Posts Tagged ‘India’

One Year Of Modi Govt

May 30, 2015

One Year of Modi govt: Bure Din For Social Sector

Modi government has damaged the rights-based legislative framework without spelling out what will replace it.

Aruna Roy & Nikhil Dey

No one in the last two decades has come to power with greater euphoria than the Narendra Modi sarkar. It has taken less than a year for that euphoria to recede and change to disappointment. There are sufficient reasons for this change. The celebrations of the first year in office of this government are in sharp contrast to the plight of the common person.

The callousness of the government is most noticeable in its attitude to social sector issues. It does not seem to realise that rights-based legislation were not a UPA creation, but a reflection of the aspirations of millions of Indians struggling to procure the most basic entitlements. In its desire to establish itself by discarding past achievements, the current government is making a cardinal mistake.

Nothing could be more symptomatic of this narrow partisan approach than the prime minister’s statement on the MGNREGA in Parliament. It is shocking that the PM could promise to build a programme only to establish its monumental failure. This statement sent a strong message down the line to discredit and mismanage the programme. It is a failure not only of leadership but of vision and governance. The PM’s rhetoric sounds hollow even to his own party. The Madhya Pradesh chief minister has publicly stated that the MGNREGA is one of the best programmes in independent India.

Rights-based legislation like the forest rights act, right to food, right to education and right to information, passed in the last 10 years, did not merely provide economic and social entitlements to the poor. They were an attempt by India’s poorest citizens to claim delivery of basic services and ensure accountability. The people’s right to participate to ensure delivery and to monitor these programmes arose from numerous failures.

Rights-based legislation are an attempt by people to demand a share of governance. The demand for transparency, the right to question, audit development programmes and their implementation, arose from this. This framework is being undermined through budget cuts and the attempt to replace rights with cash transfers, which are much more in a paradigm of doles and handouts. Bank accounts without money and spurious promises through contributory pension and insurance schemes cannot replace the crippling of existing programmes. Even as earlier programmes and laws are ridiculed, there is no vision or direction for what is to replace them.

There is, in fact, no roadmap this government has to offer for the social sector. If this government felt that the earlier legislation were a complete failure, it should have issued a white paper on the shortcomings and provided a blueprint for how these would be overcome. This would at least have provided the people of this country an idea of what they could expect and where they could hold the government to account.

Much of rural India has found itself reeling under a loss of social sector entitlements and scrambling to save whatever resources it has. In the farming community, many might not be personally affected by the land acquisition ordinance, but most are affected by market-driven policies on minimum support prices and inefficiencies in the provision of fertilisers, irrigation, etc. The obstinacy of the government in repeatedly reimposing the ordinance has only confirmed the rural sector’s fears that these are the days of “company raj” and “bure din”.

The government has probably begun to realise that the MGNREGA is one of the less expensive ways to provide basic support, especially in times of distress. But the PM’s earlier message has been internalised by the system to such an extent that even the PMO’s later assurance to extend support for the MGNREGA has not been able to change things on the ground. People are still unable to get work. What could be a more decisive example of poor governance?

The attack on participatory governance has been even more surprising. While there was a stated ideological bias against social sector entitlements, the rhetoric on transparency, accountability, anti-corruption and improved efficiency seemed unequivocal. However, by repeated and deliberate acts of omission and commission, this government has made sure that a carefully constructed transparency framework has been comprehensively undermined. The accountability laws waiting to be implemented and passed have been pushed into amendments and committees.

The non-appointment of the chief information commissioner and three other commissioners cannot be justified on any legitimate ground. Despite repeated protests, the government has brazened it out to undermine the credibility of the information commission. The whistleblower protection and Lokpal laws were passed with great difficulty. They have been weakened through proposed amendments and further delayed by sending them to standing committees.

The grievance redressal law (a kind of RTI part II) would have ensured accountability of all government servants and been crucial to ensuring efficiency and service delivery. Instead, institutions more responsive in engaging with the people have been replaced by exclusive structures. The argument of efficiency remains a myth as the entire system functions with extraordinary centralisation, opacity and lack of public accountability.

The fact that this is a “Modi sarkar” and not the “NDA or BJP sarkar” is proclaimed repeatedly and deliberately. It is testimony to the undemocratic nature of the government’s current internal politics. Critics gave the BJP credit for its (comparative) internal democracy. The ruling party is now defined in the feudal mould of a single ruler, rather than a party that functions collectively and democratically.

The chaiwalla image has been replaced by that of a sartorially conscious leader with a designer suit. All decisions are taken by the PM, and he is constantly travelling abroad. This has led to a dysfunctional single-leader system where questions of the people do not get answered and find no platform.

Finally, the attack on activists, NGOs and other dissenters on development politics is unwise and deeply damaging to our democratic framework. People committed to the welfare of marginalised communities and the environment find themselves branded as “anti-national”, with a completely warped sense of what true national interest is. We can only hope that the people will assert their rights and demand that promises be kept and that we will see a more inclusive and plural India.

The writers are with the Mazdoor Kisan Shakti Sangathan. Roy was a member of the UPA’s National Advisory Council until May 2013 / Courtesy: Indian Express

Mexican Walmart Bribes

September 23, 2012

Wal-Mart Paid $24 Million In Bribes For Permits In Mexico

    According to a report published Saturday by the New York Times, Wal-Mart Stores Inc.’s largest foreign subsidiary, Wal-Mart de Mexico, informed senior executives at Wal-Mart back in 2005 of an elaborate bribery campaign orchestrated in order to obtain permits, licenses, and inspections throughout the country of Mexico in a widely successful attempt to ensure market dominance.

    The Mexican executive who blew the whistle on the whole ordeal was previously an attorney charged with obtaining construction permits for the company.  The lawyer said in e-mails and follow-up conversations that Wal-Mart de Mexico paid bribes on numerous occasions to obtain construction permits during a period of time when they were rushing to rapidly expand across the nation.

    Wal-Mart has grown to become Mexico’s largest private employer, employing 209,000 employees in Mexico.  One in five Wal-Mart stores is now in Mexico.

    The Times reported that it wasn’t until learning of its investigation that Wal-Mart decided that it was time to inform the United States Justice Department in December of 2011 that it had initiated an internal investigation into potential violations of the Foreign Corrupt Practices Act.  Under which law, it is illegal for United States corporations as well as their subsidiaries to bribe a foreign official.

