Save our Government!

This is a tribute to the only organ of the state that is working well in this country, UPA-2. The others, including sports- BCCI is caught up in a spot of bother while the Indian Olympic Association has no recognition- are messing it up or are busy blocking the government from fulfilling its duties. Whether they are constitutional or statutory bodies, they are all evil. It is time to save our government from all these evils- either abolish them or modify their functioning in the ways that follow-

Let us start with the CAG- it has dictated policy, exceeded its constitutional mandate, cooked up humungous figures beyond our comprehension and devalued the currency as lakhs of crores have entered normal conversation. If the government is to function, CAG and the Indian Audits and Accounts Department should just stick to verifying and tallying the accounts and be happy with it. If they do not match, there must be something wrong with its calculator.

Supreme Court and Judiciary- it has no role in making laws, but in the absence of legislation to protect women from harassment in the workplace, it framed its own guidelines as an interim measure. This is obviously trespassing and should be prosecuted. If that was not enough, cancelling (supposedly) unfair telecom licenses, criticising the government for having huge buffer stocks when there are hunger deaths, granting people in tribal areas the right to determine whether their land should be taken over for mining etc is just intolerable. This has lead to policy paralysis, low economic growth and animal spirits of the industry has been restrained. It should simply come to verdicts on issues that do not affect the government and not paralyse it.

Election Commission- by going in to the actual election expenditure, election commission is taking over the functions of an accountant. It should just be satisfied with whether the expenditure receipts have been filed, whether it is right or wrong is not something the EC should bother about. It should also stop worrying about what appears in the media during elections, how dare it trample on our right to paid I mean free press!

Information Commission- this is the latest entity to start bothering the polity of our nation. Why should there be any information about political parties in a democracy? Aren't they revealing all their agenda and intentions through manifestos that are implemented promptly? It should simply concentrate on dissemination of information about how well our government is implementing 'Bharat Nirman' and not give out information that will go against the dictum 'ignorance is bliss'.

CBI- well, they are actually doing their job, but not well enough perhaps. Why should it obey the Supreme Court when it is actually under the Prime Minister's office? Obey your boss, not a constitutional authority that is obstructing government functioning!

Why can't these bodies get their act right? They should aid the government, not paralyse its functioning. Sad time to live in, some simply abuse their power or have no idea how to use it.

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

Smart Politics and Living Under Foreign Rule

What do you do when you have your backs to the wall and you have no way to escape? What would you do when you are facing the truth that you have been corrupt, unfair and favoured the wrong people? You wait for the right time to fight back. That is exactly what the UPA has done and it has displayed some brilliant political acumen in these games.

It didn't make any proper statement in the Coal scam except an excuse of a statement by the PM, allowed Parliament session to be washed out and heaped blame on constitutional authorities and shifted the blame on to states for recommending how to allocate coal mines. It handled 2G by sending A.Raja and Kanimozhi too was in jail on related charges. Kalmadi was in jail on the commonwealth games scam and now they are out and we know that their trials will not happen in the near future. Who knows, they might be excused for lack of evidence or because none of the witnesses or the accused are alive after 30 years and even the report might be missing due to termite action or just corrupted computer files. This is an altogether different issue though.

It waited till the ash and dirt from Coal became unbearable and started the smokescreen with Diesel and added LPG to fuel the fire and inflation too. I admit, some amount of price rise in Diesel and LPG was inevitable but it seems increasing taxes on luxury cars and dual pricing for diesel would just be too harmful for the Society for Indian Automobile Manufacturers who asked the government for support due to falling sales in vehicles ( a ). This is inspite the evidence that SUVs are outselling normal passenger cars ( b ). Gensets, SUVs and mobile towers total to about 22% of diesel consumption and add to it passenger cars and you get the segment of dieself consumers who do not deserve subsidised diesel ( c ). It is transport vehicles that require subsidised diesel especially with State owned Transport Corporations being stressed as it is and yet they serve an important public purpose. Subsidising SUVs owned by the super-rich and Public Transport needed by the masses is not an equal policy, subsidy should be given to those who need it. I have no qualms about LPG cylinder subsidy limit and implementing gas pipeline projects and exploring resources might just stem the price rise here. But maintaining subsidy for MPs and MLAs is unfair, although it really does not matter though most of them do have other under the table sources of income and a puny increase LPG prices will not be of much impact for them in the reality.

FDI in retail is being hailed by Indian corporates, the american investors and the US President. Previously I had suggested that rating agency downgrades, Hillary Clinton's visit to India (d & e) and Obama's speeches (f & g)  were all aimed at only pressuring India to adopt policies favourable to USA. They have got what we wanted but due to the inability or perhaps the vested interests of the powerful in our country, we get nothing in return. A strict visa regime exists, US still subsidises its agriculture heavily, aids Pakistan and sees us nothing more than a consumer.


