Fueling public expectation on India's growth prospects in 2015 may prove deadly

Pratim Ranjan Bose

By all means 2014 was eventful.

The corruption-ridden Manmohan Singh government of Congress-led coalition suffered a humiliating defeat in May. The mandate was not merely against Congress – that had suffered its worst ever defeat – but, also against the coalition politics. 

Frustrated with the prolonged policy paralysis at the Centre; the young India – cutting across the religious divide - reposed faith on one of the most controversial characters of Indian politics. Narendra Modi’s BJP came to power with a single party majority - a feat last achieved by Congress in 1984 election.

Fair job so far

A fair assessment will tell that the Modi government hasn’t done badly either, during the last seven months in office.

At least two major schemes (Swachh Bharat Aviyan  and Jan Dhan Yojna ) were rolled out to address long pending issues in public health and hygiene and, financial inclusion.

I am sure together they will impact life of 800 million rural Indians like never before, helping create a wider and stronger market place.

The task cut out for the new government was an extremely uphill one on the economic front.

Coal sector –fuelling 72 per cent of India’s electricity demand – was in a mess. Supreme Court cancelled allotment of nearly 200 captive coal blocks. Some 40,000 MW worth of electricity generation capacities attracting close to $ 33 bn bank finance are either stranded due to lack of fuel or suffering from low demand.

Gas sector was mired in controversy on pricing issues. Road, port and rail infrastructure projects were in jeopardy. Gross irregularities left iron ore sector grasping for breath and the country was meeting demand through imports. As a spin-off effect, the banking sector was full with sticky assets.

Having assumed office, Modi revised the previous government’s decision to double the natural gas prices to an abnormal high of $8.4 per million metric British thermal unit (mmBtU) . The gas producers are now offered 33 per cent hike to $ 5.61 per mmBtU that is in sync with the price of imported liquefied natural gas (LNG).

Exercises are on to create mechanism for distributing the coal assets in a transparent manner as ordered by the apex court. State owned mining companies were asked to tighten belt and grow faster to meet demand of either iron ore or coal.

On the policy front, foreign investment limits are raised in insurance sector and the Land Acquisition Act was relaxed to pave way for faster implementation of the infrastructure projects.

Associated controversies

The initiatives were not free from controversies either. At least three major decisions involving opening upof the country’s coal sector to private competition; FDI limit in insurance and amending the Land Acquisition Act; were taken through ordinances.

An ordinance is a law that is enforced subject to be ratified by the Parliament at within a stipulated period. The practice is not recommended unless in urgency. To add fuel to the fire thegovernment re-promulgated some of the ordinances (as in coal) invitingcriticism from the Opposition of indulging in undemocratic practices 

While the government blames Opposition for creating roadblock for due discussion on economic issues in the Parliament; the truth is, BJP should blame its ultra-Hindu nationalist affiliate groups for diverting attention from the growth agenda.

Buoyed by the electoral success of Modi; these affiliate groups started indulging in as controversial acts as conversion that doesn't go with the religious fabric of the nation.     

While the future will tell how BJP tackles these groups and ensures rule of law that is most important for economic growth; it is time for Modi government to take a more level headed view on the country’s growth prospects in the immediate future, else we may end up in another set of troubles.

Don’t promise the moon

Looking back the Manmohan Singh government had run into rough weather by trying to ride the popular aspirations, way back in 2004-05. In an effort to make the most of the prevailing high growth regime, the government took a series of hasty decisions be it in allotting coal blocks, telecom spectrum or setting up power plants.

As they came back for a second term (2009-14) all of those decisions blew up on their face. Worse, the entire country paid for such actions.

Modi came to power promising growth at a time when the world economy was in a topsy-turvy and Indian economy was in serious trouble.

It was commendable that he started taking corrective measures to bring the economy back on the rails resulting an upward revision in projected growth from 4.7% to 5.5% in 2014-15.

But the environment is clearly not conducive for as high growth, as the government is expecting in 2015-16. The Economist cautioned that the world economy, led by the US, may be heading for tough times in 2015. The Reserve Bank of India too toed a similar line in its recent financial outlook. 

Modi must appreciate that the recent improvement in India’s growth outlook are a result of record drop in crude prices in barely six months.

  

The credit goes to OPEC’s decision to run American Shale oil producers out of business by pumping more crude. But no one knows where OPEC is going to put a stop. No one knows either, if another war will break out in the West Asia or some rebels will blow out an oil installation.

The bottomline is, a slight jump in crude prices will see India grappling with host of issues – starting from the capital account deficit. And if the crisis deepens, as in 2008, RBI says the Indian banking sector will not be free from trouble.

We are living in difficult times. The country will be obliged to Narendra Modi if readies India for reaping long term benefits. Fueling public expectations on short term gains, may prove deadly.

***

India's move to ratify Land Boundary pact, opens new possibilities in regional cooperation

Pratim Ranjan Bose

Astrologers predict. Journalists use their experience to put jigsaw pieces together.

 In June this year, I anticipated that the Narendra Modi government is set to take definite steps in implementing the long pending Land Boundary Agreement with Bangladesh. 

My guess proved correct on November 25, as all the stake holders (including Modi’s BJP and West Bengal Chief Minister Mamata Banerjee’s Trinamool Congress, who were staunch opponents to the move in the past) in the Parliamentary Standing Committee on Foreign Affairs; unanimously cleared the final draft for land swap bill. It will be placed in the Rajya Sabha or the Council of States in the current session. 

