. Who is right and who is wrong? The Government has chosen to go with the RBI’s point and amend the Act first. This has caused delays. If twenty years later, someone alleges that the Government could have gone ahead and increased the number of licenses earlier, will people remember the RBI’s counter point of view? It’s the same in the coal case. No one remembers today, but there was a strong view against auctions. How can delayed auctions be called scam at all.
7)    Then the point that the states where the coal mines were located - West Bengal, Chhattisgarh, Jharkhand, Orissa and Rajasthan all ruled by the opposition parties – none of whom wanted auctions. Why? Why is the spotlight not on them???
8)    Again from Wikipedia, the PM’s statement in Parliament “A meeting was convened in the PMO on 25 July 2005 which was attended by representatives of coal and lignite bearing states. In the meeting the representatives of state governments were opposed to the proposed switch over to competitive bidding. It was further noted that the legislative changes that would be required for the proposed change would require considerable time and the process of allocation of coal blocks for captive mining could not be kept in abeyance for so long given the pressing demand for coal. Therefore, it was decided in this meeting to continue with the allocation of coal blocks through the extant Screening Committee procedure till the new competitive bidding procedure became operational. This was a collective decision of the centre and the state governments concerned.Is this a false statement???? Has the BJP challenged its veracity????
9)    The “windfall gains” estimate of the CAG are bunkus. The CAG has taken the value of coal that may or may not be recoverable, at costs of production that may or may not be correct and most importantly – and this seems to be core expertise – has forgotten to take the present value of monies generated over a period of 100 years. What kind of accounting body is this???? Besides, it has ignored the 26% tax the Government makes from all such windfall profits!
10)                       Now coming to the corruption angle that CBI is looking into (under SC supervision). Amongst those alleged to have bypassed the screening committee system by giving false information is Ajay Sancheti, a BJP MP. There is also an RJD MP as well as some from the Congress. Its not like the BJP goes scot free

The above points show that a) the move to auctions was not possible in 2005 b) all political parties followed the screening committee process – the most the BJP c) The announcements of the mines to be allocated, the guidelines etc were all put out in public domain. There was no hush-hush d) state government reps – largely comprising non-Congress parties – were very much part of the allocation decision making and most importantly e) the states ruled by opposition parties were opposed to auctions.

This is not to say that there wasn’t corruption in the allocation process. Everyone knows there is corruption in almost every single government department – both at the centre and the states. I know so many of friends who encounter corruption in government departments in Gujarat, Bihar, everywhere. But to call the coal allocation process itself to be a case of corruption, and to brandish it as the “mother of all scams” is crap. And then to blame the architect of the auctions – the PM without whose thinking we would still have been continuing with allocations – as the one who is guilty (of what???) is criminal. This is politics at its worst. At present, we have only seen bureaucrats stop taking decisions. Very soon, we will see politicians stop taking decisions as well. After that, we can all sit back and enjoy India’s ride down back to the Hindu (BJP) rate of growth. We may have the satisfaction that “everything is above board”, even if there is nothing to show for it!

The real truth is that both the 2G and coal “scams” are purely political attacks. There is zero truth in them. The CAG is part of the political establishment under its present chief. Everyone seems to be forgetting that as a country develops, its policies evolve. If the Government dismantles price control in diesel and kerosene at a future date, that will not make the present subsidy regime corrupt. Where there are cases of corruption, those caught should be jailed. But to blow up the whole thing as a scam is just a political plot to tarnish the image of the PM and the Government.

Monday, April 22, 2013

Kalyan Banerjee’s coal report: Turning the clock back; ruining India….

Today’s TOI talks about the Standing Committee on coal bringing out a report which says that all mines allotted between 1993 and 2008 were allotted in an unauthorized manner. It goes on to suggest that all mines that have not started production yet should be scrapped. And that all those who were involvement in the process should be investigated. This is like turning a clock back – its impact on the investment climate, GDP growth, credibility of government’s policies and in fact on India’s future itself is bound to be disastrous.

Not surprisingly (in my mind), the report has been brought out under the chairmanship of a Trinamool Congress leader, Kalyan Banerjee. The TMC has no stakes in the past. It’s easy for it to attack everything that was done in the past. It couldn’t care less about the saying “Vision is 20:20 in hindsight”. With the information available in 2013, even a joker could say that the processes followed in 1993 may not have been perfect. If this logic were to be extended, most of India’s post-independence economic policy is flawed. All those industrialists who benefitted under the license raj should be asked to return all the gains they made. All those bureaucrats and politicians should be hanged or put in jail. If we go about doing this, we are surely going down the path to self-destruction.

