Time India got its own bribe-giver act….

We have a plethora of rules that threaten to investigate and prosecute the bribe taker. This was OK at a time of petty corruption – when the government official receiving the bribe did so from sundry non-corporate givers. Since the Indian economy has got increasingly corporatized, corruption too has changed in complexion. Major cases of corruption usually originate from the corporate sector’s unfettered and relentless pursuit of super-fast growth and profits. It’s time India got an Act targeting the bribe-giver as the PM has indicated.

For every bribe taker, there has to be a bribe giver. If the bribe giver happens to be a corporate, it is that much easier to investigate and bring to book. There are far fewer corporates than there are bureaucrats and politicians. If nothing, the job of tackling corruption will become easier if the bribe giver is under the threat of prosecution. Further, the cleaning up of the corporate sector is easier – typically when a corporate gets “listed”, the SEBI rules that apply to it make disclosures far more mandatory and extensive. It becomes that much more difficult to indulge in bribe giving. As a case in point, if DLF shareholders want to check out the facts of the recent Kejriwal accusation, they can demand a probe. As more and more Indian companies get listed, the chances of indulging in blatant big-ticket corruption reduces at least partially. Of course, those who operate businesses in benami names, or keep their companies behind a complicated corporate veil may still get away – but a start is still a good idea.

Major countries like the US and UK have specific acts targeting the bribe giver. The US’s Foreign Corrupt Practices Act is one such. It restricts “issuers” (listed companies mainly), “domestic concerns” (largely unlisted domestic companies) and “any person” (covering ordinary US citizens) from bribing “foreign” officials (foreign official, political party or even a candidate for political office). The penalties range from $ 250,000 per violation and a prison sentence of 5 years for individuals to $2 million for corporations. Likewise, the UK Bribery Act launched recently provides for similar acts of corporate corruption. It is stricter in the US act in several respects of applicability and “exemptions” (promotional expenses, facilitiation fees etc) and it also provides for up to 10 years of imprisonment and “unlimited” fines if found guilty. Both acts have had a salutary effect on curbing corporate corruption outside the US.

This approach to tackling corruption appears better than creating another massive bureaucracy of the Lokpal. In many ways, it changes the entire approach to corruption. Uptil now, giving bribes is not considered to be a crime; only taking is. But by changing this dynamic, there is finally a recognition that corruption is a two way process. The fact that the existing corruption-fighting agencies (CVC, CBI, Anti Corruption Bureaus in the states) will remain responsible for curbing corruption is good. We need to reduce the size of the Government in this country; not increase it.

The PM’s statement also indicates a certain commitment to fighting corruption. To my knowledge, there have been no major ideas floated in the fight against corruption except for the Lokpal. The BJP for all its platitudes against corruption has failed to offer viable solutions to fight corruption. The PM should now take his idea through. It will go a long way in convincing the people of India about its intent. The BJP has to support the initiative. The Left parties – which are ever ready to reign in the private sector – should be happy to support the initiative too. The trick now is to finish off the job quickly.

The real truth is that catching corruption at the “giver’s” end is easier than tackling it at the “taker’s” end. It wont help cut petty corruption, but it will surely go a long way in attacking big ticket stuff. Its worth giving it a shot….

Is Kejriwal the joker in the pack – or just the joker???

Kejriwal’s entry into politics has created even more sensation than his “crusade” against corruption. He was expected to upset the apple cart, but no one expected the methods he has adopted. In many ways he is doing more of what politicians normally do – silly, populist, sensationalist things. And in other ways, he is charting a totally new path – working like media companies do – believing in “scoops”. But even here, Kejriwal is going ahead into unchartered territories – for he is not worried about having to present evidence to back his outrageous claims. In the process, Kejriwal, rather than being the unpredictable joker in the political pack, is looking more and more like a circus joker. Entertaining, but untrustworthy and unreliable.