It seems Imperialism is happening from the inside out, our powers are handing our country on a platter for the world powers to conquer. During the colonial era, we were only a market to source raw materials and to dump their products which destroyed our indigenous industry, agriculture, trade and crafts. The same thing will happen again and we are doing this to ourselves.

The political acumen of this bold ploy is clear when we consider the fact that there is little chance of allies putting the government in trouble. The main allies are Tamil Nadu's DMK, TMC from West Bengal and NCP mainly from Maharashtra with SP from Uttar Pradesh supporting it from outside. The condition of none of these allies are secure except maybe that of SP but already people are not happy with the rule and the difference between SP and Mayawati's BSP was just 3% in vote share, an extremely narrow difference which can shift. TMC is now a joke in West Bengal with everyone who raises a voice automatically becoming a maoist. NCP -Congress alliance in Maharashtra is in trouble as issues like Adarsh scam and farmer suicides have dimmed their prospects. DMK is not in power in TN now and so for all these parties, their only salvation lies in continuing the status quo since a change in it will only mean loss of position without chance of any gains.

Our Government did all this to rid itself of the policy paralysis tag, but none of these commentators, rating agencies, foreign heads of states are interested in the pathetic condition of human life in this country. None of those who hail the reform measures (h) have a stake in that, they are only bothered about themselves and this is a fact that government should realise. Perhaps the government knows this but it easier to hand over everything to private companies, both foreign and domestic, and then say it was forced by market or coalition compulsions. It is easier to let free the animal spirits of those who clamour for reforms for their sake and the so called experts and industry and market voices are concerned only about their growth, profits and share prices. They are not even remotely bothered about the enormous human cost of their growth and accepting this voice as the voice of India is exclusion that no amount of hot-air concepts like participative and inclusive governance and aam admi can compensate for.

This government is for the rich, by the rich and of the rich alone and if it does take steps to address other issues, it is mere tokenism. Take issues like Lokpal, Women reservation, Land acquisition, Food Security which are in pending in parliament. Take issues like child and maternal health- India is nowhere near reaching the millenium development goals (i & j) and our poverty is more than that of sub-Saharan Africa (k & l) . International Food Policy Research Institute's Global Hunger Index ranks India 67th out of 81, worse than Pakistan, Myanmar and riot-torn Sudan (m). It is here that governance deficit and policy paralysis has its greatest impact. This is where the government should act and act without hesitation rather than just signing over everything to market forces.

The government will ride on the wave of these reforms to the next election- 18months away when the impact of these reforms would only have started to be felt but it will bury the issue of scams and corruption, pathetic governance and development for the people and policies tailor made to suit the interests of corporates and made under pressure from foreign governments.

Poor and Unfair Standards

S&P has issued warnings that it might downgrade India's rating to junk unless the government wakes up from slumber and implements much needed reforms. The recent confusion due to policy paralysis on what is considered essential and urgent reforms in fields like FDI in multi-brand retail, high budget deficits and current account deficit and poor investor sentiment is the reason being suggested for such a downgrade. In fact, it is being suggested that the 'I' in BRICS, an acronym for countries with high growth rate which are expected to be world economic leaders, should be replaced by Indonesia for it has shown robust growth.

S&P had rated Lehman Brothers AAA (the best possible rating) until the bank crashed which triggered the global financial crisis in 2008, merely an example of the ineptitude of the organisation or perhaps its wrong priorities. S&P is not an organisation that is meant to identify well-being or welfare of the people, it does not really care and hence a credit rating downgrade shouldn't raise as much issue as the fact that India's Human Development Index is lower than that of Iraq, Nicaragua and China. We have more starvation and poverty than sub-saharan Africa and the S&P ( Standard & Poor- what an ironic name and strange surname for one of the co-founders who started the rating systeM) rating is only about credit-worthiness, whether giving credit to a country or a company is safe and whether it will be able to repay these loans.

The claim that our growth rate is low and so Indonesia should be the 'I' BRICS is too hollow because Indonesia's growth is 4.8% and when we consider other BRICS, South Africa around 3% (with unemployment close to 25%), Brazil estimates 2.5% growth, the picture doesn't look that bad and the story is not so different for other nations too, but this downgrade threat applies only to India and China's growth story is also facing questions with corruption scandals coming to light and lower scope for export driven growth.

A government exists for the people, priority of the government should be the welfare of the people, not the profits of foreign enterprises. Its duty should be to protect the people from vicissitudes of international economics and step in where prices of essential goods are highly volatile. It must levy taxes and duties to encourage or discourage consumption of certain goods and invest it to adopt technologies and implement projects necessary for the people, but this money should not to be siphoned and distributed through poorly implemented dole-outs and favours for cronies, domestic or foreign. Diesel and Petroleum subsidies are necessitated by high taxes levied by centre, but these taxes are not used for the good of the people but are then given back to Oil Marketing Companies so that they are profitable.