The report covers the entire period from 1993 to 2008. This itself brings out some interesting points:

First, that the BJP is bound to reject it. The BJP’s vaunted position (even though its complete baloney) is that India was a land flowing with honey and milk during its six years of rule. Well if that was so, then why were the coal mines allotted wrongly during its rule the way the report alleges? The BJP escaped the CAG’s investigations because he (a friendly guy!) chose to restrict his field of investigations to the post-NDA period. How convenient. But the Standing Committee covers the NDA period as well, and holds it as guilty of any transgressions as it does the Congress and others.

Second, it says that the process before 2004 was even worse than between 2004 and 2008. In that period apparently, even ads were not floated for the mines that were distributed. The whole process was shrouded in secrecy. In this period of time, the Congress ruled for 3 years (Narasimha Rao till 1996), the Janata Dal (United) for 2 years (Deve Gowda and IK Gujral) and the NDA for 6 years (Vajpayee). If we were to believe this report, none of these parties thought anything was wrong, and continued with the process that they inherited. So either all of them were poor rulers, or all of them were corrupt. This is ridiculous.

Third, there was some degree of transparency brought in between 2004 and 2008 – in the sense that at least ads were released about the mines being distributed. And still, as per the Standing Committee, there was not much transparency in the process. Why? Because there were no auctions and the GOI made no revenues. But even the SC has said that auctions needn’t be followed in all cases; and that revenue maximization cannot be the sole goal of the government. As long as the non-auction process was clean, and as long as the country benefitted, the process was fine. As a matter of fact, coal production in the country rose from some 100 million tonnes in the 1990s to some 500 million tonnes per annum now. There is need for privatization of the coal sector felt today….but back then, the wisdom of successive governments was in keeping coal production with Coal India Limited. The policies of those days did help take the country forward. How can we today blame those policies?

Such reports should be rejected outright. They serve no purpose but to tarnish India’s image and growth story; demotivate its cadres, and derail its future. Written as it is by a communist leader (for the TMC is even more Left than the Left itself), it is not surprising that he has found everything post the 1991 reforms to be amiss. He may not say this, but if he had his chance, he would never have allowed the private players to get into coal mining at all (producers of electricity, cement and steel). The report reflects more political ideology than anything factual.

This is also called “witch-hunting”. Finding out something from the past, intentionally losing the context, and then making a big deal out of it today, knowing fully well that such a stand will create a flutter in the media. But there is one big mistake that Kalyan Banerjee has made. That is that he has blamed both the Congress and the BJP. Ask Kejriwal. He knows the day he started blaming the BJP alongwith the Congress, his movement ended. The poor man today goes on a 2-week long fast, and still doesn’t manage to attract any crowds. If only he (and Anna) had stuck to their cozy BJP intimacy, they would have been far more successful.

But why blame Kalyan Banerjee alone? Every political party adopts the same trick in nailing its opposition. The BJP (aided by the CAG) accuses the Congress of having followed a wrong policy (FCFS) in the past. Why does it say this? Because the subsequent policy followed in 3G (auctions, which the Congress only thought of) gave good results (or so the party believes, even though in mind the policy was badly flawed and led to the industry being stillborn). Anything done better in the future becomes the reason to cast accusations about the past. How will the country ever progress then? Why will any bureaucrat or politician want to make improvements then, if that is going to be the grounds of him or his government of the past being called corrupt? Actually, had 3G not been auctioned, and had FCFS continued with, there would have been no 2G scam at all! The Congress made a mistake! Damn this economist PM! The BJP’s doublespeak is of course even more pronounced, because it would like us to believe that the FCFS policy was good between 2001 and 2004, but turned bad exactly after the UPA took over! C’mon guys….

For India’s sake, we the people must protest against such political tricks. We are not interested in the past. We are more interested in the future. Whoever makes changes for the better should get our vote. The BJP should tell us what changes they will bring about in the future if they came to power, rather than just criticizing about the past. But does the BJP do that? Never. All they speak is about some vague concept called “good governance” without bothering to elaborate on it even a little bit. At least the Congress brought about changes in 3G auctions. At least, the Congress introduced (and passed) the Lokpal Bill, no matter how flawed. At least, the Congress is bringing up the Land Reforms bill which will improve things in that sector. Can the BJP tell us what they will bring in the future? We are not interested in debating the past. We are interested in debating the present and the future.