In today’s world, it is not difficult to create sensations. It’s a world in which people like Assange are treated like heroes – even being considered for the Time Magazine Person of the Year award – rather than a plain terrorist who exposes sovereign secrets through debious means. His actions can cause conflict around the world; unsettle long-standing peace arrangements between nations and even make the most trusting and eternal friendships suspect. When the US Government takes action against him, it is branded “intolerant” and a “suppressor of freedom”, rather than being seen as one removing a rogue element from the world. In today’s world, people have turned decidedly anti-establishment; and any person who dons that hat is considered a hero.

It’s the same in India too. There is a high degree of anger at the slowing economy. That is starting to hurt. Inflation is running high, jobs are not being created and savings are being squeezed. Suddenly, the confidence of the people is being replaced by diffidence. Suddenly, rather than looking at a bright future, people are starting to worry about a bleak one. In a situation like this, it is obvious for people to attack the authorities. Kejriwal is merely seizing that opportunity. His credibility so far has been higher than that of the main opposition party’s. The question is: is this reason enough for Kejriwal to behave the way he is? Is this the political alternative one is seeking?

Kejriwal has been hurling unproven accusations against one and all. First it was against Gadkari who was accused of trying to scuttle a demand for a probe against the NCP in the irrigation scam in Maharashtra. Sure, Gadkari is entirely capable of doing this considering how deeply the BJP’s hands are involved in the corruption business. But did we get to see even an iota of evidence; or are we just expected to behave like omniscient people and “connect the dots” – the most popular phrase these days. By connecting the dots, we are supposed to see the real picture. That Gadkari is a corrupt man. C’mon Kejriwal, you can do better than that.

Likewise, the charges against Robert Vadra are clearly intended to created a sensation. Here is the son-in-law of Sonia Gandhi, the most powerful political person in India. Since there is no direct way to get her, the next best is to get her son-in-law. Now I would have no complaints against this, provided some evidence was presented. But again, we are expected to merely connect the dots – basically imagine up things that don’t exist. Kejriwal has merely used published information to hurl accusations against this man. His accusations have been denied with data by DLF. Experts have ruled that neither DLF nor Vadra are public figures and that the Government cannot initiate action unless there is a complaint against them. Yet, has Kejriwal done that? Has he filed an FIR? Has he filed a case in the court? No, he has merely hurled an accusation. The sensation-crazy media has amplified it in hopes of a higher TRP. And we expect the Government to start investigations against him. Yet, when there were similar accusations against Kejriwal himself and his colleagues Kiran Bedi and the Bhushans, there was no offer to be investigated. In fact, at that time, the Government was branded as “targeting the crusaders”. C’mon Kejriwal, don’t behave like a joker.

Then this drama about asking people to stop paying electricity charges in Delhi. The reason it is all so stupid is that everyone knows that utilities in India are under-priced; not over. Utilities lose money. One of the reasons for this is the theft of power. On one day, we want the government to cut T&D losses (which includes theft), and on a different day, we want it to restore power to the homes of such thieves. Such flip-flops are obviously random; they are also extremely demoralizing to the administration. If they do something, they are damned; if they don’t, they are damned too. Kejriwal should first try to understand issues before raising sensationalist alarms. Delhi’s power tariffs are lower than Mumbai’s. The higher tariffs for certain people go on to subsidize power to other more disenfranchised people. Even if the Government made profits from power distribution – which it doesn’t – it uses those profits to subsidize other welfare programs. Profits – if at all – in a Government department don’t mean the politician take the money home. It only means that the resources are being deployed elsewhere. By picking on one part of the Government’s program and ignoring the rest, one can prove anything. People complain about diesel price hikes, but forget that the Government is only losing money on diesel, not making profits.

But given the climate around the world and in India, Kejriwal is being given wide publicity. We are now expected to wait for “yet another sensational revelation” today. We are supposed to sit on the edges of our seats, waiting for the next episode of the drama to start. Political parties have already grown weary of Kejriwal. Apart from the routine demands for a “probe”, the BJP has been muted in the Vadra matter; the Congress likewise in the Gadkari case. It’s a question of time before the people also develop a disdain for this rumor monger. Kejriwal’s relationship with the voters could end up becoming a one-night stand. It’s a matter of time before they realize he is nothing but a joker.