The Bentonville, Arkansas, based company’s spokesman David Tovar issued a statement in which he said:

“If these allegations are true, it is not a reflection of who we are or what we stand for. We are deeply concerned by these allegations and are working aggressively to determine what happened.”  

    The NY Times investigation reportedly unveiled a long struggle at the highest levels of Wal-Mart.  The report indicated that the corporation had discovered evidence of a $24 million paper trail which was suspected to be bribery payments to foreign officials in Mexico.  At the time, the New York Times alleged that top Wal-Mart executives were more concerned with damage control than they were with exposing corruption within the corporation.

Bad Labour Practices of Walmart

September 23, 2012

Walmart Fined $4.8 Million For Failure To Pay Overtime

    It took an investigation by three separate divisions of the government to finally give Walmart a taste of its own medicine and although the fine is not even a blip on the company’s radar at last it sends a PR message to the megastore.   Treat your employees better!

    This Tuesday (May 1, 2012), the Department of Labor announced that Walmart agreed to pay $4.83 million in back wages and damages to employees it had illegally denied overtime.  The agreement follows a multi-year investigation into Walmart’s labor practices. More than 4,000 workers, all vision center managers or asset protection coordinators, will receive money from the settlement.

    Nancy J. Leppink, deputy administrator of the Labor Department’s wage and hour division, said in a statement released right after the agreement was announced,

“Thousands of employees will see money put back into their pockets that should have been there all along,”

    Add that to Walmart’s woes.  The company is being investigated by the Justice Department and Congress for bribing Mexican officials to open stores all over the country.

    All U.S. workers are entitled to overtime if they put in more than 40 hours a week, certain salaried managers are exempted form the laws.  Before 2007 Walmart considered its vision center managers and asset protection coordinators exempt. The Department of Labor called the mistake a misclassification.

    A Walmart spokesman said in an e-mailed statement,

“When the issues resolved today were initially raised, we took them seriously and fully cooperated with the Department of Labor to make sure they were corrected in 2007. We adjusted our pay practices at that time and determined that back wages should be paid for the associates involved. We have agreed on a fair settlement amount for the associates that trained for the role of Asset Protection Coordinator (APC) and associates in the role of Vision Center Manager (VCM), and we are pleased to have resolved this matter,”

    In 2008, the company agreed to pay as much as $640 million to settle 63 federal and state class actions suits.  The class actions alleged that Walmart systematically denied their employees overtime in order to profit

India’s Food Crisis Has Many Ingredients

October 2, 2011

India’s government is drafting a food security bill, but there are other areas it must address if it is to halt rising hunger levels

Nilajana Bhowmick


Indian vegetable vendors at a street side stall in Kolkata

    Gurwa Ahirwar, of Akona village in Chhatarpur district in Bundelkhand, is in his late 60s. He lives with his wife and his three grandsons. The rest of his family, his two sons and daughter-in-law, migrated to Delhi to work. Most families in Akona are left with only the elderly and the children. The young have left in search of work in the cities after continuous drought in the last few years caused crops to fail.

    Bundelkhand lies mainly in Madhya Pradesh, the second largest state in India and the one that contains the greatest concentration of hungry people in the country. The Indian State Hunger Index released in 2008 placed Madhya Pradesh in the "extremely alarming" hunger category. The state is a glaring example of everything that is wrong with India’s poverty elimination efforts.

    Of the 118 countries on the global hunger index, India ranks 98th, with 214 million people going hungry. Millennium development goal 1, which looks to eradicate extreme poverty and hunger and provide food security by 2015, is miles off.

    In 1993-94, 44.6% of people were living at below the poverty line in Madhya Pradesh. If MDG targets are to be met, that figure must go down to 22.3% by 2015. Yet, according to new poverty estimates produced by a government fact-finding commission, poverty in the state has increased by 4% to 48.6%. A survey by a local NGO revealed 83% of children are undernourished and most families go to bed on an empty stomach.

    The extent of India’s hunger problem is perhaps most evident in its children. Biraj Patnaik, national adviser to the Right to Food campaign, says: "India has the highest burden of child malnutrition in the world. You find that almost a third of Indian babies are born with low birth weight and this is a very high number. Lack of access to food, no access to drinking water, lack of sanitation facilities and gender inequity – these all contribute to child malnutrition, which again stems from hunger and poverty."

    According to the development economist Jean Dreze, the most serious nutrition challenge in India is to reach out to children under three. "It is well known that if a child is undernourished by age three, it is very difficult to repair the damage after that," says Dreze. "Yet most infants and young children continue to be exposed to undernutrition and remain beyond the reach of public intervention."

    However, the way in which public intervention is managed – and the attitudes that shape it – are themselves sometimes blamed for the worsening of the problem.

Agriculture spending

    A key factor in India’s plight has been the government’s espousal of development at the cost of agriculture – the mainstay of people in the rural areas. Nationally, agriculture provides 67% of employment. In the last financial year, the Indian government provided around 500,000 crores (US$112bn) of subsidies and exemptions to the industrial and corporate sector, which contributes just 22% to the employment sector, while government expenditure on agriculture declined by 4.3%.

    India’s hunger problem has also been compounded by the high price of food over the last couple of years. A report on consumption patterns in rural India by the National Sample Survey Organisation shows a decline of 1.97%. In 2005-06, an average of 11.9kg of food grain was consumed per month, per family member, at a cost of 106 rupees ($2.38). In 2006-07, that figure came down to 11.69kg, with the cost of food increasing to 115 rupees ($2.58).

    Some blame rise in food prices on hoarding by the government. To give one example, India produces around 600 million tonnes of fruit and vegetables out of which 25% to 30% is wasted due to inadequate logistical support. While inflation has clearly played a part, the food crisis is part of a wider failure of the government to ensure people’s entitlements to food. Many welfare schemes have failed to reach the poorest because of corruption, for example, and some policies have simply failed to take account of local needs.

Welfare to work

    One such scheme is the National Rural Employment Guarantee Scheme (NREGA), which came into being in 2005. The scheme ensures rural people livelihood security by guaranteeing them 100 days of work every year. Under the terms of NREGA, every rural Indian has the right to work within 15 days of requesting it and without having to travel more than three miles outside their village.