The real truth is that we are on a self-chosen path to self-destruction. The world outside must be watching us and wondering if democracy is indeed the right model for a developing country. On the one hand they see a China, growing rapidly under a dictatorial one-party rule. On the other hand, they see an India, suffering under a fractured political set-up. Equally, our competitors must be heaving a sigh of relief, knowing that the global dollars will now flow to them and not to India. Truly sad. In fact, abhorable….

Sunday, April 21, 2013

Stop Lok Sabha and Rajya Sabha TV channels….and disruptions will stop

Hamid Ansari, Chairman of the Rajya Sabha, made a failed attempt yesterday at getting the opposition parties to let the house function. He suggested that those members who disrupted the House would be debarred from entering the House. If this was done, the entire BJP (and several other parties) would keep getting debarred all the time. Why would they agree to such a move? Why would they want their members debarred? Besides, a house that doesn’t function is good for the opposition because it stops the Government from achieving its agenda. A Government that fails in its agenda can be expected to fail at the hustings as well. It works to the opposition’s advantage if the Houses don’t function. Hamid Ansari can still succeed in his efforts – if he just realized one more truth about our Parliamentarians.

The truth is that there is another reason why opposition MPs disrupt the Houses so often. It is the presence of the TV cameras mounted inside the houses which serve absolutely no purpose, except allowing opposition MPs to grandstand. And we know just how much our politicians love TV cameras! Take them out, and there is no motivation left for them to disrupt the House. No longer will they be able to impress anyone (their “following”???) with their “ideological blockage” of Parliament. Equally, no longer will they be worried that their chief opponent will be able to do so too. This will ensure that Parliament functions.

I think I read this wonderful post on Facebook or twitter (am unable to trace it) or in the papers yesterday. “In the earlier days, OB vans and TV cameras would rush to the site of a protest event. Now, protesters rush to where the OB vans and cameras are”! This pretty much sums up the reality of the situation. Since our politicians are a mere reflection of society, they are driven by the same urge that drives the protesters (or at least the leaders of those protests) outside.

What good are those cameras doing anyways? I doubt if anyone – anyone at all – watches those two channels. I don’t have TRP data readily available, but I can bet my last buck that no one watches them. Except of course for political activists, political enthusiasts, political rabble-rousers, the Parliamentarians themselves and of course, the political journalists. It’s the political journalists that I am most worried about. They “amplify” what happens inside the Houses (and I like I said, no one has watched those proceedings yet), and bring those images to millions of people. The fact is that both the LS TV and RS TV are catering largely to the outside media. They are like pipelines from inside the Houses to the outside world.

If this is supposed to be an exercise in furtherance of our democracy, and to satisfy the needs and rights of society to know what happens inside our “temples of democracy”, then like I said, it’s already failed. No one is watching these channels. The Government has merely become a vendor of TV footage, lapped up by private channels for free. And what do these private channels do with the footage? Trained and focused on “increasing TRPs”, they cleverly edit the footage, and use only those sensationalized portions that can be played and re-played a thousand times to attrack viewers who have at least a modicum of interest in political affairs. It’s true. Most Indian news TV channels have learnt from Ekta Kapoor – repeating the same footage ad nauseum with sound effects to boot! None of these TV journalists has any interest in the truth, or in showing the (usually less sensational) entire footage. Losing the context is the whole purpose of editing. Taking a sound byte out of context is what adds the juice. Editing is the core value addition they bring to the footage they get. That’s the creativity in the news business!

Want evidence that our Houses would work better without cameras? Well, just compare how the Houses work (full of disruptions) with the Standing Committees (shorn of the glamour provided by TV cameras). In most cases, Standing Committees meet regularly and work without disruptions. Members of all parties add value, un-afraid of taking positions that they believe in rather than those they are forced to take in public. For example, the BJP was forced to support Anna’s demands for a Lokpal Bill which would include within it, the provisions for Lok Ayuktas as well. That was for public consumption. But inside the Standing Committees, the BJP demanded that the Lok Ayuktas be left out of the Lokpal Act. Now imagine if the Standing Committees also had been covered by TV cameras; would the BJP have allowed any such discussion to happen at all? Remember also, that a logjam helps the opposition. What would be the motivation for the BJP to try and find a resolution to the contentious points?