The consensus was needed because, Modi’s, BJP that has a brute majority in the Lok Sabha or the House of the People; is a minority in the Rajya Sabha. It means, ratification of the bilateral agreement, the last of which was inked in 2011, is now a certainty.

I expect all the formalities be cleared in the current session of the Parliament. But that does not mean land will be swapped immediately. For, it would require due and lengthy administrative exercise to settle many issues including the most important of all – rehabilitation for the international migrants or refugees.

The task at hand

A grave omission during the Partition (1947) saw India and Bangladesh claiming hundreds of small villages, as their national territories, on either side of the border.

In the Constitution of either country they are referred as adversely possessed land (APL) and enclaves.

Mostly located on either side of the border along Barak Valley in Assam, the APLs are connected to the country by a small strip of land which is difficult to access. A total of 665 acres of land is in adverse possession of either country in Assam border.

Enclaves are completely land locked. India has 111 enclaves spreading over 17,000 acres at Lalmonirhat, Nilphamari and Kurigram districts in Bangladesh. Bangladesh has 51 enclaves over 7100 acres at Cooch Behar in India.

According to a head count conducted last year, a little over 51,000 people are living in a total of 162 enclaves. This includes 37,000 so-called Indian citizens living in captivity in Bangladesh and 14,000 in Bangladeshi enclaves in India.

I am saying “so-called citizens”, because they are deprived of any service that an Indian or Bangladeshi citizen can expect from its government.

There is no civic amenities be it electricity, school, health care facilities or so on. They are captives in a foreign territory that refuses to serve them. Their home country, at least on paper, cannot reach them any services either. They don’t figure even in the voters list of either country. They are citizens without a country.

 Once the international border is redrawn, people living in such land parcels will be offered the option of switching their nationality. Alternatively, they may migrate to their ‘home country’.

According to a survey by India Bangladesh enclave coordination committee, in 2013, only 743 people out of 37,000 living in Indian enclaves in Bangladesh were interested to migrate to India following land-swap. No one from the over 14,000 people in Bangladeshi enclaves in India are interested to migrate.

Once the Parliament decides to make necessary constitutional amendments; both the governments will engage into a more dependable study to finalise the details to the last mile. And, that should rightly take a little time. We could for nearly seven decades to reach this far, we can surely wait another couple of months or a little more to complete the deal and redraw the international border.

Huge Gains

An immediate gain for both the countries is the scope to tighten the border security and prevent infiltrations. The infiltration primarily takes place from Bangladesh to India for economic opportunity. But some Islamic terror outfits are using the border in their advantage. It’s time to hit them hard.

But what is important this is going to give Bangladeshi Prime Minister Seikh Hasina, some added handle to ignore Islamic outfits and strengthen economic ties with Modi’s India.

 And, that is the real advantage of this deal – greater regional co-operation. I am extremely hopeful that ratification of the land boundary pact will open doors for transit of Indian goods and services through Bangladesh to remotely located North Eastern States.

Better and cheaper connectivity should help improve India’s national integration both in economic and political front.

In fact, if Bangladesh grants India access to the Chittagong sea port, the landlocked North Eastern states may turnout to be into a lucrative investment destination to tap the South Asian markets.

I am sensing a flurry of announcements from Bangladeshi side sooner than later. Lets hope, I will prove correct, once again.

***

Mr Modi will you consider selective opening of underground coal mining?

Pratim Ranjan Bose

 The P V Narsimha Rao government, that liberated Indian economy in 1991, bypassed the issue by enhancing scope of captive mining. The Atal Bihari Vajpayee government abandoned the proposal in the face of still opposition.

Now, it’s the turn of Narendra Modi government to propose de-nationalisation of commercial coal sector, in the Coal Mines (Special Provisions) Ordinance, 2014 that will be placed before Parliament in the ongoing winter session.

The manner in which such a major change was proposed, in all-important coal sector that is fueling 72 per cent of India’s electricity consumption - leaves room for doubting intentions of the government. 

It is now to be seen if the Parliament approves the bill.

There is every possibility that it would be blocked. Because Modi’s, BJP that has a brute majority in the Lok Sabha or the House of the People; is a minority in the Rajya Sabha or the Council of the States.

The government is yet to clarify on the road-map to privatise coal sector.

But rest assured any hasty move will put the country face-to-face with major disruptions in fuel supplies, which has been growing at a healthy pace for last two years, as coal unions have taken the agitation path.

Simply put, privatising India’s coal sector is not an easy choice. And, politics apart, there are some valid reasons behind it.

All monopolies are not bad

That cheap electricity is a corner stone of growth, is a common knowledge.

And, a look at growth economies around the world will tell you, there are reasons for the Indian government to maintain a firm grip on the coal mining sector so as to achieve this goal.

The developing China and Developed South Korea does it through State monopoly in power sector. In both the countries industry gets electricity at relatively cheaper rate than in India. 

Ideally, it should be cross subsidised by the retail and household sector. But, in reality, utilities often absorb huge losses or sacrifice profit potential for national good.

South Korean monopoly incurred amajor loss in 2008. In China, which is relatively low on affordability, State-owned generation companies lost billions of dollars between 2010 and 2012. 