The real truth is that Kejriwal is pushing forward an untenable method. By this logic, his party should be called the Scoop Party or the Scam Party. He is doing the same thing the BJP does – criticize without offering a solution. Or letting us know what his own vision is, except of course for the Lokpal. It would be better if he focused on his own plans and communicated those to people….

Why India cannot have televised debates between PM candidates….

After the exceptionally brilliant television debate between Obama and Mitt Romney, many Indians wistfully wonder why we cannot have similar debates between our PM candidates on TV. There are several reasons for that of course like “language issues”, “multiple parties rather than just two-three”, “party-based elections rather than individual-led” etc. But the most important of them all is the low level of maturity of our leaders and our media.

Language issues refer to many things. The absence of a common language across the country that leaders can converse in; the inability to speak fluently and concisely so that debates don’t go on endlessly. Given such language issues, a “better debater” (one who has better control on language) may win a debate over a poorer debater, even though he may be much lesser informed. By “multiple parties”, obviously what I mean is that debates would have to be held between innumerable leaders and the whole advantage of public debates would be lost. By “party based elections”, what I mean is that a leader’s personality and views are somewhat less important than a party’s ideology and agenda. That is why our PMs are mostly elected after the party secures a leadership. That is why we have party manifestos instead of TV debates.

But the most important reason why debates are meaningless in our country is that our leaders simply don’t have even a basic appreciation of debate decorum. The decency to let someone complete his or her point. The ability to complete one’s point within the allotted time frame. The willingness to listen to the other person’s point and attack only when time is provided for it. And equally, the maturity not to turn the debate into a personal attack on each other.

Just look at what happens on debates on TV channels. Each participant makes wild accusations against the other and the anchor makes absolutely no attempt to moderate the discussion, believing that a chaotic and raucous debate makes great content. Reputations are routinely sullied on prime time TV – and the channel takes no responsibility of holding back accusing panelists, or of putting out the right facts on prime time once they come out. It’s part of our culture –accusing someone in public is considered part of acceptable politics. In a country that lives on gossip, public accusations without an iota of evidence are cool. How can one have meaningful debates in such an environment?

Take the Kejriwal accusation against Robert Vadra as an example. Kejriwal’s big moment under the sun emerged not from any “scoop” but from publicly available documents. He has made wild allegations without giving the opposite party any time or opportunity to react or respond. The media has played along, again without giving Vadra a chance to explain. The other accused –  DLF – has given what appears to be a solid explanation questioning the facts that Kejriwal has put out. The point here is not about what is right or who is right or wrong. The point is about the quality of our basic value systems. Kejriwal could have filed an FIR against Vadra. He could have approached the courts.  But no, he chose to make arbit accusations in media. In the recent past, an India Against Corruption activist accused BJP President Gadkari of trying to scuttle the demand for a probe against corruption charges in the irrigation scam in Maharashtra. Again, she had nothing to prove, and indeed her case would be thrown out in the first hearing in the courts. So she preferred to go to the media. With such immaturity, how can informed and intelligent debates take place on TV?

The media has no ethics about carrying such wild accusations. In fact, Scam TV decided to put up a full show on the IAC activist’s charge against Gadkari. Even the respectable TOI put out the accusations against Vadra on page 1 yesterday, but put our DLF’s detailed explanations only on an inside page today. Tarnishing someone’s reputation in this way is worse than the worst forms of corruption. And yet Kejriwal’s main weapon all along has been exactly that. With such disdain for the basics of justice, how can we dream of decent TV debates?