Want evidence that the LS and RS TV channels cater largely to only a few “activist” variety? Ask who were the most prolific demanders of TV broadcasts of their meetings and discussions with the Government? Yes, Team Anna. For Team Anna, TV cameras were the fuel on which their movement ran. See the disarray the movement finds itself in (in fact, I don’t even know if it exists any longer. Where is Anna?) now that media has moved away onto other more juicy things? Team Anna anyways took a hardline stand on all issues. Imagine, if the TV cameras had been there, what would have happened? They would probably have converted the proceedings into the daily 9pm farce (they call it debates don’t they?!) that have become the biggest identity of the Indian TV news industry!

The real truth is that House disruptions are entirely on account of grandstanding. Take that opportunity away and the opposition leaders will settle down. It’s not about throttling their voice….but their voice should be heard more inside than outside. All MPs want to become celebrities. Take that opportunity away and they will be forced to “serve” rather than grandstand!

Saturday, April 20, 2013

Another CAG gaffe: Not explaining that cost over-runs don’t mean corruption….

The CAG first messed up the telecom industry by bringing out its bizarre report alleging that the exchequer lost Rs 1.76 lac crores (dubbed the biggest scam of independent India) because the government decided to dole out cheap spectrum. It failed to count the “downstream” benefits that the public received in the form of cheap mobile tariffs. Later, the CAG brought out an even more bizarre S-band report, equating much lower-value S-band spectrum with much higher-value 3G spectrum and alleging it to be a Rs 2 lac crore scam. It soon had to scoot with its tail between its legs. As if this much of “creative accounting” (or should we call it “notional” accounting, since the CAG loves the concept of notional!) wasn’t enough, the CAG has now started a new chapter. By bringing out “cost over-runs” in the Maharashtra irrigation department without explaining how that should be read and understood.

The CAG’s political partners, the BJP can now be expected to take this bizarre report to levels of utter absurdity. In the case of 2G, I cannot quite understand how a “notional loss” to the exchequer became a case of “mota maal” for the Congress as the BJP dubbed it. Is it the BJP’s point that the Congress pocketed so much money? Because if it indeed did, then the Congress should have no worries about returning to power in 2014, for power can always be “bought” with money, right?! The Congress did not make any such sum. And the BJP knows it. But these kinds of allegations are par for the course in politics. Truth be damned!

In much the same way, cost over-runs are being projected as corruption. The TOI calls it a “Rs 70000 crore irrigation scam”. If one were to analyze this number, much of it comes from cost over-runs, not from someone pocketing money. The DNA writes “In its audit report on state finances for the year ended March 31, 2012, submitted to the legislature on Thursday, the CAG said that in the 426 incomplete projects with an expenditure of Rs 43,270.01 crore pertaining to the water resource department and the five irrigation development corporations, the time overruns were up to 40 years. In respect of 242 out of 426 incomplete irrigation projects, the initial budgeted cost increased from Rs 7,215.03 crore to Rs 33,832.29 crore, resulting in significant cost overrun totaling Rs 26,617.26 crore,". To the lay public, that anyways believes that politicians are corrupt, this Rs 26,617 crores of cost over-runs represents corruption of that much amount. But is that the truth?

Cost over-runs are NEVER a case of corruption. They are ALWAYS a case of bad governance. To understand this, we have to understand the concept of “time value of money”. Essentially, the same item that costs Rs 100 today costs Rs 110 the next year and Rs 121 the year after that (assuming 10% inflation). This increase in costs is in fact the very definition of inflation. That is why economists always “deflate” “future value” by the inflation factor to arrive at “present value”. In the above example, the Rs 21 increase in costs over 2 years does not mean corruption, but merely the time value of money. When something gets pushed behind by as much as 20-40 years, inflation ensures that the actual figure is several times more than the original. However, this does not mean corruption.

One easy way to understand why this is not corruption is to look at the impact of time value of money on the opposite of costs – i.e income, or salaries. It’s a common refrain amongst people that “even a driver earns Rs 10000 a month today. Back then, an engineer used to get just Rs 2000”. Again, this does not mean that drivers have started “extorting” money. It only reflects that today’s Rs 10000 is perhaps worth no more than Rs 500 twenty years back. To the common man, this is extortion; just like cost over-runs are corruption.

