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The death-wish government PDF Print E-mail
Wednesday, 28 September 2011 00:00
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Cairn, UTI-T Rowe Price, Qualcomm … the list of companies where the government has done its best to rebuff foreign investors keeps growing, and we’re not even talking of all the projects that have been held up on environment grounds that, often, didn’t sound very convincing. In the case of Posco, for instance, even the ministry eventually agreed that one of the main objections raised—that the project managers hadn’t done anything to identify the tribals affected by the project—was frivolous since the project area wasn’t one were tribals were to be found.

 

In the case of Lavasa, where I’ve just come back from, with the green cover rising (74.36% vegetation in April 2002 to 81.92% in April 2009 according to satellite pictures) thanks to planting of over 6 lakh indigenous plants and a lot more, it’s difficult to see just what the environmental problem posed by the city is—yet, work on the city has been stopped for 10 months now and 10,000-plus workers have been retrenched. Thanks to fancy bio-engineering, including a tie-up with the Biomimicry Guild of the US (http://biomimicry guild.com/guild_about_us.html), even after roads have been made by cutting into them, the mountains look as green (and with indigenous plants only) as the ones which have not been touched. With the work and residential areas

in close proximity, the modern

city keeps the carbon footprint to the minimum ...

Last week, to get back to the narrative, the telecom ministry decided to reject Qualcomm’s application for an Internet service provider’s licence, 15 months after it had won 4 circles in an auction and paid $1 billion for it—the excuse was flimsy, more so since the licences are easily available anyway (http://www.financial

express.com/news/fe-editorial-our-law-prevails-here/850375/2). Even more absurd is what the telecom ministry is now doing on 3G licences—notices have been sent out to several telcos on why they are offering 3G services in telecom circles that they don’t have licences in.

I guess it’s a good idea to back up a bit here, as the topic is a bit technical. Since the government had just enough spectrum for two all-India licences (apart from one for BSNL/MTNL) when it auctioned 3G licences in April 2010, it allowed firms to offer 3G services through agreements with others. So if a Vodafone had spectrum in only 9 circles, it could enter into agreements with Bharti or other companies who had 3G licences in other circles and offer its customers the same services, in return for a fee to Bharti or whoever. Two points need to be made here. One, while auctioning the spectrum, the government made it clear that such intra-

circle roaming could be allowed—not that it needed to, since the licences in any case allow for this. Had it not allowed this, a large number of Indians wouldn’t have had access to 3G services. Two, there is no reduction in the

licence fee/spectrum charge which the government gets, so what’s the problem? Does one hand of the government know what the other is doing?

Given the contortions we’re seeing over the

Chidambaram’s-to-blame note that the finance minister ‘saw’ but did not, it is now being argued, endorse, it is obvious the government functions in many very deep silos. Despite the clarifications given by law minister Salman Khurshid (“people give their opinion over and above the summary”) on why the finance ministry note is irrelevant, all the letters from then telecom minister A Raja to the Prime Minister, and the finance ministry’s decision to stop pursuing the auction demand, make it clear enough people in the government were in the know, but chose to do nothing to stop Raja. So why are we wasting so much of government time on this?

Why not concentrate instead on genuine reforms that will help get investors back, both from India as well as from abroad? Industrial growth is down from 12.4% in Q4 2009-10 to 5.1% in Q1 2011-12, GDP from 9.4% to 7.7% and investment levels from 32.7% of GDP to 28.4%—RBI has a recent paper where it estimates that corporate investment in 2011-12 will be lower than what it was in 2010-11. Foreign investment is also down, both in terms of portfolio flows as well as in terms of setting up of factories.

None of this, however, seems to have registered on any of the major players involved, either in the government or in the opposition. Which is why Parliament hardly functions and the list of Bills that need to be passed keeps getting longer with every passing day.

In a year from now, as the economy continues to go down the tube, no one is going to be bothered about whether it was the then finance minister P Chidambaram who could have stopped the 2G losses or whether it was then external affairs minister Pranab Mukherjee who could have stopped Raja since he was heading the Group of Ministers on spectrum pricing … As the global economy continues to lurch from one crisis to another, and the Indian economy slows and jobs creation further reduces, the voter is going to be focused on only one thing. No government has survived a combination of high inflation and falling economic growth—with the expansion of productive capacity slowing, there’s reason to believe inflation won’t be easily reined in either.

 

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