A key requirement of TV debates is that debaters must swear to stick to facts. In India, everyone prefers half-truth and full-lies. For example, Kejriwal’s charge that Vadra acquired the Saket hotel property at a throwaway price is factually wrong. Today DLF has clarified that the market value of the Saket property was indeed Rs 150 crores (the charge made by Kejriwal), but the company also carried debt worth Rs 80 crores on its books. Vadra paid 50% of the equity valuation (Rs 70 crores) and “assumed” (took on) liability for the Rs 80 crores debt. Hypothetically, if the debt was Rs 150 crores, a person could buy the company at “zero” price. That would not be a scam! That would only indicate that the one who bought it had taken on the responsibility of settling Rs 150 crores of debt. If Kejriwal were less driven by political sensationalism, he would have understood this in no time. After all, he was an IRS officer in his earlier avatar. But Kejriwal intentionally hid this.If all this went on prime TV in the form of a debate, we’ve had it. How can lay people be expected to understand this when an ex-IRS officer refuses to do so?

The real truth is that we simply cannot have televised debates between PM candidates in our country. We simply do not understand the basic rules of a debate. For us debates are based more on emotions, and less on facts. Anyone can make a random personal charge against someone else and get away with it. We routinely misunderstand a “toilets are more important than temples” comment (poor Jairam Ramesh is in trouble for this). Not surprising then that as a society, we don’t deserve the joys of such TV debates…..

Recapturing the Reforms space…..Congress’s political strategy clear

The Congress is working overtime to prove its reforms credentials. Or should we say: re-prove them. After being hobbled down by a Leftist Mamata for far too long, the Congress seems to have found its space all over again. In doing so, the Congress is playing a shrewed political game – sensing an opportunity which few others have sensed. It has also managed to de-position the BJP.

Here’s how. The Congress’s traditional voter base has been the rural poor, the farmers and the Muslims (in most states, except in UP and Bihar). In some of the states, it has squandered its grip to offshoots – like the TMC in Bengal, the NCP in Maharashtra and more recently, the Jagan led party in AP. All these parties are essentially the Congress itself; but having a separate identity helps their leaders secure a more prime place in governance and in politics. The big point however is that the Congress’s politics is about rural areas. Hence the MNREGA; the loan waiver; the repeated increases in Minimum Support Price; the Food Security Bill; the lavish Land Acquisition Bill etc etc. While every party is pro-poor and pro-rural folks, the Congress is the biggest claimant to this class of voters.

To this, the Congress added in 2009 the fast growing segment of urban middle class, usually a BJP strong hold. The Congress has added this segment on the back of a few gaping holes in the BJP armory. Traditionally, the biggest bugbear of the urban middle class – its complaint with the BJP – has been the “Hindutva” agenda of the party. Most urbanites have evolved and moved away from petty religious issues and believe in communal harmony. The focus has shifted towards economic progress. The BJP’s fierce and divisive politics of Ayodhya still rankles them. But the more orthodox of the middle classes have lent support to the BJP on this score.

The other gaping hole has been the BJP’s apparent lack of progressive economic thinking. The BJP first showed that during the 2008 Indo-US nuclear deal debate and vote in Parliament. Most urbanites anyday prefer anything “US” to anything “Russian” or indeed today anything “Swadeshi”. The BJP has completely misread this sentiment, preferring to fork a US-phobia to urbanites. The urban voters wanted the nuclear deal, just like they want the Jaitapur and Kudankulam power plants. But the BJP voted against the deal and squandered an otherwise strong position they had before the 2009 elections. The BJP’s long term ally, the Shiv Sena, is now creating a shindig around Jaitapur.

The BJP has made a huge mistake in opposing reforms. Whatever the party may do to explain that every reform is not related to FDI, in the common person’s space, it is. If more FDI enters the country, the country progresses faster. They get more jobs. There are more “foreign-like” shops that open. Our cities look more global. There is more pride in the people etc etc. Honestly, no one in the urban centers agrees with the BJP on the “40 million jobs will be lost” theory the BJP is propounding. They have seen more than 2000 Indian large formats open and they have only seen more jobs being created.

