Here is the 1.76lakh crore Mr.Sibal

The government and the relevant political parties have attacked only the financial impact part of the report (Chapter 5) while ignoring other parts like how advice of Minister of Law and Justice and suggestions of Prime Minister to reconsider pricing was ignored, how licenses were issued to ineligible entities, undue advantages given to Swan telecom and non fulfillment of roll out obligations by the new telecom companies (Chapter 4 of the report). Therefore, this post explains only the Financial Impact part of the report.

If someone has the patience and brains to understand the report, it would be easy to realise that it does not state Rs.1.76lakh crore IS THE LOSS. Under Chapter 5 of the Performance Audit Report on the "Issue of Licences and Allocation of 2G spectrum" ( http://cag.gov.in/html/reports/civil/2010-11_19PA/Telecommunication%20Report.pdf ), the financial impact is assessed. It says the following points-

1) The price of Rs.1659 crore was fixed in 2001 at a time when teledensity was low and cost to consumers was high. So a low price would increase accessibility and reduce prices. But in 2008, the situation had changed- the prices were low, there was a steadily increasing demand from consumers and penetration was increasing. Under this situation, the price should have been revised.

2)S TEL voluntarily agreed to pay Rs.6,000 crore to Rs.13,752 crore for 6.2MHz spectrum and increase the amount in case of others offering a higher price. This alone works out to more than Rs.65,000crore and a loss of Rs.53,000crore (the government collected a grand total of Rs.12,386crore based on 2001 price)

3) By comparing the prices obtained in 3G spectrum, considering the demand for spectrum, its scarcity during 2007-2008 and opportunity, the price should have been Rs.1.52lakh crore against Rs.12,386crore obtained. A loss of 1.39lakh crore

4) Swan got license for INR1,537 crore (US$279.73 million) and then it sold 45% stake to UAE based company Etisalat for INR4,200 crore (US$764.4 million). Unitech Wireless, a subsidiary of the Unitech Group, got license for INR1,661 crore (US$302.3 million) and later sold 60% stake for INR6,200 crore (US$1.13 billion) to Norway based company Telenor. Calculation based on sale by Unitech gives a loss of 69,000crore or and that by Swan gives 57,000crore.

The government also allotted to existing operators, additional 3.6MHz (1.8MHz+1.8HMHz) spectrum based on usage, justification and availability at no cost(operator reaching subscriber base of 5lakh or more in a service are - page 24 of the report). To each of the above loss figures, the CAG added price of this additional spectrum. The amount of this loss was based on the recommendation of the Technical Committee appointed by Ministry for Communication and Information Technology for "Allocation of Access spectrum and pricing" that additional spectrum assigned beyond contracted 6.2MHz+6.2MHz should attract upfront charge equivalent to 3G auction price. TRAI also recommended in May2010 for charging the additional spectrum held by operators beyond the licensed quantity. This loss amount is 36,993 crore and is then added to 3. For the 2 and 4, the price of this additional spectrum is calculate at the same rate as that of the contracted 6.2MHz.

 

The loss calculations have been shown above and is taken from the CAG report.

These companies did not invest in setting up infrastructure and marketing, but still got extremely high prices while selling off shares and this was because of the only asset they possessed- spectrum. For companies like Telenor, they have trained manpower and technical know-how to establish a mobile telecom service provider, if they have the spectrum and they paid Unitech dearly for it.

"Audit reiterates that specific value of 2G spectrum could have been discovered only through an efficient market drawn process and in its absence, these are indicators available which give the hints towards the loss Government could have suffered. The revenue realised through auction of 3G at the rate fetched through a market process is highlighted in this report to project the benefits of resorting to an open price discovery process and the value that spectrum could command without compromising with the policy of open competition. The fact also remains that the Government got 1.03lakh crore from the auction of 3G and BWA spectrum against their own estimate of Rs.35,000crore"

This is from the report and what this means is that the auditor is not saying the loss is this much, but is indicating the magnitude of the loss the government suffered when it did not use market forces, which it had infact used in sale of 3G and Broadband Wireless Access spectrum(BWA). This is all the more important since the price fetched at 3G+BWA was almost the three times the estimated price.