Here’s another way to look at the issue. Rs 100 not spent in the year it was meant to be spent in means that that Rs 100 was either saved, or spent on something else more important. Either ways, that Rs 100 provided the bang that it was capable of in that year. Its not as if that Rs 100 was pocketed by some politician, and then a further Rs 121 had to be coughed up two years later. In fact, if that Rs 100 had just been parked in some decent security, it would have become Rs 121 in two years, and it would have made no difference to the cost. But it would still be a case of cost over-run and like I said earlier be called corruption.

So the Rs 70000 crore irrigation scam is hardly a scam of such magnitude. It may still be a scam, and in all probability, there is bound to be some corruption, but it’s nothing close to the amount publicized. Most of it reflects cost over-runs and not corruption. Likewise, the Rs 26000 crores that the CAG brought out is not corruption at all. A small fraction of it may well be though.

What the 20 or 40 year delay reflects however is poor governance. When a project is conceived to be executed in year 1, it should be completed in that year. If it is pushed behind because of administrative failure, then the benefits of that project are also pushed behind by that much time. Those benefits would always be worth much more (that’s why the project was conceived in the first place). For example, the delays in irrigation projects could have led to thousands of farmer suicides, or lacs of crores of “genuine loss” (just taunting the CAG here!) in agricultural food-grain production and export. The CAG as usual, has failed to go beyond its dirty nose, and estimate the end effect of delays. Just like it failed to estimate the end benefits of cheap 2G spectrum. The CAG’s credibility stands completely eroded because of such sub-moronic practices.

There is of course another reason why cost over-runs are shown as corruption and not as merely bad governance. As a bunch of people, we Indians love conspiracy theories….and the corruption angle has far more intrigue than some esoteric concept like bad governance! We also love big numbers….so showing what could potentially be a Rs 200 crore case of corruption (Raja in 2G) as a Rs 1.76 lac crore scam is what works in India!

The real truth is that an audit body like the CAG should do a lot more to inform the public. It should indeed bring out cases of cost and time over-runs but it should also explain what they mean. If the CAG has to do media briefings (and we know the present CAG loves to do that!), then it should be to educate the public how not to misread such numbers. But then again….why should the present CAG do that? He has his post-retirement life to take care of….

Friday, April 19, 2013

But who asked for the JPC???? BJP cannot mock the findings….

The BJP as expected has “rejected” the JPC report, finding its conclusions inconvenient. After all, the report attempts to turn the tables on the party by claiming that a Rs 40000 crore loss was incurred by the Vajpayee government. Inconvenient or otherwise, what right does the BJP have to question the report of a committee that it itself demanded be set up (the PAC headed by a BJP leader could well have reviewed the CAG report), knowing fully well that the committee would have a majority of ruling party members and would be headed by a Congress MP? Having made this demand, how can the BJP disown its report? This technicality aside, lets look at what the report says.

First, the report says that the government acknowledges that it decided to continue with the cheap spectrum policy after due consideration and deliberation. This decision was not taken by Raja alone. But by the cabinet, including the PM and FM. Clearly, the cabinet was keen to continue with the cheap telecom policy so as to complete the job (of increasing tele-density) that was not even a quarter done then. In 2004, the number of subscribers was not even 250 million. Today, that number has crossed 900 million, thanks in large measure to the cheap spectrum. The government was right in its decision. So is Raja right in claiming that he consulted the PM? Of course he is. The PM is not running away from this decision of his government. In fact it is openly embracing it.

What Raja however did not keep anyone informed (leave alone the PM) was what he would do AFTER the policy was cleared by the cabinet. That he would tweak a vital clause in the way the policy was implemented – from forming a queue based on who applied first, to one based on who paid first. This small, yet monumental change, allowed a few of Raja’s favorites to jump the queue. This is why some of them were ready with their Demand Drafts even within only a few hours after the announcement. The deadline itself had been advanced by a few days to keep some others out.

Did Raja need to go back to the cabinet for these misdeeds of his? Of course not. The cabinet does not get involved in nitty gritties. The minister kept his secretary (who is also in the dock) in the loop, prepared a press release to give effect to his devious scheme, consulted the attorney general (as a matter of protocol) with a draft of a “clean” press release, and then proceeded to make changes in it without informing anyone. All along, he kept re-assuring the PM that he was doing everything correctly. This was clearly the act of a minister who was out to beat the system. For this, Raja may have been rewarded with a Rs 200 crore gratification. The point here is whether Raja’s claim about keeping the PM informed is right or wrong. It appears he is right to the extent that the PM took the final call on the policy; but he is dead wrong when he says he kept the PM informed about his corrupt practices.