Then there is the larger issue of opposing all reforms. The BJP opposes everything. All this doesn’t go unnoticed. The middle class is savvy enough to demand alternate solutions rather than just questions being asked.

Net Net, the Congress has rightly regained its reforms imagery. If reforms was not the Congress’s agenda, why would it want to have Manmohan Singh as the PM? It could have had any pliant politician to hold the job until Rahul became ready. Here’s the other truth about the middle class. They love Manmohan Singh, no matter what attempts the BJP may make in calling him a puppet of Sonia. There is a strong belief that MMS is clean and in today’s politics – when the BJP’s party President Gadkari is again and again getting embroiled in corruption controversies – even that is good enough.

The Congress also realizes how the mood has swung around since it started announcing the reforms. As I write this post, the Sensex is kissing 19K and the Re has bounced back to the 51 levels. There is a visible relief in the corporate sector that the economy will start to roll again. Investments are expected to start soon too and with that job growth. In today’s India, at least as far as Lok Sabha elections go, economics has started to matter significantly. By positioning itself on the reforms bandwagon, the Congress is carving out a completely isolated and unique position for itself. Equally importantly, it has completely depositioned the BJP, which suddenly appears to have nothing to offer as far as growth and reforms are concerned. It has also managed to create a rift within the party – with business minded states like Gujarat being forced to tow the party line, in spite of their genetic bias towards progress.

The real truth is that the Congress has managed to position itself as the sole supporter of reforms. In a country that aspires, first and foremost, for rapid growth and well paying jobs, that’s a solid advantage. The BJP may stick to its head in the sand attitude for now; but sooner rather than later, it will have to change tracks.

Kejriwal’s political agenda is kiddish….

In what can best be described as unthoughtful and even immature grandstanding, Kerjriwal’s political promises look like what a rookie would pronounce. Most of them are impractical. At best, they can be  described as plain stupid.

Take the “no red beacon on vehicle” point. This is classic grandstanding; a point meant only to brag that his party wouldn’t treat its MPs/MLAs as being anything but ordinary citizens. Forget practicality, this point seems to be screaming. The way to prove a politician’s pro-people stand is apparently by him/her getting stranded in a huge traffic jam. This is akin to the Left parties’ ideology that all people must be equal; equally poor! It would be better if the “more important” people – as politicians no doubt are considering the role they have to play in building the nation – spent their time on meaningful activities rather than getting stuck in jams.

Then take the “will not move around with security personnel” point. Again, this is high level grandstanding, with a desire to appeal to people upset with the cavalcades of security vehicles that travel around with every VIP, affecting their own travel. But Kejriwal may want to revisit this slogan of his by remembering the number of politicians who have been killed in the line of their duty. Again, Kejriwal’s aim here appears to be to say that his politicians will be no different than ordinary aam aadmis and hence why should they get special treatment.

The crux of his political promise appears to be plain populism. Politicians will get no special treatment. In fact, politicians will be ground to mother earth and buried in the sands….simply because they are politicians. By doing this, Kejriwal’s party wants to become the antithesis of current political parties. Fundamental also to Kejriwal’s thinking is that politicians are worthless people. None of them deserve any special status. The PM should also travel without security, so what if he/she gets assassinated. If that happens, then that’s all right. After all, so many ordinary Indians get assassinated too. And if the PM has to prove that “he is one with the people”, he must be the first one to take the bullet in his chest!

Likewise, the “no more than one member from a family can contest an election” is stupid and bigoted. On what grounds can the son or daughter be asked not to contest if their father or mother is contesting? Does Kejriwal believe we are still a feudal society in which the father or mother decides the career choices of the children? Is what Kejriwal saying this that if a family member stands for election from his party, then another family member must necessarily stand from another party? Or should shun politics? This is naivete at best.