So the CAG has not said the government lost 1.76lakh crore and has provided three different estimates of losses. Report also says that for better price discovery, market forces could have been used and when it was used in 3G spectrum auction, the government received an amount greater than its own estimate. It also says that the price received by the government by selling spectrum at 2001 rates is much lower than the real price of spectrum in 2007-2008 and such mistakes should be avoided in the future. It is high time the government ends this charade as it turns a blind eye to what is being said in the report and obfuscates the facts, attacks small parts of the report, denies it in spite of clear and simple evidence along with attacking the credibility of a constitutional authority using high-end rhetoric and puppets fueled by nothing but a lot of hot air.

Shoot the Messenger

Along with the Coal scam, the 2G spectrum allocation had put the government in a tight spot but it is fighting back. First it announced a slew of "reform" to distract people's attention, it is now trying to change the composition of the CAG inspite of the constitution not even envisaging a multi-member body as it had suggested for the Election Commission. The government has also tried to destroy the credibility of the CAG since it cannot remove him from service (his process of removal is same as that of impeachment of a judge of the supreme court) and so cannot punish or coerce him. A JPC had been convened, but by sheer strength of numbers, the government has derailing the process and JPC has done little or no work.

Now, it has brought out a new guy R.P.Singh, retired official to rake up an issue and even he doesn't really know what he is talking about. But by creating a controversy and confusion over the issue, the government can bury it and defend itself. The statements coming through are incoherent (some statements say he is only questioning the notional loss figure, some say the CAG mainpulated the figure, some say he was influenced by Murali Manohar Joshi). Even Sonia Gandhi has made a statement- seems the government is fast when trying to cover up its trail of corruption.


The question is only about the magnitude of the loss and the method of its estimation. There are no doubts about the fact that there was a loss and this is important. The CAG is constitutionally the protector of the public funds and so has to point out even the most minute cases of misuse or loss of funds to the public. CAG report is not a fault finding mission nor is it a fact finding mission alone, it is a report meant to correct previous errors and take adequate action to ensure it is not repeated. It is not the responsibility of the CAG to investigate criminal wrongdoings or corruption and to say the CAG has exceeded his constitutional mandate is tantamount to saying that the use of public money shall not be made public and shall not be scrutinised.

The government is behaving as if the CAG report has only mentioned one thing- there was a loss of 1.76lakh crore. While this forms only a small part of the Chapter 5 of the report dealing with financial impact, the government has highlighted ONLY this part of the report and has been attacking it and is pretending to have destroyed the report's credibility. The media has also given enough attention and airtime for the government's brainless banter. The government has also been mum on the other observations of the report. The report speaks about how advice of Minister of Law and Justice and suggestions of Prime Minister to reconsider pricing was ignored. The report also speaks about  issue of licenses to ineligible entities, undue advantage to Swan telecom and non fulfillment of roll out obligations by the new telecom companies (Chapter 4 of the report)

A government that has been reluctant to make any probes into the really serious allegations and obvious cases of its own misconduct, corruption and mistakes is now going to constitute a probe against the CAG. This is blatant misuse of power, arrogance and clear attempt to fool and misguide the people. In spite of all the clear evidence, the government is sticking to one aspect of the report- the notional loss figure presented in the report. Rather than investigating the fact that there was a loss, rather than analysing why the recent round of auctions went awry, rather than cleaning its own house, the government is simply trying to defend itself and throw mud on constitutional authorities that are meant to point out the government's flaws and ensure accountability.

These attempts by the government are a loud declaration that we will not abide by the rules, we are not accountable to anyone and we will do as we please. We will do whatever we can to hold on to power, we will try to fool the people, will never admit our mistakes and will not make any effort to serve the public. We can wake up someone who is sleep, but never wake up someone pretending to be asleep. The government knew what it was doing while throwing away scarce natural resources, we all ought to know why it happened and how it happened too.

But what is beyond doubt is the fact that there was a loss and only the amount of the loss is being questioned. This issue is never highlighted by the parties or by media eager to report on issues (sometimes in a biased manner) and sensationalise them. The loss amount estimate would definitely vary but a 2,700 crore loss estimate is stupid and too low. In the next post, I have explained the CAGs calculation of losses and one glance at it would enable all of us to given an answer to Kapil Sibal's question 'Where is the 1.76lakh crore?'

