Saturday, March 24, 2012

Scam Gates that Lead to Nowhere!

Let me begin with a caveat... I can’t stand this Government, headed by Dr Man Mohan Singh, anymore!  I believe that it has lost all the credibility to continue and is only clinging to the power!  I would love to see this Government replaced with any other functioning government, at the earliest.

Having said that let me come to the subject of this post.   It is about the numerous issues being brought out in the name of scams and gates, latest being the so called scam of coal mine allocation, otherwise popularised by the social media  as Coalgate!

When I try to correlate the above two paragraphs, I am reminded of the story of a mother-in-law, who wanted to see her daughter- in-law’s tears even at the cost of her own son’s death!  While many of us would like to see this Government packing up at the earliest (though, each of us might be wishing so, for different reasons), we can’t afford to be that mother-in-law, and let our Nation suffer in the long run.

I am as worried as anybody else about these gates that are appearing more frequently in our national and regional landscape.  But, for the purpose of this post, I would restrict myself to the national scene.  Where are these gates leading us to? Are these gates only for ouster of the present government or are they taking the nation to unknown territories?

Our Constitution envisages a fine balancing of different arms of the State - Executive, Judiciary and Legislature.  Government, being the Executive, has lost the credibility due to various actions and inactions.  But can that be a reason to allow other arms to gain upper hand and in the process upset the constitutional balance?

We have seen the increasing activism of Judiciary, with government looking helpless in front of various Benches that pull them up, to the happiness of headlines writers in the Media, during any stage of the hearing. 

Look at the 2G verdict.  Government of the day clearly understands the danger in making auction the only legal method for allocation of natural resources.  Even otherwise, allocation and utilisation of natural resources must be the policy of Executive.  Yet, government is not even sure of filing a review petition to challenge the Order that makes first come first serve policy illegal and unconstitutional! Government is worried about public perception because it knows that people hold it guilty for 2G scam (rightly or wrongly) and any effort to challenge the verdict that calls for cancellation of tainted licenses will be seen as an effort to side with corruption!  This is what lack of credibility does to governance! 

While this indecision and innuendos are still going on, there comes another jolt.  This time, it was leaking of a draft report of CAG’s performance audit on allocation of coal blocks.  Anyone who has dealt with auditors in their official capacity knows very well, as to how preposterous their preliminary observations can be at times.  Their objective is to establish wrong doings and aberrations and towards this end they don’t leave out any chances.  However, fortunately, most of these preliminary observations get dropped during the replies and subsequent explanations, spread over considerable period of time. 

Final reports usually contain only reasonable observations that could not be resolved by the executive staff to the satisfaction of auditors.  However, CAG, which is supposed to conduct the audits and submit report there on, to the Parliament, is increasingly finding it tough to keep even their draft reports from reaching the Media.  Media, in turn, arrive at conclusions that allow them ‘breaking news’ and outrage based TRPs, irrespective of the fact that the CAG itself is yet to finalise its findings on the matter and the Parliament could accept or reject that very findings.

Let me not go into the details of the said draft report, already published in the Media extensively.  I will limit to the principle of auctions as the preferred mode for allocation of natural resources, as advocated by CAG in 2G as well as Coal allocation (though yet to be finalised).

Is CAG or even Supreme Court competent to dictate the mode of allocation of natural resources to a Government? In my humble opinion they are not. It is the legislature and/or executive that must decide its allocation or exploitation. 

CAG should limit itself to ensuring that there were no misdeeds in following the stipulated policy.  It can also suggest any alternative methods that are more efficient within the stipulated policy or even recommend a change in the policy itself.  But to report that a policy itself is wrong and then to suggest that all actions undertaken by Executive within that policy is corruption is definitely beyond the scheme of things.  Otherwise, why do we need a legislature and executive? Let CAG make policies and bureaucracy govern the nation!

Is auction the panacea for all ills?  Can auctions be limited to certain resources alone? Or, would it be the policy for each and every resource controlled by the government? For example, if I don’t get a berth in a train or a seat in Air India, can I file a PIL and seek auctioning of those berths/seats to the highest bidders?  If there are no sufficient beds in a government hospital, should the doctors auction them to the highest bidders? Water being a similar natural resource, should we allow people to exploit it as they wish or should Government sell it to the highest bidders?  To take it further, if you are waiting for a taxi and I come and offer more money to the driver, whom should he accept as the passenger?  I would not even dare to take these further to licensing of oxygen supply against payments.