The India model is just opposite. Here electricity generation companies, half of which are owned by private capital, make money. The national miner sacrifices profit opportunity to provide them with cheap fuel.

Disturbing the set up may lead to as dangerous consequences, as evident in coal-rich Indonesia and South Africa.

Little scope in surface mining

The liberals, however, argue that it is possible to regulate a private coal mining sector.

The large number of complains of windfall gain against the Chinese miners indicate it is easier said than done.

Yet, assuming they are correct, it is doubtful if a whole-hogged privatisation would increase the country’s coal production significantly.

The reason lies in limited scope to fast forward the growth in surface mining, the least-cost production method, contributing 93 per cent of India’s 550 million tonne (mt) coal production.

Need to step up production at a higher rate, low price of fuel, coupled with failure to bring in new underground technologies; led the national miner - Coal India (CIL) - to focus its energy on low hanging fruits of opencast mining.

The sector is now plagued with a series of problems, which are more social than technological. 

Considering the increasing resistance against land acquisition and deforestation, surface mining has limited growth potential in the years to come – with or without private capital.

If allowed, private sector would surely try to enter this area. But that has to come at the cost of national miner’s growth and greater social tension over land acquisition.

To cut the long story short, India can only expect to add to its trouble, by opening up the surface mining to private participation.

Open underground mining

Do I sound a pessimist? Not at all. And, here is a prescription for the Prime Minister to reform the coal sector.  

Ask the national miner to reserve cheap opencast coal only for the regulated electricity generation sector. And, throw underground mining, which has little relevance to the country’s energy needs, open to competition. Allow free market price of fuel produced from such mines to make it lucrative opportunity for the private capital.

Let us face it. With a mere 40 million tonne (seven per cent) production India’s underground capacities are highly under utilised. Going by the reserve potential India underground mines should contribute 25 per cent of domestic production.

Approximately 20 per cent of Australian production (over 400 mt) comes from underground, nearly 40 per cent in USA (over 1000 mt) and 86 per cent in China (over 3500 mt).

While the world is moving towards 10 mt a year long-wall phase; the largest underground project in India promises produces 2 mtpa. (Long-wall technology helps extract more coal from the same mine.)

Private players can correct this anomaly. Low requirement of land acquisition will reduce the scope of social conflict. The country should enjoy rapid production growth at minimum compromise with nature.

It’s a win-win strategy and, is destined to change the face of Indian coal mining for ever without disturbing the electricity sector.

Win-win strategy

Cancellation of allotment to steel, cement and other such sectors, operating in the open market; should improve immediately availability of cheap fuel for electricity generation. This coupled with CIL-led growth in surface mining should be adequate to feed the power sector for some time to come.

Since steel and cement sector currently meet majority of requirement through imports (200 million tonne per annum including metallurgical coal), creation of domestic market should go in their favour. The country will save precious foreign exchange by replacing part of the import demand.

The national miner should be happy as well.

Free market pricing should offer a fresh lease of life to its nearly 300 underground mines losing approximately Rs 10,000 crore a year. Higher realisation will directly reflect on the company’s bottom line. And, a happy CIL means, coal unions may not find much logic in opposing the move. 

Only the illegal miners - extracting anything between 20 and 30 million tonne coal a year - may be hard hit.

***

(Disclaimer: Graphics are collected from the web. Will be removed in case of any objection)

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The coal block verdict, a new law and the concerns ahead

Pratim Ranjan Bose

The picture isn't quite clear.

Four months is too early to asses a government, especially the one that has shown sufficient enthusiasm to bring the growth momentum back.

Yet, the recent course of events following cancellation of 204 captive coal block allotments, by the Supreme Court of India, leaves some doubt about the intentions of the Narendra Modi government.

The coal block verdict

In a two-part judgement (August 25 and September 24 ) the apex court held that:

(a) The government arbitrarily allotted assets to the private sector (captive dispensation or screening committee route) since 1993. All such allotments stands cancelled with effect from April 1, 2015.

(b) Commercial mining by State or provincial government-run companies was contrary to the provisions of Coal Mines (Nationalisation) Act 1973. Also, the prevailing practice of State-owned companies transferring ownership of mineral assets to private miners, through joint ventures, was ‘illegal’.

The net result: All but two allocations, in government sector, are cancelled.

(c) The de-allocated captive miners – either in private or the State sector – are asked to refund the government Rs 295 for every tonne of mineral extracted from these assets.

Taking a leaf from the milestone report by the Comptroller and Auditor General of India (CAG) in 2012, the court held that this is the windfall gain pocketed by the private sector captive miners or passed on them by the State sector through JVs.

Justice prevailed

There are couple of issues with the actions taken on coal block allotment scandal, so far.

Penalties were imposed rather arbitrarily. Even the court was aware of it. But it failed to probe the issue in detail as the government was insisting on early resolution to the impasse. 

More importantly, the political class remained unpunished for flouting rules (in connivance with the industry) and creating such a mess.

We have seen India’s IT minister landing up in jail in 2G-scam. Can’t we expect the same treatment to the culprits of the Coalgate scandal? 

True, a CBI enquiry is on, to take the conspirators to task. But, it is not yet clear if the investigators are out there to nab the culprits or to protect them?  