The details on the CAG report, myths about it, some important info about and government onslaught on the constitutional authority are given in these links-

http://www.thehindu.com/opinion/op-ed/cag-six-answers-to-clear-doubts-and-misperceptions/article2647710.ece

http://www.thehindu.com/opinion/lead/article2568360.ece

http://www.thehindu.com/opinion/lead/continuing-onslaught-on-the-cag/article3929560.ece

http://www.thehindu.com/opinion/lead/article3836708.ece?homepage=true

http://www.thehindu.com/opinion/op-ed/the-government-is-on-the-wrong-wavelength/article4116401.ece?homepage=true

Intelligent Honesty

In the Season 5, Episode5 of TV Sitcom Big Bang Theory, when Howard asks Raj and Sheldon whether it is true that they were sick of him always mentioning his trip to space, Sheldon says yes and Raj says no. Sheldon then goes on to say that they had different approaches as he was going for helpful honesty. Perhaps the world needs a bit more of Sheldon's honesty, perhaps that might solve a lot of communication gaps and arguments and pretence.

I do agree that it cannot happen all of a sudden- certain areas like international politics and diplomacy, our own politics, offices etc might remain so. But what is the need of dropping hints, snide and nagging remarks among friends and in close relationships? This is where honesty should come in first, not to give people a rude awakening and question their own self, but to be better friends and to build stronger relationships based on openness and honesty where each one helps the other and stays with the other.

But it must spread beyond that, not to give others a piece of our minds or to destroy their worlds, but to tell the cold, hard truth for mutual benefit. The obstacle sometimes is our belief in not making a person feel bad and being nice to them. Even a Malayalam proverb says that inconvenient and uncomfortable truths are best avoided. The mother of a friend of mine asked me whether I was good at being tactful and diplomatic since I was preparing for the civil service. She said it would be prudent to be so when handling politicians. This is when I remembered having read that the duty of a civil servant is to give unbiased, objective and fact-based views and opinions to the political executive. But this was thrown away by many and the genuflection and pusillanimity of such civil servants have been severely criticised.


Civil servants need to give honest, straightforward and objective advise. Their opinion must not be circumscribed by values (does not mean it should be completely neglected since the fact-value dichotomy is practical only in theory) since it is upto the political executive to give more weightage to values. But the benefits arising from giving advise that would be considered good or pleasing and the resultant entry into the good books have meant several civil servants become humble servants and sycophants. The really smart ones would give the advice, clothe it in sweet words and would express their views without having to sacrifice their morals and principles and yet not invite grudge or enmity. This type of disguise should be accepted perhaps. So would the disguise needed to correct and convince a team-member/team-mate until the work is done since resentment and ill-will can hamper the work. A threadbare evaluation could perhaps be done after the work has been completed.

What this means is that pure honesty and the blunt truth is more a mark of poverty in creative thinking whereas complete disguise and cover-up signifies lack of moral courage. We need morality and courage which is aided by wisdom and creativity to achieve the full and proper effect. There is no point in using disguises all the time, the truth has to come out. So when all tact, hints and snide remarks fail, I think it is better to just go with the blunt facts. But when it is brought out is as important as the how- when the person is in a good mood, when the work is done and it is time to analyse, when personal safety is assured and the other person's situation is also considered.

But currently, the interest in saving a person's face, fear of retribution along with greed means that honesty takes a back seat. Add to it our general lazyness and reluctance to exert our brains, it is difficult to get honest opinions and analysis. Suppose a person actually gives honest opinions and airs views and criticism independently, contempt and even hostility follows. This not only prevents the person from being honest, but the fear generated also drives others into submission and they easily conform to societal norms. So along with wisdom, courage and creativity, handling society and its criticisms also is essential to honesty.

'Satyameva Jayate' should become more than just our national motto, but also the basis of our government's functioning. It is hard to stay honest, it is even more difficult to begin to be honest and straightforward (I say again, not the naive or blunt honesty, but the sensible and intelligent honesty that I have described above). Still, a beginning has to be made and the best place to do it is with people close to us, they should be able to accept us for what we are and stand our newly found sense of honesty. If this can spread and the world becomes a little bit more honest with itself, inspite of the difficulties, I believe it would well worth the effort because in the end, truth always wins.