You might find the above suggestions preposterous.  But the logic is same as 2G and Coal allocations.  What starts with them today can extend to all those scenarios tomorrow. We will have the perfect capitalist system where highest bidder gets all the rights to any assets!

We all know tender system is another form of auctions, used by government in allocating public works.  What is the result?  Pot bellied contractors and potholed roads?  Has tender system been able to remove corruption or syndication in construction contracts?

The logic of CAG seems to be simple. If an allocation is made other than through auctions, whatever profit made by the allottee amounts to loss made by the government on account of that allocation and therefore it is corruption.  Even though, CAG himself dissociated from this view in his letter to Prime Minister, going by the recent past we can safely conclude that the final report will also reflect this view. 

In my opinion this view of CAG (and of Supreme Court in 2G) is incorrect. Let me demonstrate.  First of all, why is that such a resource is allocated to private parties under licence or permits? Why it is that Government itself is not exploiting these resources?  As per my understanding, Government neither has the capital nor the expertise to undertake such ventures.  Government can spend tax payers’ money and undertake these ventures despite lack of expertise, but then we have seen that whenever such things are done, they end up in making colossal losses.  Closest examples are the number of loss making PSUs including Air India, where budget allocations have to be pumped in again and again to keep them afloat.

We have opted for a mixed economy where public and private sectors coexisted.  With liberalisation, the emphasis got shifted more towards private economy, Government’s role being limited to regulator and facilitator.  At least this was the stated objective of liberalisation, though for various reasons the quota license raj continues to be in existence, in many sectors!

 Is private economy bad? Not, at all.  The very nature of human beings and their rational and/or selfish motives makes any public enterprise inefficient.  Unless, there is profit for the persons involved, the efficiency suffers.  Compare the efficiency level of government servants and private sector employees and you will realise this truth.  When a private person employs capital, it is his money, or money for which he is personally accountable.  He cannot afford to make losses.  Therefore, he will employ the best available resources and make all efforts to succeed.

This is the reason we cannot ignore private capital, if we are to progress at faster speeds.  Look at the effect of all reform measures on our growth rate and it becomes clear that private capital is an unavoidable element for our growth. 

Now, why should private parties employ their capital in such activities? Obviously, it is for profits.  If they are sure that the profits from the enterprise will not be sufficient to cover their opportunity costs of their capital employed elsewhere, they will not undertake that enterprise.  If the proposed enterprise involves risk, they will only undertake the same if they are assured of compensating profits. 

This being the case, how can we logically expect the private parties to pay license fees or auction amounts equivalent to the entire profits expected out of the venture? They are not in this for charity!  When they get the license, they hire and employ expertise, provide management skills and try to make the enterprise a success. They also bear the losses if it eventually fails. 

Look at the example of King Fisher.  If it was a huge commercial success, CAG and many others would have faulted Government for allowing a private player into a sector which was previously reserved for a public carrier.  Probably CAG would have come up with another performance audit which would have stated how many crores (with all those zeros) Government lost by not auctioning the airlines license and airspace! Today, with King Fisher making losses we are all cutting jokes at the entrepreneurs and in no way want our Government to do anything to save that company!  What is this, if not double standards?

Coal fields were never auctioned in Independent India.  Government itself was seized of the necessity to find alternate methods of allocation and the Bill for the same has been pending for many years now (like many other legislative proposals... but that is another story).  To arbitrarily take a period and then say Government of that period lost so much money by not auctioning the coal fields is not in good taste!  Would CAG conduct a study as to how much money was lost since independence on this account and how much blame is to be apportioned on to CAG itself for not being able to point out this fault earlier? After all CAG didn’t come into existence in 2004!

Can revenues or profits alone be made the yardstick of all decisions? By that logic, would CAG or some future bench of Supreme Court hold the Bench that decided the Vodafone Capital Gain Tax case against Income Tax authorities, corrupt, because its decisions caused a loss of revenue to the tune of USD 2.1 Billion to Government? More so, when at least the High Court found the reasons advanced by tax authorities sufficient to hold that the withholding tax was payable in India on that transaction!

By no means am I suggesting that any corruption should be condoned.  I am only stating that we should realise the difference between corruption and the need to revise policies in accordance with changing times.  Corruption involves criminality and corresponding standard of proof whereas, reforms of policies only require a felt need or advantage.