    Dreze, one of the chief architects of the programme, says that it provides employment to 50 million poor people every year, but he admits that the implementation has been faulty.

    "NREGA is a pro-worker law implemented by an anti-worker system," he says. "One manifestation of this is the systematic resistance of the administration to any sort of accountability. All the accountability provisions – unemployment allowance, compensation for delayed payments, penalty clauses – have been sidelined. This defeats the purpose of the act."

    Under pressure from civil society, the Indian government is formulating a food security bill, which will make access to food a legally enforceable constitutional right, like the right to life.

    Contained in the bill, which is being drafted by the National Advisory Council and backed by the chairwoman of the ruling UPA, Sonia Gandhi, is making access to food a legally enforceable constitutional right. In the first phase, the draft proposal outlines subsidised food for 72% of the population by 2011-12.

    However, with the World Bank recently warning that 60% of the country’s food subsidies do not reach the poor, it is high time the government made some fundamental changes. Reforming the faltering public distribution system, which it plans to universalise under the new bill, enhancing support for farmers, and improving storage and transport may go some way to reduce wastage and pave the way for long-term food security.


Anna Hazare’s Crusade Against Corruption

August 18, 2011



    He wears only khadi, a simple garb of homespun cotton, and lives in a small room off a temple in a remote, drought-prone western Indian village. A veteran of the 1965 India-Pakistan war, he retired from the Indian army and took vows of chastity and public service.

    According to public statements in June, the septuagenarian bachelor has $1,500 in his bank account.

    But ascetic social activist Anna Hazare has galvanized the nation of India, rattling the country’s leadership at the highest levels, as he garners support that cuts across economic and social divides.

    His grassroots effort to fight corruption through public fasting has drawn comparisons to Mohandas Gandhi, whose non-violent efforts helped lead to India’s independence from British rule in 1947.

Hazare channels river of dissatisfaction over corruption

    "We are tired of the problem of corruption, but he is saying: There is another way," said Usheer Mohan, a New Delhi business owner who took to the streets to protest Hazare’s arrest this week ahead of a planned anti-corruption demonstration.

    "He gives hope for all Indians. There is a feeling he can take us out of these problems. People have started considering him another Gandhi."

    Hazare has been a vocal opponent against corruption for two decades, but only in recent months has he catapulted onto the national stage as the people’s voice against endemic corruption that plagues one of the world’s fastest-growing economies.

    "If you keep track of Indian news, you know how truly widespread and national this is – it is in every nook and corner of this country today," Kiran Bedi, a Hazare aide, told CNN.

    "One and all have either seen bribes or experienced bribes or suffered from a bribe, so it’s both at bottom and the top, and it’s truly united this country in a wave against corruption."

    Bedi, a former senior police official, is like Hazare himself a Magsaysay Award winner — one of Asia’s biggest accolades for public service leadership. Other activists involved in his anti-corruption crusade — which the Indian media dubs "Team Anna" — have fought for "right to information" laws to make India’s notoriously labyrinthine bureaucracy more transparent.

    Kisan Baburao Hazare — known to his admirers as "Anna" or elder brother in his native Marathi — is a former soldier who, after watching compatriots die fighting in the 1965 war with Pakistan, considered suicide until he had a spiritual conversion after reading the teachings of Swami Vivekananda, according to his official biography. Vivekananda, a father of modern Hindu philosophy, emphasized the importance of social service in his teachings.

    Hazare first garnered attention for helping to turn his village, Ralegan Siddhi, in the western state of Maharashtra into a model for water use and sustainable development — work for which he received two of India’s highest national prizes in the early 1990s.

    He also launched a campaign against the distilling and consumption of liquor in the village, which he believed was leading to widespread alcoholism among men. The anti-alcohol drive was controversial: Drunk men were sometimes tied to posts and flogged, but women supported an effort to impose prohibition on the village.

    Hazare began to work against corruption in 1991 in a local campaign against the state forestry agency, resulting in his first hunger strike — a tool he has used repeatedly in his public campaigns over the past 20 years.

People have started considering him another Gandhi

    Hunger strike as a popular weapon of public protest in India "goes back to the days of Mahatma Gandhi," said Zoya Hasan, professor of political science at Jawaharlal Nehru University. "He employed fasting as a weapon of protest, a weapon of struggle. Since then, because of its association with Gandhi and the iconic status of Gandhi, fasts have been a very popular form of protest."

    Hazare conducted a five-day hunger strike in April which ended after India’s prime minister agreed to introduce long-pending legislation meant to crack down on graft.

    The latest stalemate is over the scope of powers the proposed independent commission, known as Lokpal, would have. Hazare and his supporters want the body to be able to independently investigate the prime minister and Supreme Court; government officials say such a move would give too much unchecked power to the new watchdog agency. The government also says Parliament should be the forum where this law should be finalized, without undue pressure from unelected activists.

    In a statement to Parliament, Prime Minister Manmohan Singh said his government wants a Lokpal established quickly to combat corruption, but "the path that he has chosen to impose his draft of a Bill upon Parliament is totally misconceived and fraught with grave consequences for our Parliamentary democracy."

    Hazare’s aides see it differently.

    "The hunger strike has been a last resort by Anna Hazare … nobody wants to go to a hunger strike at the drop of a hat," Hazare confidant Bedi said. "The process has failed, dialogue has failed, meetings brought about no results."

    Hazare was planning to go on a hunger strike to call for stronger anti-corruption measures when he was detained Tuesday. As thousands took to the streets to protest the arrest, authorities let him free, but he refused to leave the jail.

    The anti-corruption crusader has accepted a police proposal that will allow him to proceed with his public fast and demonstration in New Delhi in public for two weeks, according to Hazare supporters.

    Government moves to detain Hazare before his planned public hunger strike catalyzed supporters like 43-year-old Mohan, who took to the streets of the capital on Tuesday night after Hazare’s incarceration.

    "We were shouting slogans, waving flags and banners, singing the national anthem," said Mohan, who is a director of Studio Thorn, a retail design firm in New Delhi.

    The government of Prime Minister Manmohan Singh — who has overseen an economy that has more than doubled in size the past seven years to an estimated $1.7 trillion this year — is now roiled in a string of high-profile corruption scandals.

    In April, Suresh Kalmadi, the chief organizer for last year’s Commonwealth Games, was arrested and accused of buying a time, scoring and result system from a Swiss company at inflated cost. He has denied any wrongdoing.