High Impact Exams- Analysis and Recovery

For the last 3weeks, there has been little along the productive side except 10days of working out, lot of sleep and most importantly chill out and then freak out about what would happen in the future. I would be lying if I said the exam has not had an impact on me and for sometime, I thought it was just me, that it was just my usual habit of being apprehensive and nervous about everything, but realised that almost everyone who takes this exam is just as scared and apprehensive. It has been difficult to do anything that requires brain work, not because there are no motivations since I have done a lot of things without any motivation. It is only because UPSC civil service exam was high impact and I would like to figure out how and why the hangover is still not wearing off.

I have faced tougher exams with averages around 20%, highest score was near 50% and everyone was swearing at the person who set the paper. We felt they were trying to prove a point, it was almost a vendetta. This has happened a lot of times too. I have also faced exams where I have been downright pathetic (10 out of 75) but there were people who were disappointed they would get only 70  out of 75. There have been exams where the syllabus was simply too vast to cover for a normal human being and yet in none of these situations have I experienced the sort of fear or apprehension that I currently feel.

I have written exams that have determined my future- AIEEE, JEE, BITSAT and I have been pathetic in some, decent in a few and been depressed due to my own failure. I have faced the uncertainty too since results were out only after a couple of months. I had spend two years preparing for these entrance tests and yet nothing compares with the impact that the civil service exams have had. In fact, the dedicated preparation for civil service exams lasted for just 7months. Even though the gap between each stage is only 3months, it adds up to a process that takes well over a year and that nearly exhausts our patience.

Over 4.5lakh people apply for civil service and only 2.5lakh take the prelims and then only around twelve thousand qualify for mains. So the number of people applying wasn't highly significant. One could say that those who qualified for the mains exam were highly competitive and I have not competed with such high numbers. The only similar experience being the battle against 600 batchmates during the first two years in college and a large majority of them were extremely competitive.

Chemistry was a subject that I was very used to and perhaps the only time in college I put my heart and brains into a subject. It did bring a lot of success and happiness to me and so preparing for Chemistry optional paper wasn't a colossal task. The essay paper too was not totally new to me thanks to my habit of blogging, pointless free writing and rambling on about even insignificant issues. But there was preparation practice required for these too, adding to the over all impact.

This how the impact took shape, not on their own or all of a sudden- they added up to form one huge complex force- a huge syllabus, long gestation period, competition, life altering experience and the difficulty in syllabus have not come together at the same time ever before. However, the major impacts came from a few issues that I have not faced before.

The syllabus covered was definitely vast, with General Studies alone enough to drive a person into insanity. The mere fact that it has no specific syllabus except vague statements like issues of current national and international importance, science and technology meant that one had to swallow a lot of information and analyse them. Public Administration was entirely new to me and had to start from scratch here. I was then informed that rbrn those who have been teaching public administration for over 30 years haven't become experts in the field and cannot comprehend it fully. Add to it the issues of Indian public administration, its evolution and the challenging times we live in, the labyrinth made me lose my mind at times. Another challenge was about writing 2 exams of three hours each every day and that too on consecutive days. It was physically draining, but the scheduling made it a bit easier. After GS on the first day, non-evaluative language papers on the next day meant little pressure and the essay paper as the lone exam on the third day gave a little breathing space for public administration two days. Chemistry was a good 10days later and this meant even though the schedule was challenging, it was not a harrowing experience.

After the exam, it is the fear and apprehension that remains and the extremely scary worst case scenarios. These too add to the impact through regular aftershocks. Thus, the coming together of a lot of small incremental factors and a few major factors mean that the exam has an impact that does not easily wear off. In fact, I am glad that there is a 3month break before the next stage because for the last few months, it has just been about me- me wanting to do the exam well, me wanting to study a lot, me spending most of my time reading and writing, me being aloof from everything, me giving up a lot of things that I like, me, me and me. I even lost focus of why I want join the civil service in the first and it too was infiltrated by the "me, exam" obsession.

It is time to get back to shape, literally and figuratively, since I have gained not just a few extra kilos. Need to get back to quizzing, novels, movies, but most importantly if I am to get what I want or rather be what I want and do what I can because I deserve it, I have to gain back why I want to do this and only that can make all this effort and hardship worthwhile.

Optionals, Fear and Madness

I have no tales to tell and the tales I want to tell do not want to jump out on to a screen, but they want to appear on paper. It wants to be struck off, over written, torn off and thrown away and then take shape- a poetic way of saying I want to write and not type.But do indulge me for what is to come is far worse than what has been said.