Limitations apart, there is no denying that the verdict (and the series of verdicts over last couple of years), is a watershed. It sent a shock wave to the unholy nexus between India’s highly corrupt political class and crony capitalists.

I rejoiced the judgement.

New laws for what?

It was now the job of the government to ensure transparent distribution of captive resources, and bring the economy back on the rails.

The government responded by framing a new law – The Coal Mines (Special Provisions) Ordinance, 2014 - on October 21. 

An ordinance is a law, enacted by the government without prior discussion (or permission) in the Parliament.

The government cannot be faulted for this emergency measure, as it had only six months to settle the issue, before the existing captive miners are forced to stop operations. 

But why should the new act challenge the exclusive domain of State in commercial mining of coal? Section 4(2)(b) of the new act clearly gives the government administrative power to offer blocks to any company for commercial exploitation.

On behalf of the Modi government, the finance minister Arun Jaitley described it as an enabling provision but, not for immediate use. 

But that hardly answers the question.

The issue is not merely about liberalisation of the coal sector – no matter, how debatable the issue is. The concern is if the government is attempting privatisation of the sector through the backdoor.

A bill to open up the coal sector is pending at the upper house (Rajya Sabha, the council of states) of the Parliament since 2000. The government had the option to deal with the issue separately. It didn't.

Incidentally, despite winning the 2014 generation election with a thumping margin, Narendra Modi’s BJP is a minority in the Rajya Sabha.

Evidently the government is trying to first create a case, avoiding public debate, and hoping to achieve ‘political consensus’, by the time the Ordinance comes up for discussion in the Parliament.

How the government achieves this goal, is yet to be seen. Will they try to win over the Opposition by debating the issue on the floor of the Parliament or by striking political deals by pushing its opponents on the back foot, as has been the practice for last couple of decades?

I don’t have ready answer to these questions. But a couple of issues are intriguing.

Tricky issues

One such issue is the deafening silence about the fate of industries worth billions of dollars earned in the past, through allotment of captive resources that were unlawfully awarded by the government.

The Supreme Court verdict created space for transferring the assets to the national miner, with an underlying clause to ensure supply of fuel to the linked industries. The government didn’t exercise the option.

The ordinance also offered scope for transferring assets to the concerned state-level miners for due supplies to the affected industries. But, if the country’s coal secretary is to be believed, this option is not considered either. 

The impasse will surely hit the industrialisation agenda of coal rich states – especially Odisha, West Bengal, Jharkhand, Chhatishgarh and MP – which counted on availability of fuel to attract industries.

Many will love to believe that the Narendra Modi government will use the opportunity to corner its political opponents in two large coal-bearing states – Odisha and West Bengal.

This is of course not the only possibility.

A couple (3 to 4) business groups cornered nearly 15 per cent of the assets distributed by the former Congress-led UPA (2004-2014), to private sector, without competitive bidding.

One of such groups, led by a Congressman, today contributes a lion’s share of the captive production and is probably the single largest investor in linked end-use plants, during the last decade. A majority of this investments went to Odisha.

With the change of guard in Delhi, this group is now accused of many irregularities.

Heard it through the grapevine, the government is not keen to offer them an easy lifeline, by announcing a programme to rescue the captive mine operators.

The same old vindictive politics?

There is little doubt that the guilty should be booked. The nation is tired of watching business-politics nexus looting its resources.

But, it is also true that the nation is sick of vindictive politics that puts political agenda ahead of the growth and development.

The UPA government, for example, was tough against a business group (which is also accused of irregularities) that made the most of the disinvestment programme of the previous BJP-led NDA regime (1998-2004).

The situation went to such a passé that top congress leaders were found openly raising concerns against a multi-billion dollar project pursued by the group, in Odisha.

Hopefully, the Prime Minister Narendra Modi will free the nation from the legacy of vindictive politics.

***

(Disclaimer: Graphics are collected from the web. Will be removed in case of any objection)

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B2B relationships hold key for optimisation of Indo-Bangla economic ties

(The following post is a reproduction of my guest article in October 19, 2014, issue of the FirstNews, Dhaka )  

Pratim Ranjan Bose 

The small island nation of Taiwan (Republic of China) was separated from mainland China (People’s Republic of China) in 1949.

And, since then the political relationship between democratically elected leadership at Taipei and a totalitarian regime in Beijing remained sore.

The mutual distrust was evident in August, when the Taiwanese President sacked a senior minister, who was negotiating free trade agreement (FTA) with Beijing, describing him as a “spy of China”.

Such frivolous allegations should have stalled trade talks for years, in the Indian subcontinent. But, this week, China and Taiwan were back to the negotiation table.

The reason lies in business-to-business (B2B) relation. The industries in two nations are so integrated that China’s exports to Europe are often dependent on imports from Taiwan.

This is definitely not the ideal ground for political acrobatics.

Lack of B2B initiative

 

The argument holds good in explaining India’s improving economic ties with neighbouring China.

Politically there are many differences between these two rivalling superstars of Asia. But, the business in either nation is integrated. And that ensures that no one will rock the boat.

But, why such B2B relations do not flourish between next door neighbours India and Bangladesh, which were part of the same nation till 1947, and share the longest land-border with each other?

The question is intriguing.

