Rational Expectations

Much of this exchange took place behind closed doors, in interactive sessions closed to the media, so even if the thick-skinned bureaucrats felt mauled, they chose not to show it. If anything prevented a public display of irritation, and ensured the global meet ended with some degree of success, it was the fact that the government has pushed through several important economic legislation through parliament in the last couple of weeks. Never mind what thebureaucrats are saying to you, the conference8217;s organisers seemed to say, what8217;s important is that vital legislation is moving forward.

Even so, the conference had some major moments when, for instance, an investment banker asked the information and br-oadcasting secretary what the policy on fo- reign investment in the internet was, and would it change the way the one on cable networks did years after everyone inve-sted in cable, the government came out wi-th a policy which set the ground rules. Be-sides, since foreign investment is not all- owed in the print media, though it is for TV, wou-ld this be allowed for the net, the banker asked. Before Y.N. Chaturve-di could reply, India Tod-ay8217;s Aroon Purie shot ba-ck sarcastically: 8220;Go ah- ead and invest, these gu-ys don8217;t even think the net8217;s part of media, and by the time they do, it8217;ll be too late anyway.8221;Interestingly, this se-ssion was originally op-en to the media, but la-ter, the organisers tried to get the press to leave. It is, of course, unclearas to whether the organisers wanted it this way, or whether government officials asked them to do this, to avoid public exposure of their discomfiture, and to prevent damage to the the all-is-well picture.

Similarly, Andres Bande who heads the 30 b Flag Telecom in the UK, kept lamenting how, despite the opening up of the internet, the government was sitting on 15 applications of various internet service providers ISP, to allow them to set up th-eir own gateways8217; or connecting points with telephone lines abroad. Currently, the state-owned VSNL is not just an ISP, it is the only gateway8217; in the country. So all ISPs have to eventually go through VS-NL8217;s gateway8217;, and this is what causes the huge traffic jam, as it were, and ensures that we have to dial up anywhere between ten and 20 times before we can connect to the internet. The bure-aucrats to whom Bande put this query, after they had talked of how good the new telecom policy was, had no answer. No answer, except the usu-al there are a few gli-tches8217;and why don8217;t you bring this before the telecom regulator8217;. Gr-eat, except that, as ev-eryone knows, the telecom regulator in India is totally toothless becau-se that suits the government. In this particular case, if for example the TRAI pulls up the government for not allowing ISPs to set up their own gateways, it8217;s conceivable as in all such cases in the past, the government will turn around and say this is outside the TRAI8217;s purview or that this is a licensing issue, and therefore also outside its purview.

Similarly, as Purna Saggurti of Deu-tsche Bank Securities in the US put it, In-dia8217;s disinvestment track record is so pathetic, it isn8217;t funny. In 1990 and 1991, over the space of 15 months, President Salinas in Mexico sold the government stake in all the country8217;s 18 banks for a whopping 12.4 b. By contrast, over 5 years, India got just 4b, and the sick PSUs are still a drain on the budget. Another delegate, Ronnie Chan, who runs one of the most successful real estate development firms in HongKo-ng and is on Enron8217;s global board, pointed out that Brazil got 19 b in just one telecom deal and that China, which like India has a huge sick PSU problem, was moving so fast on this that it wasn8217;t funny. Chan himself has bought 8 Chinese PSUs, and has turned around 6 of them already. Put this to government officials, and they8217;ll try and argue that these are just stray examples. This of course flies in the face of the fact that the loudest applause in the CII-WEF summit was for people like Bande who put the government on the mat.

In any case, the most damning indictment of the way the system works is that of the US power major Cogentrix pulling out of India just two days ago, its patience finally worn out after more than 7 years of delays and public interest litigations Cogentrix fought and won 8 PILs till 1997, but then got bogged down in a PIL alleging corruption which has been in the courts for more than two years. And many of the earlier PILs we-re similar in nature acirc;euro;ldquo; in one case, for insta-nce, thePIL filed was a repeat of one filed against NTPC when it was first developing the project. This was dismissed by the Sup-reme Court in 1991, but was still entertain-ed in its new form. How much this cost Co-gentrix can be judged from the fact that in just Maneka Gandhi8217;s PIL, the company sp-ent Rs 1 crore in legal fees acirc;euro;ldquo;another power company Enron, incidentally, spent Rs 30 crore in legal fees over 18 months to count-er 24 PILs. The costs of delays are, of cour-se, incalculable.

Good thing that the skins of our bureaucrats and politicians are so thick that none of this matters to them. Else, they wouldn8217;t be able to live with themselves.