This current downgrade warning could merely be an effort to push the government to introduce reforms that would benefit large corporations in the west that have no chance of increasing revenues in their home countries and force their terms of business on India. It also exposes the true face of nations that intend to be friends of India, they merely see India as a trading and investment partner where they can make money. The downgrade threat is obviously out of place, not just because in terms of priorities of the organisation which does the rating or its righteousness or its ineptitude, but it is an attempt to interfere in the internal economy of a nation through unfair pressure and threats.

Although coming with dubious intentions from an organisation that has committed grave errors, it does raise some pertinent points related to maladministration and policy paralysis within the government and these are issues that must be tackled urgently if the nation is not to slip into chaos and confusion. Urgent reforms are required, but they are in the areas of pension reform, allotment and clearance for projects that are environmentally sustainable, infrastructure bottle-necks, anti-corruption legislation, expanding education, delivery of services and clearing of several bills that are pending in parliament. For this, parliament needs to function, government must show some urgency in identifying and implementing reforms for the good of our people and show some spine by coming out from the comfortable shade of  "coalition-dharma" and identify and declare that certain elements in the alloy are blocking essential reasonable reforms and lay out what it intends to do for the country and how it would go about that task, rather than just projecting fantasies for the future and evoking glory of the past. Only then will we have stability and a government of the people, by the people for the people.

Congress Needs to Get its Act Together for the Nation

Passing the buck and hiding behind a clean image is all what our PM has been able to do for sometime. The uncertainty on the real power center and decision maker in this country means that no one knows who is really responsible- is it Sonia Gandhi, the UPA chairperson or Mr.Manmohan Singh? Do they really have the freedom or are they in any position to take real decisions due to the so called 'coalition dharma'. Or is it simply a comfortable smoke screen for them to hide behind, with coalition partners being made scapegoats for long term political gains for the Congress?

Mamata Banerjee is a law unto herself as she is more focused in gaining West Bengal, so much so that Mr.E.Ahmed requested a move from the railway ministry citing difficulties in working with the minister. DMK too has been stubborn, but that game will be played in the TN assembly elections and A.Raja's resignation came about simply because it had to happen under the sheer weight of 1.76lakh crores which still threatens the government and even Parliament. NCP is stubborn as ever with Sharad Pawar and Praful Patel doing abysmally and yet only receiving an upgrade from MoS to cabinet rank. The recent cabinet reshuffle can be called nothing of 'spineless'.

Government needs to act decisively in the interest of the nation and put faith in the people who have already shown their intelligence by rewarding the performance UPA-1, NDA in Bihar. But this government's performance will surely invite the people's wrath. If the government act disregarding 'coalition dharma' and heed to real dharma, which is governing for the people by bringing to book the corrupt and guilty, ensure accountability and deliver performance by simply making the right calls on Food Security, MGNREGs, RTI etc it will surely be able to secure the people's trust. They simply have to implement these ideas that are already taking shape but they are unwilling to implement them citing lack of funds which, when read together with 1.76lakh crore from 2G scam, makes a mockery of democracy and governance itself.

There are a couple of factors the congress must consider-
1) Under-performance of the government will lead to Congress, the leader of the UPA and hence morally responsible for all its actions
2)However clean the image of the top brass and the PM, since he leads the Cabinet, will be responsible for the cabinet's actions.

This will mean the people will vent their frustration on the congress rather their allies. This will mean a parliament in limbo in case of an election which must eventually happen with the congress having much lesser seats and smaller regional parties calling the shots perhaps. An administrative paralysis when the nation is at a cross road and staring at several important decision to make will surely stunt our growth.

That the BJP led NDA won't be able to bring in the numbers is a forgone conclusion and this means we might even see a Mayawati or Mamata or Karunanidhi becoming king-maker or even something more.

The Manmohan Singh lead government and Sonia Gandhi lead Congress must act against erring ministers, corrupt officials and lose their stubborn attitude. It needs to take the effort to come clean on corruption scandals, bring to light all the black money stashed abroad even if the means exposing those in the highest echelons of power. It needs to take steps to address the burning issues of the 'aam admi'-inflation, infrastructure development and preventing exploitation of the poor and landless and tribals. Multibillion dollar defence deals and FDI in retail and UNSC permanent seat will do nothing in that direction. They need to understand that bending our back to international treaties that means we cannot disclose the black money stashed abroad or laws that mean no returns for our farmers will only bring more shame to government. All this depends on one critical factor- the top brass actually wanting to bring the guilty to book and that they are not involved on this. A clean image for one person will surely not save the government.