Officially, Bangladesh was liberalised in 1982, a decade before India opened up its economy in 1991. Ideally this should have changed the dynamics of business-politics relationship in the region, over the last quarter of a century.

The change is visible in India. While business now has greater say on the country’s politics, either in domestic or international arena; the growing pressure from voters has also forced the politics to pay heed to economic realities.

The changing economic environment is reflected in India’s drastic one-sided reduction in tariff barriers between 2007 and 2011. The reduction is so sharp, that India hardly has any negative list of imports from Bangladesh.

Politically there are movements too, from either side.

India offered $ 1 billion line of credit to meet infrastructure gaps in Bangladesh. But what is more significant is Delhi’s decision to sell cheap thermal power to Dhaka.

The electricity - now flowing to Dhaka - is produced on subsidised fuel that was mined displacing Indian citizens and, causing environmental damage both on account of mining as well electricity generation.

To put it straight; the true economic value of this deal is far higher than what Bangladesh pays and, will be paying over years or decades.

I do not mean everything is hunky-dory on political front. But, politically China and Taiwan are not friends, either.

Its true that India is slow in implementing some purely political deals like water sharing agreement or land boundary agreement.

But, it is also true that things are moving in a positive direction. Ganga water is now shared. Tin-Bigha corridor is a reality.

The complex federal structure of India has surely come in the way of faster implementation of some agreements struck in 2011. But, that is perhaps a necessary evil of democracy and, even Barrack Obama is faced with such obstacles from the US Congress.

The point is: Developments since 2007 has surely created an environment for greater economic integration between the two neighbours. Yet, we don’t see much action on B2B front that is the real driver for movement of capital and goods.

As a smaller economy with limited product bouquet, Dhaka surely is not in a position to access the Indian market in a big way. Which means, the trade balance may remain positive in India’s favour (Dhaka has a bigger trade deficit with China), in the foreseeable future.

But Dhaka can turn it to its advantage by inviting Indian capital in setting up shop in Bangladesh, either for sourcing products, or to use it as an a gateway to access other South Asian markets. This will reduce the gap in Dhaka’s overall trade balance and ease balance of payment scenario.

Unfortunately though, things are yet to gain pace in that direction.

Exide Industries, India’s top automotive battery maker, planned a JV in Bangladesh more than a decade ago. A much bigger investment was proposed by Tata Group, one of the largest and most admired Indian conglomerates. Both were called off, for reasons beyond business.

And, that is irrespective of the fact that during this period Indian corporate sector was found investing in large numbers across the world.

Automobile a classic example

A classic example of the missed opportunity is visible in Automobile sector.

India is hub of extremely fuel efficient small car production.

And, Dhaka surely needs small cars to decongest its disastrously slow traffic and put a check on consumption of fuel.  

The economic significance is tremendous. Petroleum products are the single largest import item of both India and Bangladesh. Any savings on fuel therefore is a boon to the economy.

(Dhaka tried to replace demand for petroleum products by subsidised domestic natural gas, as auto-fuel. The policy led to a bigger economic drain.)

Yet, I find automakers in India are hardly enthusiastic about the prospect of Bangladeshi market. They have surely entered there to maintain a footprint. But, the scale is too low to set up even an assembling unit, meaning such cars are now disproportionately costly in Dhaka.

The cost is more disproportionate because Dhaka imposes same import duty on the used cars and new cars. The end result is: Bangladesh has become an importer of large second-hand fuel-inefficient cars, mostly from Japan.

The government is not merely missing the opportunity to help grow domestic auto industry, that is considered a major employment generator, but is probably also earning less on import duty, due to under-invoicing of the second hand cars.

Economics will come first

The distinctive feature of Indo-Bangla economic relation is: Half of it is largely informal in nature.

While the formal trade is estimated at $ 6.6 billion in 2013-14; the actual trade volume is as high as $ 14 billion (Muchkund Dubey, former foreign secretary of India, “Indo-Bangladesh, Economic Relations”, Mainstream, March 23, 2013). The estimates are more or less in line with an ADB report, issued earlier.

The close co-relation between the two sides at the grass root levels can be understood from two specific examples.

The estimated $ 4-5 billion informal cattle trade is a lifeline for Bangladesh’s meat processing and leather industry. Similarly, Indian private healthcare sector earns significant revenue from medical tourists from Bangladesh.

While official records quote an inflow of 10,000-12,000 patients (from Dhaka) a year; unofficial estimates suggest a substantial majority of over 7 lakh Bangladeshi tourists, visiting India annually, avail healthcare facilities.

The aim should be to add legitimacy to this mutual dependence by enhancing the share of the formal trade and encouraging more B2B activities.

***

(Disclaimer: Graphics are collected from the web, may be removed in case of any objection)

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India of our times: The books that brought the skeletons out of the cupboard

Pratim Ranjan Bose

 “Some books should be tasted, some devoured, but only a few should be chewed and digested thoroughly.” ― Francis Bacon

Writing memoirs with explosive “stories” is an established trend in the West for many years now. 

The wave has hit the Indian shores, in 2014. 

The list includes some high-profile names – from Sanjaya Baru, celebrity editor and media adviser to the former Prime Minister Manmohan Singh between 2004 and 2008, former bureaucrat P C Parakh, career diplomat-turned-politician K Natwar Singh to former CAG Vinod Rai.