I would like to talk about Public Administration and Chemistry, to be more specifics, the similarities between the two subjects apart from the fact that they were my optional papers for civil service exam. Do not fear a tirade about how my exam went, it is not significant but the level of madness and even stupidity that was the entire venture would be clear if you read on.

Firstly, Chemistry and Public Administration are about developing theories to suit observations. Then, theories explain these observations which were made on the basis of the very same observations. For example, quantum mechanics and its postulates like nodes (areas where probability of finding electron), spin quantum number are theoretical concepts and have little or even no physical equivalents. But they were developed to explain wave functions and phenomenon like paramagnetism. In Pub Ad, ideas like New Public Management, New Public Administration evolved according to needs and aspirations of the people, it was influenced by the situation on the ground and to address these situations, new ideas came forth.

As the observations change, theory keeps changing too and even going back to old ideas- initially administration was about minimal state involvement but this involvement should be organised and formal. But NPA and NPM concentrated on greater government involvement to address concerns of the time and now, it is back to minimalist government that empowers people and reduces the power and discretion in the hands of government. This is true of any science and in chemistry, the formation of a bond is a theory that has undergone "radical" changes- from the simple dot structure to wave functions of valence shells overlapping to now the entire atomic orbitals interacting with each other. This is an example of not just the evolution of the fields and its rapid evolution, but also theory suiting to fit ground realities. Even the concept of formation of activated complexes in the transition state theory was used to explain observations and where later proved
right (similar to the Higgs-Boson hypothesis)

Wilson and Weber wanted to give a proper structure to government administration and initial theorists like Fayol, Taylor, Follett were the first to propose ideas and build fundamentals. They were then discredited as mere proverbs and were then substituted with a more humanitarian view of the field of administration by Simon, Bernard, Argyris and Maslow. In chemistry too theories were built, discredited and then new ones established- right from the valence bond theory to formation of molecular orbitals.

Another one is about organic chemistry where very few reactions follow a general pattern set for compounds of a particular, the reactions are unique and exceptional and depend on the temperature, pressure, concentration of reactants and products, their stability- in short, the environment. This is what F.W.Riggs said about administration too- one must consider the ecology in which the administration works to get a proper understanding of the administration. As the conditions change, the administration also changes.

This is also an example of inaccuracy in predicting the outcome of reactions using theory. Predicting outcomes based on theories is not an accurate process. This leads us to is the bounded rationality theory developed Herbert Simon- we make decisions based on information available to us about conditions, influences, resources, restrictions and also needs and requirements. But the entire information is not available to us which circumscribes our ability to make decisions or predictions in the case of chemistry. This is very true about organic chemistry and public policy making- we do not know how people will react to a policy, we do not know how the markets, industries, agriculture and common man will be affected by allowing FDI in retail and we are not sure whether it is a positive or negative chance. In chemistry too, what factors influence a reaction or even how exactly a reaction proceeds is unknown to us and the best we can do is make predictions. We can accurately solve wave function for only 4systems since it is almost impossible for us to consider the various electron-electron repulsions and electron-nucleus attractions.

Thus, inability to predict outcome based on theory and so having to use trial and error to fix up a particular theory or decision, incomplete knowledge and inability to comprehend influences and events, making theory based on observations and then proving them (which is of course what science is all about), the evolution of this theory (creation, acceptance, destruction and then new theories), importance of environment and very few possibilities of a general cover it all concept are some of the aspects similar to both Chemistry and Public Administration.

I do not say that this is a sane idea, there will be similarities between all fields however insignificant, narrow and far apart they are. But these are the two subjects that I opted for a mind-numbing series of exams and for which I did prepare. This one is more like an answer to a straightforward question- "You have studied these two subjects. Are there any similarities and if there are, what are they?"

As for my assessment about my exam, it keeps shifting each day. Some days I feel I am in with chance, quite reasonable one too. Some days, for no apparent reason I feel insecure, scared and hopeless. This keeps shifting and I feel hopeless about different papers each day- one day it is GS, another day Chemistry. A week later it is Malayalam and then it is Pub Ad. So the next three months are going to be a cycle of this- incessant mood swings, uncertainty and sometimes even fear and depression.