    Meanwhile, India’s former telecom minister A. Raja, several bureaucrats and corporate officials are facing trial in connection with a multi-billion-dollar scandal involving the suspected below-price sale of mobile-phone radio waves or spectrum in 2008. Government auditors estimate the scandal cost the Indian exchequer some $39 billion dollars in lost revenue.

    "(Hazare) was well-known in his state, but he catapulted to national fame thanks to his leadership in India against corruption in the context of these numerous, major corruption scans that have hit the headlines in recent months," said Hasan of Jawaharlal Nehru University.

    For many Indians, corruption pervades at all levels of Indian society, even mundane processes such as receiving a driver’s license or getting a death certificate — anything that requires government approval.

    "For example, if I’m starting a new venture like a resort, when I have to get permission to develop that land as a resort, I have to get a license, I have to go through government channels – there’s a lot of corruption involved in getting the permission. If I have some good government connections, I can avoid those channels," Mohan said.

    "There is corruption both high and low."

    But for Mohan and thousands of other Indians, Hazare’s long crusade has become their own.

    "(Fighting corruption) used to be a drawing room discussion – now it’s people in the streets," Mohan said.

Courtesy: CNN World

Global Financial Turbulence: India Must Draw Proper Lessons

August 11, 2011

Sitaram Yechury

THE turbulence that has gripped the world’s financial markets has, once again, sharply illustrated the fact that global capitalism, a system based on the exploitation of man by man and nation by nation, can never be crisis free. However, as repeatedly underlined in these columns, irrespective of the intensity of the crisis, capitalism never collapses on its own. It needs to be overthrown. This requires the strength of the working class leading all exploiting classes through the sharpening of class struggle to lead the revolutionary transformation to overthrow capitalism. In the meanwhile, capitalism emerges from its self-created crisis by further intensifying exploitation. This is precisely what is happening today.

    Following the unprecedented downgrading of US sovereign long term credit rating by Standard & Poor from AAA level, the world stock exchanges went into a tailspin. In the US, the Dow Jones industrial average fell by 634 points or 5.6 per cent. The Nikkei in Tokyo was down 3.7 per cent while the Kospi in Seoul fell 6.2 per cent. Australia saw a fall of 2.9 per cent. The German index, the Dax, dropped 5 per cent and has lost 21 per cent of its value since May this year. Reflecting this, major banks saw the biggest declines in their stocks. Bank of America fell by 20 per cent, Citi Group fell by 16 per cent, Morgan Stanley dropped by 14 per cent, J P Morgan fell by 9 per cent and Goldman Sachs fell by 6 per cent. The Standard & Poor’s 500 stock index has lost 16.8 per cent in the last three weeks. Some stock exchanges, including our sensex, have, since, shown some improvement. This, however, may only be transitory and, in any case, such fluctuations are the reflection of the current turbulence.

    These developments have virtually generated panic with the London Economist predicting a double-dip global recession led by the USA. Last week alone saw $ 2.5 trillion wiped off from investor’s wealth. The sensex in India lost over Rs. 4 lakh crores in the last four trading sessions. The simultaneous sovereign credit crisis in the Eurozone has seen the virtual insolvency of Greece, Ireland and Portugal, who had to be bailed out by huge packages. The crisis is now threatening Spain and Italy and is unlikely to stop there.

    However, it will be wrong to characterise these developments as a new phase of the global economic crisis. In a sense this is a continuation of the financial crisis that began in 2007 leading up to a recession. This was only to be expected given the manner in which global capitalism sought to overcome the crisis that began in 2007.

    By undertaking huge and unprecedented bailout packages for those very corporates who, in the first place, caused the financial meltdown, developed countries incurred huge amounts of debts surpassing their GDPs. Global capitalism sought to overcome the crisis by converting corporate insolvencies into sovereign insolvencies. This, in turn, has intensified the crisis today plunging the world economy into a state of uncertainty.

    The Special Inspector General for the US government’s financial bailout programmes, created to serve as an auditor of the federal bailout, in a prepared testimony delivered to the US Congress House oversight committee says, “Since the onset of the financial crisis in 2007, the federal government, through many agencies, has implemented dozens of programmes that are broadly designed to support the economy and the financial system. The total potential federal government support could reach upto $ 23.7 trillion.” Compare this with USA’s GDP which is just over $ 14 trillion. The US treasury spokesman, however, denies the veracity of this figure.

    The truth, however, is that as of May 16 this year, the total US debt was pegged at $ 14.3 trillion. Now (as noted in Prabhat Patnaik’s article last week) the USA has an anachronistic law, adopted in 1917 that puts a ceiling on the magnitude of debt in absolute terms. This is unlike in Europe or in India where the size of the fiscal deficit (different from debt) is fixed as a percentage of the GDP. This ceiling, however, was routinely revised upwards in US history. Given the current debt crisis, it was presumed that the tradition of this routine will continue. However, this was not to be.

    The Republicans whose concurrence was essential to raise the ceiling demanded their pound of flesh. While insisting that the tax benefits for the rich that began during the George Bush era be continued, the Republicans put a condition for agreeing to increase the debt ceiling only if severe cuts were effected in expenditures that were essentially aimed at benefiting the poor and the needy such as Medicare.

    Similar is the logic of the sovereign bailout packages offered by the IMF and the EU in the Eurozone. Countries like Greece had to undertake massive `austerity measures’ to cut expenditures. This has imposed an unprecedented burden on the working people, whose remunerations, amongst others, have been drastically cut. During the last two years, the popular protests in Greece have seen 17 general strikes nationwide. Germany, widely seen as the economic powerhouse of the European Union and expected to pull other Eurozone countries out of crisis is itself showing signs of an economic slowdown. Its index of manufacturing activity dropped to 52 in July, the lowest level since October 2009. This is the third consecutive month of decline. Analysts have said that the main source of worry for Germany is that the “sources of domestic demand are not manifesting itself”.

    In other words, what is happening is the following: The capitalist State mobilises resources for huge bailout packages. In the process, it accumulates massive sovereign debt. The burden of this debt is transferred on to the shoulders of the working people through massive cuts in welfare and social security expenditures. This is the logic of capitalism, pure and simple: maximize profits by intensifying exploitation.