A connected point is about the government “ignoring” the nay sayers in the government before taking the decision to continue with the NDA policy. Well, in a democracy like ours, there are always some or the other naysayers. In fact, such naysayers add to the quality of the discussion by presenting opposing viewpoints. But this does not mean that they cannot be ruled against. In this case also, it appears that the government considered their viewpoints and decided to go with the policy in spite of their views. The government rejected their view that expensive spectrum would not translate into higher end-user prices. The government was right. Just look at 3G prices. Thanks to hugely expensive spectrum, those prices are unaffordable. And 3G penetration is far from what was projected. What’s so despicable about the government rejecting the views of some people? The political authority (read minister, or GoM, or cabinet as the case may be) has to choose between alternate viewpoints. Just as a matter of debate, had the government chosen to go with auctions, there would have been other naysayers who would have argued that the policy was wrong. So what should the government have done? Stayed in limbo????

The BJP has no grounds to stand on. It has no right to question the UPA government’s decision to continue with cheap spectrum. It has no right to question the PM’s and FM’s decisions, even though it may disagree with them. No one – including the CAG – can question the policies of the government, unless they are ultra vires the constitution. The CAG is presently led by a politically motivated person, one who allegedly discusses his draft reports (takes guidance even, maybe) with the PAC chairman (and senior BJP leader) before releasing them. This vastly discredited finance expert doesn’t even understand what “time value of money” is. This Harvard educated, yet literally illiterate accountant had also once opined that S-band spectrum should be priced the same way as 3G, claiming a Rs 2 lac crore loss, only to quickly withdraw it later. I count the present CAG in the pack of opposition leaders.

It’s time the government stuck its neck out, and reverted back to the FCFS system. Or another form of “administered allocation” which is not auctions based but still improves transparency. That, and only that, will tell the world that the government stands by its earlier policy. The present policy of auctions in any case is not helping anyone. The industry is in a tailspin. The BJP and CAG are the ones responsible for this mess. Their opportunistic politicking created an impression of massive corruption, leading to an about-turn in policy. By equating the “notional loss” suffered by the government to “corruption”, the opposition even put the government into a policy paralysis. These were deft political moves, and the BJP gained from them. How can it now run away from taking responsibility for the condition the industry finds itself in?

The real truth is that the BJP simply cannot question the JPC’s report. It is itself responsible for the existence of this JPC. It also has no basis to question the government’s policy; something that is its constitutional right. That is why it is resorting to cheap sound bytes – that the report was released to the media before it reached the members (some breach of Parliamentary propriety – how strange for a party that doesn’t even believe in the institution called Parliament). Such an opposition is best ignored….

Thursday, April 18, 2013

JPC report on 2G – some right conclusions, some wrong….

The JPC set up on the BJP’s demands – for which it blocked a full Parliamentary session – to investigate the CAG’s assessment of a Rs 1.76 lac crores “notional” loss to the exchequer is ready with its decisions. The report looks like being a mixed bag. It has come to some conclusions correctly. It’s cleared a few people rightly. But it has also blamed a few people wrongly. As a result, it’s bound to lead to more questions being asked; rather than more of them being answered.

The first thing it did right was to reject the CAG’s sub-moronic thinking on the subject. The JPC rightly (finally) argues that the policy of cheap spectrums caused enormous benefits to the people of the country. The “loss to the exchequer” did not go on to line the pockets of politicians (there was no “mota maal” as Sushma Swaraj had colorfully described it), but went on to start the telecom revolution that we saw. It led to empowerment of the lowest sections of the society, which brought them at least partly into the mainstream (“inclusive growth”). Suddenly, this section of the underprivileged became identified by a “secular number” and not by his “caste, creed, religion, sex or language” (Ramachandra Guha’s analysis of the 5 ills of India in his book India after Gandhi). Suddenly, this person, ostracized by society for centuries, became a small entrepreneur, repairing phones, delivering newspapers, making duplicate keys…..all because he was just a phone call away. The CAG couldn’t care about all this, but the political executive has to. It is the government’s job to elevate people out of poverty, not the CAG’s. The JPC has finally given a green signal to the cheap spectrum policy.