Baru’s The Accidental Prime Minister: Making and Unmaking of Manmohan Singh and Parakh’s Crusader or Conspirator? Coalgate and Other Truths hit the stands in April this year, followed by Natwar Singh’s One Life is not Enough and, Not Just an Accountant: The Diary of the Nation’s Conscience Keeper by Rai.

The common thread between them is the no-holds-barred broadside against the former Congress-led UPA government (2004 -2014). Unsurprisingly, these books kicked up widespread controversies, and, as a corollary, attracted considerable media attention.

On the brighter side, these inspired many – including Manmohan Singh, former Supreme Court judge and chairman of the toothless Press Council of India, Markandey Katju, and last but not the least, the Italian-born Congress President Sonia Gandhi – to write their own accounts sooner or later. 

Katju, often in the news for controversial remarks, is expected to talk on corruption in the high levels of the judiciary.

Singh is apparently provoked by Baru’s portrayal of a “defanged” Prime Minister.

And, Sonia is upset because Natwar, who had once enjoyed easy access to her household, has now turned against her, virulently castigating her for her autocratic style of functioning. 

Totalitarianism in the guise of democracy

 I haven’t read Rai’s memoir yet.

Baru is an accomplished writer and his book is a nice read indeed.

But, the show is definitely stolen, or a little more than that, by Parakh and Natwar.

As the former coal secretary (2004-2005) Parakh left all those import marks on government files that helped Rai stitch together a case, in 2012, against the Manmohan Singh government for arbitrarily distributing hundreds of coal mining assets, free of cost, to private parties.

The scandal not merely paved the way for the corrupt Congress-led government’s exit from power earlier this year but also had a crippling effect on the Indian economy. It was in 2012 that Rai brought the skeletons out of the cupboard in his audit report.

Their efforts have not gone in vain. The corruption ridden UPA was shown the doors by voters in May this year. And, in September, the Supreme Court cancelled all coal block allotments.

Parakh in his book has not only reflected on the making of the scandal but, he went much beyond that.

It is a handbook to understand how Indian democracy is transforming itself into a banana republic - where unscrupulous politicians are increasingly trying to grab every opportunity to fulfil their narrow interests.

Take tour through his 36-year long career, from a sub-collector of Asifabad in Andhra Pradesh to the coal secretary in Delhi, you realise how deep corruption has spread its roots, especially since the 1980s.

That corruption breached the tolerable limits is known to every Indian. But not many had the guts to chronicle it, with specific details.

He guides you to look at the “the other side of simplicity” of BJP-led NDA government’s (1998-2004) coal minister Mamata Banerjee (now Chief Minister of West Bengal), forcing the national miner to recruit her party-men, donate generously to choicest NGOs.

UPA coal ministers – Sibu Soren and Dasari Narayana Rao – were demanding graft from coal officials. An MP from Jharkhand is a coal mafia. Parliamentary committee head, Ananth Kumar, (now fertiliser minister in the Narendra Modi government) was holding the brief of an errant junior officer in Coal India.

The message is loud and clear. In modern India, totalitarianism is taking shape in the guise of electoral democracy wiping out the constitutional gap between bureaucracy and political administration. They have started working in common interest – corruption.

The man who walked the lions

Parakh is an outsider in politics. He talks about issues concerning basic governance that directly touches the lives of the commonest of common Indian citizens.

But, the octogenarian Natwar belongs to a world which was known for class, charm and elegance.

Son of a Maharaja (prince), Natwar grew up in the company of the high and mighty, and always remained close to them. He enjoyed walking with lions and lionesses of this world.

Husband of a Princess; Natwar knew India’s first Prime Minister Jawarharlal Nehru’s sister Krishna Nehru Hutheesing from close quarters, before he joined the Foreign Service, on a cold morning of January 1953.

For the next five decades, he not merely worked in the Indian missions in China, the UN, USA, Poland, Africa and so on; but also struck up a warm relationship with the Nehru-Gandhi dynasty.

As a diplomat, Natwar was one of the closest aides of Indira Gandhi, arguably the most powerful and charismatic Prime Minister Independent India has seen. He had quit diplomatic career to join the Rajiv Gandhi cabinet in 1984, and was a close confidante of Sonia Gandhi, till 2005.

He would discuss literature with Jawaharlal and E M Forster with as equal ease, as he guided Rajiv in striking a landmark treaty with China in 1988 or accompanied Sonia in a boat ride with Russian President Vladimir Putin.

His book has little to do with corrupt district magistrates or MPs.

It’s about the untold stories of Prime Ministers and Presidents, top leaders intellectuals.

His book poignantly captures, how silly decisions by Morarji Desai almost jeopardised India’s long-term interests in Africa, or why Sonia picked P V Narsimha Rao as the country’s Prime Minister in 1991 and eventually fell out with him.

It gives deep insights into India’s diplomatic successes and faux pas – while dealing with Beijing, Islamabad, Washington, Moscow or Colombo.

The best part is it offers a 360-degree tour of the issues that dominated global politics for five decades - the stories concerning the decolonisation of Africa or sabotaging of Pakistan’s interests in East Pakistan (now Bangladesh), by its own diplomats in 1971.

It’s an effortless narrative adroitly filled with nuggets of humour. I will rate it as an almanac of India’s foreign policy down the years. 