    In the USA, data from 2009 corporate tax returns shows that the estimates of corporate profits grew from 8.3 per cent to 10.8 per cent in 2010. Corporate profits accounted for 14 per cent of the total national income in 2010, the highest ever recorded. Corporate profits have been expanding for the last ten consecutive quarters. In the process, all corporates have accumulated mind boggling cash reserves. Apple alone has cash reserves of $ 72 billion, more than the GDP of half the countries in world. Microsoft and Google together have cash reserves of more than $ 100 billion. Similar is the story with other corporates. At the other end of the spectrum, USA has today an unprecedented unemployment rate of close to 10 per cent.

    This situation is not confined only to turbulence in global finance. It has laid the seeds of a more fundamental crisis. As the burden of sovereign debt is passed on to the common people, their purchasing power correspondingly declines. Combined with the growth of unemployment, this leads to a sharp contraction in domestic demand. Further, this global crisis has drastically reduced global trade. Germany, for instance, saw its exports fall sharply in June to a growth rate of only 3.1 per cent compared to 20.1 per cent in May. Under such circumstances, the manner in which the USA has handled its debt ceiling issue impacts not only its domestic economy but the global economy. With the contraction of domestic demand in all the major economic powers, save China, the contraction of GDP in all these countries is inevitable. This, in turn, will lead to a further contraction in governmental revenues, imposing further debt. The servicing of this would lead to imposing further burdens on the people. This vicious cycle has been set in motion, imposing unprecedented burdens and misery on the people. This would lead to many ugly manifestations of social tension like the spreading riots of loot in the UK.

    For us in India, it is important to draw the correct lessons. Clearly, what is required is to boost domestic demand as a means for achieving not only substantial growth but also arresting the growing economic inequalities. This would mean that the process of foregoing legitimate tax revenues in the name of stimulus packages must be reversed. During the last two years, over Rs 9.5 lakh crores was, thus, foregone according to the budget papers. Instead, these huge amounts should be collected and utilised for massive public investments to build our much-needed infrastructure. This will generate high levels of employment and bolster domestic demand fuelling a sustainable growth trajectory.

    Further, given the global financial turbulence, India must not be foolhardy to rush into `Gen next’ financial reforms. In the first place, if India could protect itself from the devastating effects of the global meltdown in 2008, it was because the Left parties had prevailed upon UPA-I not to proceed with such financial reforms that were waiting to be legislated. Such wisdom must prevail to protect the Indian economy and people from being devastated by this global turbulence.

India’s 2G Scam – The Untold Story

July 4, 2011


The Real Story About 2G Scam :

                                       Truth Behind the 2G Spectrum Scam

    Recent scams in India not only tell about the free loot of scarce national resources but also show the power of having big ‘Surnames’ like Tatas, Birlas and Ambanis. It seems that India has been taken over by corrupt politicians in alliance with corrupt bureaucrats and businessmen. Number of PSUs (BALCO, VSNL, Modern Food, Hindustan Teleprinters, etc.) have been divested at throwaway prices. Since liberalization from ‘Licence Permit Raj’, few industrial houses managed by people having big ‘Surnames’, have grown exceptionally by exploiting India’s scarce resources, be it mines, oil, land, ports or spectrum, in alliance with the political masters. Small and medium entrepreneurs are going out of business, because of monopoly created by established industrial houses by lobbying with the government. When public becomes angry over revelations of such scandals, the strategy often employed is to start targeting second-tier selectively while protecting top-tier who can buy India democracy with the vast wealth gained by corruption. Recent example is 2G spectrum scam.

    When things were going as per the whims and fancies of Tatas, Birlas and Ambanis in telecom sector, there was no scam and no inquiry from CBI, ED, Income Tax, PAC or JPC. The moment new players entered in this sector, they were killed by these big people with the support of Indian bureaucratic system. People know that big corporate houses, like Ambanis, Tatas and Birlas, not only control the government but also play a major role in the formation of government and allocation of ministries, as apparent from the Niira Radia leaked tapes.

    Let’s start with Tata first who has been shown as victim of DMK leader A. Raja’s policies in the CBI’s first charge sheet. Surprisingly, in the same charge sheet, CBI estimated loss of Rs.8,448.95 crores to the exchequer from Tata’s dual technology licenses. Tata not only got 19 dual technology licenses but also got 3 new licenses in 2008 at 2001 price for which loss to the exchequer is estimated to Rs.22,535.6 crores. Till recently, two senior DMK leaders (PV Kalyanasundaram and VRS Sampath) were helping Tata by acting as director in Tata Communications. A. Raja considered Tata applications for dual technology licenses even though these applications were filed after the last date. It shows, Tata was the biggest beneficiary of A. Raja policies and major contributor of loss to the exchequer claimed by CBI in its charge sheet. Tata’s hand-written letter of November 13, 2007 (delivered personally through Niira Radia) to the then Tamil Nadu Chief Minister praising A. Raja’s action defies the CBI story of Tata as victim. In this letter, Tata had complained about some ‘powerful vested interest groups’ in the telecom industry but Tata had forgotten that he is also part of the same class. For this reason only, Tata got a clean chit in Unitech-Tata Realty deal and Voltas land deal with Karunanidhi family, and on the contrary, shown as victim. When unsecured loan from DB Realty to Kalaignar TV can be quid pro quo, then why not Voltas land deal?

    Recently, Tata regretted that his conglomerate couldn’t enter the growing aerospace industry in India because his attempts to enter the segment were thwarted by corruption. Why is Tata complaining now in November 2010? Why he is not disclosing the names of the 3 Prime Ministers he approached and the minister who asked bribe from him? Why had he not filed any complaint against such minister – if he really wanted to remove corruption? Does it mean that all private aviation operators are part of corruption or is he trying to show that Tata has created a big empire without being part of corruption? If it is true, why does Tata need to hire corporate lobbyist – Niira Radia? Surprisingly, CBI had failed to unearth anything incriminating against Niira Radia whose leaked conversations with assorted bigwigs have riveted the nation.