To conclude, I can only say one thing. Reforms in governance are not a destination but a continuous process. What is in vogue today might change tomorrow. We can even decide that we want to throw out private economy completely and stick to the erstwhile Soviet Model command economy for future.  But any change must not be brought by blaming the prior acts as criminal or corrupt. Such attempts will only increase the resistance to change.  Look at the reaction of current Minister for Coal on the leaked CAG report. He says, “I am coal Minister in UPA-2 and during this time no coal block has been given”.  In other words, he is using his inaction or inefficiency as a proper defence!

This is the true danger of such an approach.   No Minister and no bureaucrat would want to risk his career and reputation by taking any decisions that might be called into question in some future date on the basis of changed circumstances!   No work means no crime and no corruption. 

I won’t mind some corruption but we can’t definitely afford inaction!  Punish the corrupt but don’t encourage inaction!

PS: My thanks to @GuruMaata for triggering this post through a twitter debate on the subject. 

Tuesday, March 20, 2012

An Open Letter to Mrs Sonia Gandhi

Dear Mrs Gandhi,

I have always admired the role that you played in Indian politics, at a very crucial juncture. At a time when the grand old Congress Party was fading away, under the non-inspirational leadership of Mr Sitaram Kesri, you took the reins and managed to hold the Party together. Many had given up on Congress Party; and that includes some of the star Ministers under current government. All of them left the Party for greener pastures and only returned when the Congress party became greener under your leadership.

Congress Party is blessed with many ‘larger than life’ egos but not many leaders. It would only be a matter of months, if not weeks, before these egos pull the Party apart in case a Gandhi name is not there as High Command, to keep them under tight control.  Even opposition knows that and I believe most of the personalised attacks directed at you and now at Rahul Gandhi have their origins in this realisation!

I have also admired the way you managed the equations between Party and Government, along with Dr Man Mohan Singh, over so many years.  In spite of all accusations against your role, including as the Head of the NAC, and the alleged remote controlling of the PMO, I have personally believed that the coordination between Head of the Party and Head of the Government was remarkable.

However, I must say that all of that is history.  Amidst rumours of your illness and the drifting of the Government, it has become increasingly painful for people like me, who still believe in the important position that Congress Party occupies, to reconcile with the developments. 

First of all, unlike UPA-1, the perception of UPA-2 is that of a non-functioning government. UPA-2 came into power with enormous goodwill, having managed to overcome all the challenges.  However, very soon it began to be affected by various issues like ‘policy paralysis’ caused by incalcitrant allies and recurring scams involving enormous corruption. Roll back has become the hallmark of the government and impression of the PM is that of a Silent Buddha! All this time, those very fair-weather leaders, now senior Cabinet Ministers, were doing all possible acts and deeds to undermine the credibility and collective responsibility of the very Government that they are a part of.

With Rahul Gandhi’s induction into the Party, there were some signs of activation. But after the initial euphoria, none other than the die-hard Congress supporters could see any impact whatsoever from the hard work of Rahul Gandhi. Party does not give any impression of having a definite direction; rather it is moving like driftwood in an ideological vacuum. Lawyers and Dalals seem to be in charge! Even the kind of spokespersons representing Congress in public leaves a lot to be desired!

Look, for instance, at the latest incident that has triggered this letter.  A Minister who placed the railway budget before the Parliament is not going to be the one to defend it.  And to quote the PM’s words here, "Dinesh Trivedi presented a good railway budget. I regret his departure from the Cabinet. I received late last night a letter from Trivedi announcing his resignation. I will forward it to the President with a recommendation to accept it".

Additionally, to  top this shameful incident, PM has now been forced to accept Mr Mukul Roy as the replacement for Mr. Dinesh Trivedi, even though reportedly Mr Roy’s name was rejected by the same PM in an  earlier occasion. Madam, am I, along with lakhs of other Indians, missing some point here?  Can you or any leader of your Party (not those lawyers please, we are not a court) come out and explain how and why this has happened?

Personally speaking, I will never work under a leader who does not have the backbone to stand up when I am in trouble on account of my work! More so, when my actions are in the interest of the very organisation that I work for!  But look at our PM. 20 minutes is all that took for Ms Mamata Banerjee to convince our PM to accept his Rail Minister’s resignation!  I know he will use the same old defence of ‘coalition compulsions’! But then we all know how hackneyed that phrase has become, over these few months.