On the same boat

Parakh and Natwar’s views on life are as different as chalk and cheese. Yet there is one commonality between the two.

Parakh took up writing, after the country’s investigating agency (CBI) accused him of involvement in coal block allotment scam in October 2013 

The accusation didn’t quite stand. But Parakh saw it, rightly so, as an attempt to victimise him for playing a whistleblower.

One Life is not Enough generated media attention chiefly because of Natwar’s takes on Sonia and the Paul Volcker Report on the “Oil-for-food scandal” in Iraq in 2005.

The UN enquiry panel concluded that the erstwhile Iraqi dictator Saddam Hussein bribed many influential people across the world with barrels of oil worth millions of dollars.

From India, Congress party, Bhim Singh of Panther Party of Kashmir and Natwar, the then external affairs minister in the Manmohan Singh cabinet, were named “non-contractual beneficiaries”.

Everyone, but Natwar, was spared the rod. Subsequently, he lost his portfolio, and was eventually found himself hounded by central investigative agencies.

Natwar now blames Sonia for making him a scapegoat!

Volcker Report, he says, primarily accused the Congress. Natwar’s name was included at the later stage.

The Congress-led government set up an inquiry commission to probe the validity of Volcker’s claims. But, he says, the documents on the case, as collected by Indian mission in the UN were not submitted to the commission.

The hint is clear. The administration worked overtime to bail the Congress out. And to make sure its public image unsullied, they needed a scapegoat.

Natwar says it was him.

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(Disclaimer: Graphics are collected from web. Will be withdrawn in case of any objection)   

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I am ready to walk for my freedom. Let them walk the talk now.

Pratim Ranjan Bose

After many years I took part in a RALLY – michhil, as we say in Bengali. No, I don’t need any favour from the government. I have a job. I want to make the most of a liberal economic regime, make money and take good care of my family. And, I hate disruptions in civic life.

Yet, I took part in a rally. It brought traffic in Kolkata to a standstill. Many may have been inconvenienced. But, I am not repenting my decision. On the other hand, I am happy. I think, I was expected to do this much – walking a few paces with tens of thousands of university kids.

They were demanding justice against brutal police action on students of India’s prestigious Jadavpur University, in the wee hours of September 17. That was in response to a popular demand, within the campus, for due probe on alleged molestation of a fellow student on August 28.

The students were irate at the insensitive handling of the issue by the university authorities. They may not have been all correct in their approach. But, the demand was valid.  And, on that fateful evening of August 16, many of them gathered outside the vice-chancellor’s (VC) office - armed with guitars, violins and tremendous enthusiasm – in the hope of a firm assurance.

The response came by batons and blows. Some young boys and girls - mostly in their early years of graduation studies - who had more of brain than muscle, were beaten like criminals, dragged into police van and put behind the bars.

The next morning the minister, police chief and the professor – all held by a common string – stopped just short of describing those kids as deadly terrorists. And, that too in complete disregard to video footage trending on social networking sites showing an one-sided brutality.

Today, on this rainy Saturday, the students of many institutions across Kolkata hit the streets, in tens of thousands, demanding justice from the Governor of Weest Bengal, the constitutional head of the provincial government.

But I, one among the many who joined the students, wanted more. We wanted freedom from the brand of politics that had been ruining my valley for the last four decades.

I was sure that these kids were beaten and abused. Because they don’t bother to toe the line drawn by the ruling party - which holds siege at academic institutions at the drop of a hat; beat teachers; engage in corruption in recruiting teachers; divide the entire society, every community in ‘us’ and ‘them’.

To them election is a tool to divide the society, more often at the compromise of all democratic values; and establish complete control over every asset that the society created. Every university, every college, school, office and even that innocent Bus-Stand bear testimony of their aspirations to establish a political hegemony.

What they did at JU on September 17, is little different to what had been done by the previous rulers. Yes rulers. Once the came to power they assumed the role of our masters, in no different terms than a feudal lord, spending more time in bending the rules in their favour.

In this mockery of a democracy, those who speak to their mind are labelled as “opposition” or “divisive forces” or even a “terrorist” –a Maobadi. And, the opposition deserves to be silenced or eliminated.

I, and we, am sick of it. I need freedom.

I need a police force that does not act like a private army. I don’t want some third rate film stars to come and sit in high offices, because they will fetch more votes.

I don’t want our schools, colleges, hospitals to be centre stage of political theatre. I don’t care for religion. I care only for merit and equal opportunity.

I don’t want my son or daughter to live at their mercy. I want the State to ensure their independence of mind. No one should have the right to dictate their future. They should be their own masters.

It is my country, my school, my college, my trees – not theirs. I take pride in my institution. They violate its prestige. They endanger my future.

Enough is enough. 

I am ready to walk many more miles. Let them walk the talk, now.

Supreme Court verdict on coal block allotment: Should India strengthen the role of national miner?

Pratim Ranjan Bose

“The recent report by Comptroller and Auditor General has opened a can of worms on captive coal block allocation policy and ‘windfall gains’ to private sector companies. The auditor, however, kept dispensation of coal blocks to government companies — mostly owned by the State governments — out of the ambit of Coalgate,” I wrote in a post-edit in Business Line in September 2012, pointing out how the entire allocation to State sector went off-target.