    Idea Cellular (Aditya Birla Group company) was also issued 9 GSM licenses in 2008 at 2001 price and accordingly, it has also contributed in the loss to the exchequer like others. But, CBI has found no evidence against Idea Cellular to prove any wrongdoing – may be, because Idea Cellular is owned by Birlas or CBI is not sure about its calculation of loss to the exchequer. CBI also failed to investigate Idea-Tata connection (like Swan-Reliance connection) when it applied for license in Mumbai circle. Idea applied for this license in August 2005 when Tatas were providing telecom services in Mumbai and also holding more than 10% stake in Idea. Instead of rejecting Idea’s application (being in violation of Indian telecom rules), DoT favoured Birlas by putting this application on hold till Tatas exited the company in 2006. Now, CBI is favouring Birlas by saying that its application for Mumbai circle was kept in abeyance for 6-month period to comply with DoT rule. While giving this clean chit, CBI has failed to check that there is no provision in DoT guidelines to keep the applications in abeyance.

    In 2003, Reliance and Tata (fixed line operators) were allowed to offer mobile phone services, at first in the limited WLL mode (Wireless local loop) and later full mobility without paying the hefty fees paid by the earlier operators. Apart from Tata, the biggest beneficiary of change in policy was Ambani’s Reliance Infocomm who gained thousands of crores of spectrum without paying a dime in additional license fees, and the then telecom minister are reported to have received benami shares of Reliance Group companies as a ‘gift’.

    Again in 2007, Ambani also got dual technology licenses (like Tata) in 2007 at 2001 price and that too, a day before the announcement of policy, therefore causing loss to the exchequer going by the CBI understanding. None of the companies which have got dual technology licenses, has been booked so far by CBI. In fact, for Swan-Reliance connection, CBI has made small employees of Ambani as accused and kept him out of its loop despite having a statement of ICICI bank manager that only Anil Ambani and his wife were entitled to sign big cheques. Even otherwise, it is unbelievable that these small employees were authorized to take decisions worth thousands of crores of rupees without taking permission of Ambani. CBI has closed its mind on a question – whether these employees were the beneficiaries?

    Coming to Ruias who have recently sold balance 33% stake in Vodafone-Essar to Vodafone for a whopping amount of USD 5 billion. The Ruias are under CBI scanner as they suspect Essar of using Khaitans as a front for ownership in Loop Telecom. Current regulations prevent any entity from holding beyond 10% stake in more than one company in a circle. Essar was holding 33% stake in Vodafone-Essar when it applied for telecom licenses again through Loop. But it appears that CBI is not able to get hold of Ruias because of their name and fame. CBI in March 2011 admitted before the Supreme Court that first charge sheet shall be filed in April 2011 against 2 companies – MD of one company is already in custody and second company is linked to Vodafone. But suddenly, Ruias managed to keep themselves out of the first charge sheet. Till date, no one from Essar or Loop has been booked by CBI despite having a written compliant from Indian High Commissioner to Mauritius, Madhusudan Ganapati, against Prashant Ruia and I. P. Khaitan, saying that both Ruia and Khaitan came to meet him under the pretext of discussing the business environment in Mauritius but ended up asking him to share details on the Letter Rogatory sent by CBI to the Mauritius government. This incidence also took place before filing of first charge sheet but no action has been taken till date. On the one hand, CBI is opposing bail of 2G scam accused on an apprehension of interference in investigation whereas in case of actual incidence of interference, no action is being taken.

In terms of magnitude of the crime, that is loss to the exchequer, Loop has caused almost equivalent loss as Datacom and Unitech has done. CAG also said that Loop was ineligible for license on the ground of objects clause and paid up capital. In case of Swan and Unitech, CBI has filed the charge sheet pending reply of the Letter Rogatory but charge sheet against Loop is being delayed contending that reply on the Letter Rogatory is pending. For Loop, opinions from the Corporate Affairs ministry (MCA) and legal experts are being considered but no such opinion was not taken for Swan-Reliance connection. In a recent communication, MCA has reversed its stand of April 13, 2009 confirming violation of norms by Essar. Surprisingly, Loop is aware of such MCA communication but CBI is claiming its ignorance. Why CBI is receiving various representations from legal experts and politicians to save Ruias? Isn’t it sufficient to show how influential is the power of ‘Surname’ in India?

    Dhoot company (Datacom Solutions) also got 21 GSM licenses in 2008 at 2001 price and therefore, has a fair contribution in the loss to exchequer claimed by CBI in its charge sheet. Despite having recorded statements of DoT officials (Kirthy Kumar, S K Saxena, S E Rizwi and S C Sharma) saying that Rajya Sabha MP Rajkumar Dhoot of Videocon group was present at DoT reception where applicants were completing formalities relating to LOI. In fact, Dhoot partner in Datacom, Mahendra Nahata, was creating "disturbance and chaos" on crucial day of January 2008. Datacom is the major beneficiary of tweaking in FCFS policy by coming at number 2 position from number 9 position. But, CBI is going cold on these issues and protecting Dhoot brothers.

    Though it is called as 2G ‘Spectrum’ Scam, but investigation agencies are keeping their ears, eyes and mouth closed where the spectrum is. According to CAG report, old operators, including Sunil Bharti Mittal company, are hoarding spectrum of 150 MHz. Even in JPC, CBI stated that Sunil Bharti Mittal-led Bharti Airtel was allotted spectrum beyond 8 MHz in violation of eligibility norms. Five months have gone in the preliminary inquiry registered in January 2011 on allocation of 2G spectrum during 2001-07, but CBI is still busy in scrutinizing the documents, looking at the telecom policy and its implementation by telecom ministers. Justice Shivraj V. Patil Committee report is also being looked into by CBI (sent to it by the Telecom Ministry early this year) which has reported many faults in the functioning of the previous telecom ministers and DoT officials favouring old operators. How much time does the CBI needs to read Justice Shivraj Patil’s Repot of 149 pages and to convert its PE into FIR? Shockingly, when CBI says that it is busy in looking at the telecom policy, then pending such review, how it can blame A. Raja for tweaking the same, or is the CBI again trying to protect some big names like Mittals. Recently, it was reported that documents related to the telecom policy of 1994 are untraceable in DoT. Could it be that the CBI is waiting for crucial papers to go missing and then to get into action?

Delay Tactics Adopted by Big Influencers
    As per recent media report on CBI performance, at least 2300 cases are pending unsolved for more than a decade. The agency has at least 1000 cases pending for more than 15 years and 381 cases for more than two decades. As per K Madhavan, former joint director of CBI, "The pile-up happens due to various tactics used by influential accused. They want to delay the case. This is a main reason why 99% of the cases move slowly in CBI courts." The latest example supporting K Madhavan statement is 2G spectrum scam where persons like Balwa, Goenka and Chandra have been arrested. In case of Ambani, small employees have been arrested. In case of Ruias, the CBI charge sheet itself has got delayed, since this time, Loop was supposed to figure in the charge sheet.