And “no land acquisitions if farmers are opposed” is an obvious statement and indeed the policy of the day. The problem occurs when a few farmers hold out and make the entire process of land acquisition untenable. That is why the new land acquisition policy suggests that if 70-80% of the land owners agree to the financial terms, the remaining 20-30% can be compelled to sell. Now, everyone understands that this cannot be easy on those who have to surrender their lands, but then does Kejriwal have a better policy to offer? Does Kejriwal understand that there are different lobbies at work here? The Congress is proposing to make land acquisition very expensive – asking for six times the market value to be paid and for a long term income generation plan for those who lose their land. Does Kejriwal agree with this? Because if he does, then he’s already lost the support of the industrialists. And he may want to remember – just as much as the Congress may want to – that a country cannot grow without the private sector growing. The private sector deploys capital efficiently; generates more jobs and makes growth more sustainable than any government ever can. But the point today is not whether private industry is good or bad; it is whether Kejriwal is not being too much of a baby in the woods in making such ludicrous policy statements.

At the end of the day, Kejriwal has only two things to offer. One, that the JLP will be passed. And two that the Right to Recall will be implemented. Both of these are unviable. The JLP is a draconian piece of legislation and if Kejriwal’s party was to be based purely on that, I for one would canvass against it. We surely don’t want a Lokpal Raj in this country – a body full of corrupt people who judge others who may or may not be corrupt as well. And the Right to recall? Well, even the EC has said it is unsustainable in our electoral system, in which even the winner usually gets less than 50% of the votes. These things are OK for small countries; completely impossible in a large one like India.

Net net, Kejriwal has floundered in his first step. What would I advise him to do? I would advise him to first and foremost announce his team; even before announcing his policies. For example, if he got Prashant Bhushan as his future Law Minister, I would have liked to know that. But if Prashant Bhushan was the Foreign Minister, god save this country. I would have liked to know who the Finance minister would be, and then I would like to hear that person speak about his/her priorities. Will he be socialistic or would he favor private industry? In short, I would build my team first, and then use them to talk about the policies. The problem with Kejriwal is that I only know him as an anti-corruption crusader. Unfortunately, that is not enough to run a country. Running a country is a complex, multi-layered task. We need Kejriwal to convince us he at least understands these subjects.

The real truth is that Kejriwal has floundered on his first step. Politics is not about one single issue; its about a raft of different matters. Kejriwal hasn’t shown us the gumption to embrace all of these. Like I said, he should build his team first, and then decide policies….

The demise of the Anna movement….

The Anna movement has died. Instead of achieving something tangible for the nation, the movement has died an embarrassing death, mired as it was in an intrigue of personal political ambitions, prime time TV fame, and a penchant for thuggery. I cant say I am happy with this end, but I think this end was perhaps better than what the movement could have ended up with – a dismantling of all that democratic India stands for.

From the moment the movement began, there were seriously doubts about its political affiliation. Rather than curb those doubts, considering how important it is for any such movement to be so, Team Anna went about the issue in a cavaliar manner. Focusing on attacking solely the Congress, Team Anna’s pathetic reasoning for doing so made matters worse. For if one believed them, the reason was that it was the Congress that ruled at the Center. Observers pointed out that most corruption happens at local, state levels, and that the team should equally focus on that aspect, but Team Anna didn’t want to understand. Even a political novice understood that the Congress was only heading a coalition government and that other parties had a role to play as well, but Team Anna did not want to understand this. Given the general level of intelligence in the team (not that Magsaysay awards are any evidence of that), one was led to believe that Team Anna knew everything and still did what it did.

The last straw – for the common man, not the Congress – was the campaigning in Hisar. It was clear by then that the man from Hisar – Arvind Kejriwal – had a different agenda for himself. The man from Ralegan Siddhi was merely a tool to pitchfork himself right to the top. If there was one other last straw moment, it would have to be Kiran Bedi’s “nautanki” on the stage at the Ramlila grounds. Her mockery of the entire political class – with no inclination to explaining her own “hand in the till” accusations – forced people to wonder if they were any different really.