What we are looking for is a strong leadership from both you and the PM; and not any flimsy excuses. Even when the Government was facing the largest ever corruption allegations, we have stood by the Party and the Government, by giving the benefit of doubt and understanding ‘coalition compulsions’. But, we can’t do that any longer.

I have often wondered why our PM, Dr Man Mohan Singh, acts (or does not act) in a way that only he can do! Half in jest and half in all seriousness, I have written a post titled Dr Man Mohan Singh’s Predicament: The Boatman’s Logic and Contemporary Politics, way back in August.  I have tried to rationalise his behaviour by relying on an old Malayalam story about a cruel boatman instructing his son (who was to succeed him as the boatman on his death), to make people disembark from the boat while the water was still at their hip level.  Soon, people who used to curse the boatman for making them get down in knee deep water were praising him!

I have genuinely suspected that Dr Man Mohan Singh was doing all that was possible to discredit himself so that when, ultimately, Rahul takes over as the PM, people will heave a sigh of relief!  But with that event not to be seen anywhere in the horizon, I am genuinely concerned about the damage that is being done to the Congress Party right now.  I can’t stop being concerned for the simple reason that the available alternative to Congress is, in my opinion, far more dangerous for the country and its people in the long run.

But how long can one hold on to that opinion? When a Government is neither able to perform nor able to maintain its credibility, how long can it be supported merely on the ground of ‘no alternative’? I must say, I am not a purist. I would perfectly understand if today, Government went ahead and indulged in some horse-trading so as to ensure adequate majority and stability. But, not to do anything and be at the mercy of unreliable allies is something totally unacceptable. . In all likelihood, Mukul Roy will roll back the very proposals that were, in the words of Prime Minister himself, part of a ‘good railway budget’.  In all likelihood, what is good for the railways and the country will get sacrificed for the proposed continued support of Ms. Mamata Banerjee, until another issue is picked up by her for yet another blackmailing!

Now, look at the Sri Lanka issue. Prime Minister made a statement in the Parliament that his Government is "inclined to vote in favour of the resolution" even though the wordings of the resolution itself is yet to be finalised. Why?  Is it because it serves strategic interests of the Country or because DMK threatened to pull out its Ministers? Is this decision taken in the long term interest of India and its relationship with a crucial neighbour? Would India support a similar resolution if it was to be moved against itself in matters like, Gujarat riots or Punjab counter insurgency operations, to name a few?  Has the negative fallout of such a vote analysed in the light of China’s growing interest in the region?  At least, the perception is that Government merely succumbed to the pressure tactics of yet another ally!

Be it 2G scam, CWG, Anna movement, NCTC, FDI in retail, DTC, GST, other reform know much more than me that the list of failures of this Government can go on and on! Forget about action, our Ministers have even forgotten the art of negotiations!

In conclusion, all I have to say is this. Madam, you did preside over the revival of Congress Party in the past.  In my humble opinion you are now presiding over its downward journey, with fast eroding goodwill.  Please do act, before it is too late; even if it means trying out an untested Rahul Gandhi at the helm of the affairs.  Even otherwise, approaching the ultimate authority of people through a general election is far better political option than being seen as hanging on to power at the cost of nation's interests! Dr Man Mohan Singh has lived his utility. It is now time for him to retire gracefully.  Let there be a change - for better or for worse. Anything is better than this nothing. 

Thanking you,


Thursday, March 8, 2012

Once now and forever all - In celebration of the Women's Day!

                                 From Ananyaa- A Friend and Guest here 

Kicking up the sand
She kept walking towards the sea
She was more than determined
To end it all now, end it all, she thought
Once now and forever all

The sand grew damper, wetter
With every step of hers
Capturing her heel
Marking the bottom of her shoe rather intricately
Giving her more than necessary time each step
To reconsider her planned action, unnecessarily

She did reach the sea eventually
Kicked up her bright red shoes, now full of sand
And stood there unmoved, in sheer disbelief
Looking at the wide expanse of the water body
Which, all over again, did mesmerize her                                        

To do or not to do, her usual dilemma
Needed to be put down to rest
Once and for all today
Once and for all, she heard herself mutter again

But now, for once,
She knew what she wanted to do exactly
To tear his letters and spread them about
In the sultry damp air, and
In the receding salty waters of the low tide
Never to be retrieved
And never to be relived