    Why no action has been taken against big ‘Surnames’ despite having all the evidences? Can someone believe that these small people, who have been arrested till date, were influential enough to tweak the telecom policies in their favour and against the big people like Tatas, Birlas or Ambanis?

    This makes it very clear that it is easier to buy anything in India if you are carrying a big ‘Surname’.

From 2G to KG – India, Mega Scams and Neo-liberalism

June 28, 2011



    Last week we had dealt with the broad issues in the KG Basin Gas scam, in which the Comptroller and Auditor General’s (CAG) findings are only one element. In this article, we will focus on what the CAG has noted in its draft report about the KG-6 block and the Production Sharing Contract (PSC) between Government of India and Reliance consortium. In this consortium, Reliance held 90 percent shares and Niko 10 percent, with Reliance being the operator. The key findings of CAG are:

  • Even though PSC envisaged a phase-wise vacation of the contract area for exploration under the New Exploration License (NELP), finally confining the operator to retain only the area from where commercial production takes place, the Directorate General of Hydrocarbons (DGH) and Ministry of Petroleum allowed Reliance to retain the entire exploration area as “discovery area” in gross violation of the contract.
  • Reliance never submitted a comprehensive Field Development Plan as called for in the contract. Instead, it submitted an Initial Development Plan (IDP) with an outlay of $2.2 billion in 2004 and issued an Addendum to the IDP (AIDP) worth an additional $6.6 billion.
  • Reliance started procurement action even before the Addendum was submitted or passed, indicating clearly that it took the Government approval for granted.
  • Reliance added $746 million to its cost, which it had not incurred, as “estimated liabilities”, in violation of specific provisions of the contract and violation of all accounting norms.
  • The presence of various sweetheart deals with its suppliers – most flagrant one being that for a Floating Production Vessel for $1.1 billion. It appears that this was a $26 million vessel, converted to a Floating Production Vessel taken by Reliance on a 10-year lease.

    CAG has stated that it would like to go into each of the sub-contractor’s prices and audit them further. Prima facie, a number of these contracts seem to be completely ad-hoc, based on single party offers, change of terms and scope during the course of the contract, etc.

    If we look at the provisions of the PSC, there are two major classes of violations. One is Reliance keeping the total area given to it for exploration as discovery area, when the area of the major developed gas and oil fields there is less than five percent of the total.

    The other is jacking up the capital cost. Reliance benefited in two ways – one, it recovered the inflated cost right in the beginning as “cost” petroleum; two, because of the nature of the profit sharing deal in PSC, it got a much higher share of the profit petroleum than it would have otherwise. Though CAG has not computed the total amount of scam as it wants to examine in more detail the inflation of costs, our rough estimate indicates the scam to be of the order of $10-12 billion. If we add to this, the additional area that Reliance has grabbed from keeping the entire exploration area for itself and therefore any future discoveries here would go to Reliance, the scam is indeed comparable to the 2G scam, if not bigger.

Converting Exploration Area to Discovery Area
    As per the Draft Report, the total exploration area for KG Block 6 was 7,645 Km. This was an off-shore deep-water block and was awarded to Reliance in 2000 under NELP 1. Under the contract, Reliance was required to retain only 75 percent and 50 percent of the exploration area after Phase 1 and Phase 2 of the contract respectively. After Phase 3, it was supposed to retain only the area where it had made discoveries or developed gas or oil fields. Phase 1 was supposed to finish in June 2004 and Phase 2 by June 2005. Not only did Reliance not release any area, it claimed that the entire area should be considered discovery area as various 2D and 3D surveys showed that there were hydrocarbon deposits in the entire block. The Ministry of Petroleum and DGH accepted this claim and in February 2009 agreed that Reliance could keep the entire block as discovery area.

CAG has pointed out the following:

  • Discovery in the contract was clearly based only on exploratory wells drilled and finding of petroleum at the surface, and not 2D and 3D seismic surveys.
  • The wells sunk by Reliance, as visible from the map of wells drilled by 2010, showed that it covered only the north-west part of the block and therefore had not drilled any exploratory wells in other areas.
  • Even the seismic surveys carried out – the 2D and 3D surveys – covered only a part of the block.
  • Till the end of Phase 2, only 4.5 percent of the area had been designated as discovery area and therefore Reliance had no basis to claim that the entire area was “discovery area”.
  • During Phase 2 of the contract period, DGH was on record asking Reliance to relinquish 25 percent of the area as per contract. It suddenly did a volte face later and decided that the entire exploration area could now be considered as discovery area.

    Why is this issue important? This goes to the heart of the NELP and why production sharing contracts have been devised. It has been argued that National Oil Companies or the public sector does not have resources to explore the country’s oil basins and therefore the case for inducting private capital. The entire argument for inducting private capital is for quick development of India’s hydrocarbon resources. If any company takes a particular area for exploration, it must finish the exploration within a certain time period or release it back to the Government for awarding it to others. It cannot sit on top of an exploration area and hoard it for the future. That is why the clause of progressive release of exploration areas back to the Government. After Phase 3, the only area that the private party is to keep are those where it had already discovered oil or gas by drilling actual wells or had started commercial production. Everything else had to be given back.

    Normally, when gas or oil is struck in an area, its nearby areas are also likely to have hydrocarbon deposits. The value of such areas would therefore go up for any subsequent auction. Hoarding such areas means that though the party considered has not spent the money it was required for exploration, it is still allowed to retain this area and explore it at leisure.

    CAG has commented that clearly, the contractor never intended to relinquish any part of the exploration area and this was facilitated by DGH and the Ministry of Petroleum and Natural Gas (MoPNG) by “irregularly and incorrectly terming the entire contract area as ‘discovery area’, when drilling of wells, which is the primary requirement for ‘discovery’ and ‘discovery area,’ had not taken place in the major portion of the contract area.”

    CAG has also pointed out that Reliance has similarly been granted another contract area as discovery area on the basis of discoveries when discoveries had not taken place in a major part of the contract area. As per CAG, this would open the floodgates for other private operators to follow suit and strike at the very heart of the PSC, “which mandates a time bound exploration process with relinquishment of undiscovered areas so that these can be re-auctioned for exploration and development by other willing parties.”