There were many other things of course. Anna’s association with the very RSSesque Ramdev and his aversion to criticizing the BJP (the only lame excuse being that it was Justice Santosh Hegde – a Team Anna member – who had exposed the Karnataka mining scam) firmly established the movement’s political ambitions.

It now appears – and this is surprising – that Anna was unhappy from the beginning with Kejriwal’s political posturing. That he never wanted to associate with politics. But there is a problem with this approach also. For most have said that it is easy to criticize something from the outside, but the real test would be if someone could clean up the mess from the inside. Anna’s movement grew on the back of a huge public disenchantment with corruption, but it was fading because the movement appeared to lack any serious commitment to finding a solution. In fact, finding a solution was never the plan. The Jan Lokpal Bill was in fact the Jan Jokepal Bill; but the team attempted to give this description to the Government’s Lokpal Bill. No one was convinced with the provisions of the JLB, and yet Team Anna was unwilling to budge. Silly handling the issue in the early days gave Team Anna a huge lift upwards, and the government a quick burial. But as the truth emerged, people were fed up with the repeated acts of drama – fasts included – being enacted in the public domain. Enough was enough. The movement was damned.

Now, the two camps – Kejriwal’s and Anna’s – cannot badmouth each other enough. Kejriwal’s deceit is apparent again – claiming Anna had always supported his political plans and that he will come around eventually – though Anna clearly denies all this. Anna’s own credibility is suspect considering he was the fount of the entire movement which was orchestrated by Kejriwal. His own statements had always been raucous and destructive and similar sounding to Kejriwal’s. How could he now claim to be the innocent saint?

The mistake Anna made was that he surrounded himself with politically motivated bunch of narcissistic people. Those who valued TV prime time more than the success of the movement itself. But Anna had himself to blame also. He failed to recognize when the movement should have ended. He failed to be pragmatic; he should have taken the Lokpal Bill that the government passed in the Lok Sabha and then worked towards its improvement. But no, he wanted nothing but his own bill. In a democratic set-up, this was unfair and too much to expect. What else could the outcome have been. The wait for the Lokpal will now be much longer – though I for one have not been in favor of yet another law on curbing corruption; especially one that would have ended up creating another corrupt bureaucratic body.

The real truth is that Anna himself is responsible for the way his movement has got derailed. He is now trying to make amends. He has declared he wont fast again. Thank god for that. He will still engage with the movement. But the time has passed. The country has moved on. The golden moment has been lost for ever…..

SC order wont save the telecom industry….

The order of the Constitution bench of the SC pretty much overturned the order of its own 2-judge bench which had canceled the 122 2G licenses issued earlier and ordered that auctions were the only way to allocate natural resources. It was always obvious that the judiciary had overreached and it could not dictate policy to the Executive. The order is a snub to the 2-judge bench. While it brings sanity to the resource allocation process itself, it does nothing to prevent the ongoing destruction of the 2G industry.

The one to blame the most is the government. It chose not to appeal against the order of the 2-judge bench for its own material considerations. Maybe the smell of the money got to the government’s nostrils and it found milking 2G to be the best way to fix its fiscal deficit problem. But if the government had opposed the cancelation of the 122 licenses, the SC’s Constitution bench would have found it very difficult to exclude spectrum from the ambit of its order. Today, it has said that only auctions should be pursued for spectrum allocation. This is a mistake. How can it order auctions for spectrum? That’s clearly in the government’s domain. It could have canceled the licenses that broke the policy; where there was foul play. But not all. But since the government didn’t challenge it, it managed to insert that bit in – perhaps to protect the dignity of the 2-judge bench. History will hold the government responsible for this.

The whole 2G “scam” (I never called it that) came into existence because of the so called “success” of the 3G auctions. Had 3G auctions failed to generate so much cash for the government, no one would have demanded that 2G spectrum also be given out that way. After the 3G auctions, the government became like a capitalistic blood-sucking warlord squeezing out every last drop from the private sector in the process. Whether the 3G policy has been a success or failure is clear from Kapil Sibal’s recent editorial in the TOI of 15^th September: “Auction in 3G enriched the government by fetching over Rs 1 lakh crore, but since 2010, there is no evidence of the roll out of 3G services. Without the roll out, bank debt cannot be serviced. The telecom sector is now under heavy debt. It has not recovered since.”