I am happy that the Supreme Court took note of some of the issues and cancelled allotment of all 218 captive assets, disbursed either to the public or private sector, since 1994.  

Read the 163-page verdict - that gives a blow by blow account of the allotment process - and you will know how rules were flouted, changed indiscriminately at each and every step - so much so that in the end, during the Congress-led UPA rule (2004-2014), reserves were doled out, free of cost, without any set criteria.

The biggest scandal

It was arguably the biggest scandal that the Indian politics nurtured, and protected from public criticism, during the last two decades.

Take look at the history of the coalition politics and you will know that the entire cross section of Indian politics, has willy-nilly been a party to this shameful episode.

Every government that ruled in either the States or in Delhi–played a role in its making. If the Leftists in West Bengal were the first to lobby for allotment of blocks to private sector in 1994; the BJP-led government in Delhi between 1998 and 2004 (the current West Bengal Chief Minister Mamata Banerjee was a coal minister in NDA cabinet) didn’t take any step to correct the anomalies either.

A Communist party-led West Bengal government pioneered the controversial joint venture route for developing the coal assets allotted to the State sector. It helped crony capitalists pocket the benefits, meant for public good. All other states, including the rightist BJP-ruled Madhya Pradesh and Chhattisgarh adopted the model.  

If the Jhakhand Mukti Morcha (JMM) government in Ranchi thrived on coal block allocation; the largest political force Congress was a fountainhead of all illegalities (read corruption).

It was the P V Narsimha Rao-led Congress government (1991-1996) that paved way for captive block allotment in 1993. But, the Manmohan Singh government (2004-2014) took it to a new high.

It was during this period that every Tom, Dick and Harry of this country queued up for a coal block. And, those with the right connections ended up claiming a stake on the country’s most important energy source, Coal.

It’s a record of sorts that over 80 per cent of the captive blocks were distributed in merely five to six years between 2005 and 2010.

The apex Court now says, the entire exercise suffered from “the vice of arbitrariness”.

Anyone or everyone got a block by promising to set up a steel plant or electricity generation facility etc. Many of such allottees were not recommended either by the respective ministry (like steel or power) or the State governments. People even got assets without any recommendation at all.

If anyone, like P C Parakh, played a whistle blower; the Manmohan Singh government did its best to silence him.  

More decisions ahead

The Court has so far merely checked the legality of the allotments (a separate investigation is on to ascertain the financial impact and the alleged corruption in granting such assets) and, is yet to start hearing on the future of such blocks.

Most probably, there will be measures to regularise the ownership of 32 captive mines in operation and, some more assets in advanced stages of development, to safeguard any major impact on the economy.

Considering the total captive coal production of approximately 40 million tonnes a year (as against the nation’s annual coal consumption of over 650 mt); the impact, in any case, should not be significant.

A thumb-rule calculation suggests, even the closure of all such mines will impact only 8000 MW electricity generation capacities. That is a mere 3 per cent of the nation’s installed capacity.

However, it’s a major blow to the interest groups in industry and politics, who thrived on the illegal dispensation of such assets for nearly two decades. And, there are probabilities that they will put up a combined show to subvert the court initiative to bring the house in order.

More than the industry, it is the politics that should now suffer from an existential crisis. The order threatens their bargaining power with industry that is crucial to fund elections.

And, that raises questions about the future course of policy making regarding the all important coal sector in India.

Let CIL acquire the mines

There is little doubt that the apex Court verdict has opened a range of opportunities before the country to clean the entire energy space from the grip of crony capitalists.

Considering India’s low purchasing power and, high cost infrastructure the country cannot afford to pay a higher cost of electricity. And, to do that the grip of National Miner should be should be strengthened.

History taught us that the nation’s firm grip on energy sector is crucial for manufacturing growth.

India cannot keep private miners on as a tight lease as in one-party ruled China. So, there is little point in trying to emulate that model. It is better to introspect why a democratic South Korea has State monopoly on the electricity sector.

 If the Prime Minister Narendra Modi wants to make India a manufacturing hub; he must not let the country’s most important energy resource to slip into the hands of the ‘market’, at least not in this juncture of democracy, where the entire political system is running low on credibility.

The need of the hour is to work within the set paradigms of Coal Mines Nationalisation Act. Coal India (CIL) is flushed with cash. It can always acquire the captive mines and ensure that coal be supplied to the same end-use plants.

It should not trigger rise in electricity tariff or the competitiveness of the end-use plants, either. Because, captive miners are currently using mining operations as a profit centre, with fuel transferred to the end-use plant at CIL prices. 

On the brighter side, a rush in investments will improve CIL’s stock price, helping the government in making more money from the proposed stake-sell programme.

If necessary the Coal Mines Nationalisation Act may be slightly tweaked to allow CIL to enter 50:50 JVs with private sector.

The moot point India has to produce low-cost electricity to make its industry competitive.

Some Fears 

But the sceptics fear that the Indian politics may try to bounce back with a piece of legislation to take the steering in its hand. There are many examples of such retrospective policy making by the Indian Parliament in the past.

There may also be efforts to safeguard the sections of industry who are now caught on the wrong foot. Many already started demanding de-\nationalisation of the  coal sector.

The course of events in the next few months will prove, how India is shaping its future.

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(Disclaimer: Graphics are collected from web. Will be withdrawn in case of any objection)