Phases and Dates Area to be relinquished

Phase 1 end date June, 2004 25% of exploration area to be released.

Phase 2 end date June 2005 Another 25% or total of 50% to be released.

Phase 3 original end date June 2007 but was extended to July 2008 by MoPNG 95% should have been released as only 5% of the area had discoveries.

February 2009 Ministry Allows entire exploration area to be considered discovery area even though Reliance had not drilled wells in the rest 95% of the area as called for in the PSC

    For all the discoveries, the PSC calls for a detailed appraisal programme and an appraisal report which identifies the boundaries of the hydrocarbon bearing block, the recoverable petroleum or gas. It is only after this that the contractor can move for claiming a commercial discovery and development of the field. In the case of KG-6 Block, Reliance skipped the appraisal part and went straight way to commercial discovery. As the appraisal report is the basis of the capital expenditure, this meant that all the capital expenditure being incurred had very little basis. The major cost escalation claimed for the D1-D3 area thus had no appraisal report. All the cost escalations and plans for expansion of production from 40 MMSCD to 80 MMSCD was done without a detailed appraisal of the discovery.

    This was not the only issue. In the case of two other discoveries – D5 and D18 – no proposals for appraisal have been received even after seven and six years, respectively. The PSC requires that if for three years the contractor does not submit an appraisal programme, the contractor shall relinquish its rights to develop such discovery and this area should be excluded from the contract area. Again, in spite of such blatant violation of the contract, no action has been taken by the Government and Reliance continues to hold all the original exploration area and the development rights.

    Why is Reliance not exploring the contract area as it had proposed and why does it want to hold on to this entire area? Oil and gas exploration is costly business. If you strike oil or gas, as Reliance did, it would like to put its money in development of the field and getting its money out as quickly as possible. Moreover, if oil or gas has been struck, raising money in the capital market is easy, particularly given the nature of the one-sided production sharing contract that the Government of India has awarded. For Reliance, the game was simple, use the D1-D3 discovery, and the oil discovery in D6-MA-1 to bring in capital and focus on their development. Given the sweetheart deals and the cooking of the contracts as we shall detail later, this was creating capital out of market borrowings and then siphoning this from the top by inflating capital costs. Reliance did not have to spend any of their own money in this game, only cook the books.

    While Reliance was looking for easy capital to finance its oil and gas field development, it did not want to relinquish the exploration area. It did not even want to put in money for the other 16 discoveries apart from D1-D3 and D6-MA-1. However, it is hot property in the oil market, and therefore Reliance wanted to retain the entire area of the D6 Block for future exploration and not relinquish it to the Government for auctioning again, as called for in the contract and envisaged under NELP.

    CAG’s draft report provides enough details to show how both DGH and MoPNG conspired with Reliance to keep the entire exploration area. CAG has indicted V K Sibal by name in the report and has also called for holding other concerned officials accountable for this. As we had noted in our previous article, V K Sibal has been under the CBI scanner for two years without any concrete steps being taken against him. However, the scale of this manipulation of the contract is not possible without the support of the Ministry concerned, not simply DGH and Sibal.

    The proximity of Murli Deora, the former Petroleum Minister and now Minister, Corporate Affairs, to the Ambanis is well-known. The Petroleum Ministry’s role in this manipulation is clear. A thorough probe in the role of the Ministry and the Minister is necessary, pending which Deora should resign from the Cabinet.

    The other important issue is how much did the Government lose by the entire contract area having been designated as discovery area? CAG’s draft report states that this is a huge loss as the Government could have re-auctioned this area and it would have fetched a very high price because of its proximity to known hydrocarbon bearing areas. That is why blocks near Bombay High had fetched high value in earlier auctioning. More important, blocks have been awarded to private parties in order to speed up gas and oil discoveries.

    The question is what will the Government do about this? The response of Jaipal Reddy, the current Minister of Petroleum makes clear that the UPA is in a stone-walling mode, reminiscent of its 2G defence. However, irrespective of who is guilty of favours to Reliance, what prevents the UPA Government of making a simple statement – if the PSC has been violated, the Government will ensure that Reliance will not be able to gain from such violations. Why does the Government not simply say we are exploring means of taking back the extra area beyond ‘discovered’ and ‘development’ areas from Reliance? That way, it would at least do some damage control.

    This however, is almost impossible for Manmohan Singh Government to do. Unlike Brazil and Venezuela, who have used their hydrocarbon and other natural resources to bank-roll pro-poor and anti-poverty measures, the trajectory of this government has been to use all natural resources such as spectrum, oil and gas, coal, iron ore, etc. to bank-roll the capitalist class. This is the core of economic policies of the Congress-led UPA Government.

    This is neo-liberalism at its ugliest.

Breaking News! EVM Fraud in India!

January 14, 2011




        This is a sensational news for all who care for free and fair elections in India at all levels. Every one knows that India’s elections are now conducted by the Election Commission of India with the help of Electronic Voting Machines (EVM), a simple counting electronic device. Time and again complaints have been registered and allegations made by various forums and individuals that the EVMs are not tamper-proof, they can easily be tampered and desired voting results can be obtained in favour of any candidate during the poll or during the counting session. But our Chief Election Commissioners are paying no heed to that.

        Very recently two noted researchers namely Alex Halderman & Rop Gonggrijp visited New Delhi and along with our very own Hari K Prasad tested our EVMs and made an educative video to demystify the EVM fraud in India.

        I append below one press report and the original video made by those brave men for the benefit of Indian Voters. Our task is to circulate the video through all conceivable means like mobile phones, social networking sites, etc and make a huge hue & cry so that powers that be take appropriate decision to scuttle the present system of EVM voting and revert back to the age of Ballot Paper Voting.

        Interested persons may visit the site:   and   watch the flash video there. OR you can watch the video here.

Fight against Disinvestment of the Central Public Sector Undertakings

November 23, 2010

With the adoption of Liberalisation-Privatisation-Globalisation (LPG) policy of the Indian Government in Industry sector in 1991, the question of disinvestment of public sector undertakings came to the fore. From then onwards it is a saga of relentless fight of the workers and executives of these institutions. Sri Bibek Chowdhury narrates those stories in a nutshell.