Sibal was right. 3G has been a dismal failure. The total number of 3G subscribers is less than 20 million. Tariffs are sky-high and it appears that India is missing the data revolution. As a desperate measure, telecom companies have slashed data rates, and while this has led to some growth in subscriber base, it is unlikely to help them recover their investments. Much of the pressure brought by 3G license fees is now being transferred to 2G subscribers.

Sibal was write in one more respect. In the same editorial, he wrote “Governments are not in the business of maximizing revenues. Instead of filling its own pocket, it is obliged, in a welfare state, to create an environment to fill the pockets of the ‘aam admi.’ Foregoing revenue in 2G helped tele-density and served a larger public purpose. Instead of the exchequer, the people were enriched.” The Supreme Court has ratified his views by stating clearly that “Maximization of revenue in the distribution of natural resources can't be the sole criteria in all situations and circumstances.” And further: “Each bit of natural resource expended must bring back a reciprocal consideration. The consideration may be in the nature of earning revenue or may be to "best subserve the common good". It is this “common good” that the cheap-spectrum 2G policy had served all along. That’s why India’s tariffs were the lowest in the world; that’s why teledensity grew from under 10% to more than 70% in the last eight years of the UPA government. People forget today – but in 2004 when the UPA took over, we had just 275 million mobile phones. Today we are nudging a billion. Nearly 75% of all mobile connections came because of the UPA continuing with the cheap-spectrum policy. Now all that is over.

But rather than focusing on the common good served by a cheap-spectrum policy, the government chose to fill its coffers. The signs of that are visible. The Reserve price for the forthcoming 2G auctions has been set at Rs 14000 crores for a pan-India license. And in a move that smacks of an extreme focus on “maximizing revenues”, the government has managed to get a higher revenue sharing formula in place as well by “lowering” the Reserve price from the earlier crazy number of Rs 18000 crores. The government’s gamble is that bidding will push up prices beyond Rs 18000 crores anyway (that is why it is releasing spectrum in small doses, creating artificial scarcity). It will end up with higher license fees and higher revenue share as well. Such motives of profiteering at the expense of the common good is despicable.

In anticipation, telecom companies have started “culling” low-ARPU customers, preferring to conserve costly spectrum. They have also raised tariffs by a whopping 25% in recent times. More tariff hikes are expected in the coming months. It is my estimate that teledensity will drop below 50% in the next few years. Is it “common good” when the government squeezes the private sector dry and makes them shrink services? Is it common good when 600 million people get deprived of this life-changing technology? Is it common good when the “successful” 3G auctions lead to a situation where usage of data in India remains at pathetic levels, and the country loses billions of dollars of growth opportunity as a result of that? Unfortunately, in the oneupmanship battle for popularity, the government has got sucked in. It’s been pushed by a reckless and irresponsible opposition, a politicized CAG and a recalcitrant SC bench into enacting a policy that is decidedly anti-common-good.

I would rather raise diesel prices and railway fares than increase 2G tariffs. The telecom industry’s low pricing represented the most efficient form of distribution of government goodies – far better than the subsidies program of the government, 85% of which is spent in the administration of the subsidy. In telecom, 100% of the benefits reached the end consumer. But does the government have the elbow room left to change its 2G policy? I doubt it. And that is why the telecom industry will falter. Investments will reduce. Job losses will happen. And a once proud sector of the economy will become another case of “failed policy”.

The real truth is that the government became greedy when it came to 2G spectrum. It decided to hoard it. It decided to overprice it. It decided on an ascending auction method – which leads to irrational price discovery – rather than the more rational e-tendering method. It became greedy. In the short run, the government may make large dollops of money. But in the long run, it has caused irreparable damage to the industry….