The second thing it set right was that the corruption (if any) was limited to the last mile – in this case to Raja’s office. It has now been proved that it was Raja who altered the press release which went about starting the process of favoritism.

Thirdly, it has also cleared the PM and Chidambaram of all charges. This finally shows (correctly) that the two were involved in the approval of the cheap spectrum policy, and they had pushed it keeping the end consumer benefits in mind. They had rightly identified that “revenue maximization” wasn’t the only goal of the government. That the policy had been started in the past, and they preferred to continue it rather than go for auctions. That TRAI also had not suggested auctions. One thing the report appears not to have brought out directly, but which is equally relevant to the discussion here, is that it was the same PM and the same UPA government who had approved auctions for 3G. That was alright considering that 3G was a totally different ball game targeting largely the “haves” of the society. Had 3G airwaves not been auctioned, the 2G “scam” would not even have been born. Everything would have continued in a “business as usual” fashion. How can a policy decision taken in the future, and for a different subject, become the reason to call something in the past a scam? If for instance, a better formula is found for future telecom technologies, will that make 3G a scam as well?

But the JPC report also makes some blunders. It’s political bias simply cannot be missed. By blaming the Vajpayee government for causing a loss of Rs 40,000 crores, it risks the report being discarded as piece of political crap. In my mind, the NDA government did the right thing by changing the previous policy and making “revenue sharing” the formula for pricing spectrum. It was this change which made telecom a viable business, and which led to billions of dollars of investments, and a rapid increase in tele-density.

There seems to be a mistaken notion (and the BJP is as guilty of this as the Congress) that a government cannot or should not change a policy once its made. This is nonsensical. The job of the government is not to stick to anything, but to be so flexible as to achieve the set goals in the best possible way. Vajpayee was right when he tweaked the previous policy, because the goal of the government even then wasn’t maximizing revenues, but growing tele-density. And Manmohan Singh was right in continuing Vajpayee’s policy, because tele-density had increased to only 250 million in 2004 (now its crossed 900 million) and the job was only half done. There was no scam back then in NDA days; there was no scam during UPA-1 and 2 either. The real scam in the sector is taking place at present, with the government following a destructive policy of setting high spectrum prices and letting the tax hounds loose after the telecom revolutionaries. Instead of saluting their good work of the last two decades, the government is hunting them down as if they were thieves and criminals. This is the scam.

But why blame the Congress alone for this mess? It was the BJP that jumped onto the flawed CAG report and made political hay. Now the shoe is on the other foot. If tweaking is wrong in principle, then Vajpayee was indeed responsible for the loss of Rs 40000 crores. But if tweaking is necessary with changing times, then the 3G auctions are not indicative of a scam in 2G. Equally, if we now go in for coal auctions (if we do), then the previous policy of “beauty parade” wasn’t a scam either. Countries learn with experience and keep improving. Commenting on the past is the job of a fraud opposition. And of course this particular fraud CAG.

The BJP also cannot rubbish the JPC report. It was after all, the party that demanded that it be set up. The JPC is always headed by a ruling party member; the PAC by the opposition leader (in this case, Murli Manohar Joshi). Had the BJP not foolishly insisted on a JPC, it would have had more control on the matter. It could have used the PAC (as it has done) to attack the government. But because of its blinkered, near-term thinking (blocking Parliament made sense then), it is now suffering.

The government should now acknowledge that earlier 2G policies were right in the most; and should be continued. The auctions methodology is flawed as far as 2G is concerned. But if it feels bound by the SC ruling on this, then it can still adopt better auctions methods. Methods that do not burden this empowering industry, but which still bring more transparency in. A recent ET story suggests that the government (DOT) is considering reverting back to “administered allotment” (allotments sans auctions) as one of the way to revive the sector. This is a good move.

The real truth is that the 2G “scam” should now be buried. The truth is out in the clear. Cheap spectrum was a government preferred policy; not a scam. The NDA was right in improving a previous flawed policy. There was no scam there either. The UPA was right in continuing with the policy. 3G auctions were right in their own way; and 2G “administered allotments” were right in theirs. The butcher who started it all off – the CAG – is the only who should answer. But will he? Or is he awaiting his retirement, and a possible gubernatorial posting once (and if) the BJP comes to power in 2014????