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Journalism of Courage
Many years ago, when Vijay Kelkar was the petroleum se-cretary, and an aide to Satish Sharma had alleged that the minister had taken bribes to privatise some oilfields, I walked into Kelkar’s room and breezily asked him: “So did you get some of the money, or did Sharma take all of it?” After flashing his trademark smile, Kelkar had the following part-serious, part-tongue-in-cheek explanation to give: “All of us think the government is inefficient, and should get out of sectors such as oil, don’t we? So, let’s assume for the sake of argument that someone did take money to privatise the oilfields, the economy has benefitted from this corruption, hasn’t it?”
That, of course, is also the only way to possibly justify the controversial Sankhya Vahini joint venture deal that the government is facing so much flak over right now flak from the opposition in Parliament, from its allies as well as friends in private and from the media. It has the makings of a sweetheart deal, but there’s no doubt that the country will benefit from it.
Briefly, primarily at the behest of the Andhra chief minister, the Department of Telecom Services (DTS) entered into a Memorandum of Understanding (MoU) with a subsidiary of the Carnegie Mellon University called IUNet, to set up a joint venture firm to upgrade the optic fibre cable network in the country. DTS will transfer part of its existing cable network to the joint venture, Sankhya Va-hini, and IUNet will provide the technological input to dramatically upgrade its capacity to carry voi-ce and data signals. Once operational, this will help all organisations which wish to send voi-ce/data/video signa-ls across the country this includes educational institutes, software firms, Internet providers, and so on.
So far, so good. The problem arises from the fact that the government ju-st chose IUNet, headed by Prof Raj Reddy, as DTS’ partner. Granted that Carnegie Mellon is one of the best in the world in this business, that Prof Reddy’s lab is considered top-class, but surely there could be other equally worthy competitors who were not even given a chance to run the race?More important is the issue of the other advantages it gives IUNet. By virtue of tying up with the government which is a monopolist in this field there is no other private fibre optic cable network across the country today and as of now no one has been allowed to set one up either IUNet gets access to a hugely profitable pie. Now surely when the government is giving someone access to a public monopoly, it should go th-rough a transparent evaluation process? And even when ot-her private cable ne-tworks are allowed to come up, by allowing IUNet access to the telecom department’s existing network, they’ve got a headstart over everyone else.
What’s even more unfortunate is that there are, incre-asingly, more and more examples of the government going out of its way to help favourites. The National Democratic Alliance’s last stint, for instance, saw the continuing saga of the great telecom bailout, at least two steel bailouts including a Rs 5,000 crore gift-cheque for big steel firms by way of fixing very high minimum import prices, a completely unjustified proposal to refund Rs 500 crore to the Essar group, among a host of other deals.
While a huge stink accompanied each bailout, sadly perhaps because of the pressure of coalition politics and the need to please a much larger number of vested interests the government doesn’t seem to have learnt any great lessons. At the dawn of the new millennium, for instance, Prime Minister Vajpayee gave a huge gift to the country’s cigarette majors. A few months earlier, he’d announced an excise duty waiver for new units set up in the North East, and promptly all cigarette units announced plans to relocate there, to save thousands of crore of excise duties.
Since this would have really hit the government’s tax collections as cigarettes are the largest source of excise duties, Finance Minister Yashwant Sinha later issued a notification stating that the excise holiday for the North East applied to all new units but not to cigarette or pan masala companies. In early January, Sinha was made to withdraw the notification.
Sinha’s budget followed this concessions-for-friends a bit further. While the budget declared that everyone who earned more than Rs 12,500 per month was well-off enough to be taxed by 5 per cent more, it decided to slash import duties on cellular phones from 25 per cent to 5 per cent. It was perhaps a coincidence that cellphone czars like Sunil Mittal and Rajeev Chandrashekhar were const-antly orbiting around the Prime Minister during those days.
Just like it was a coincidence that fellow orbiters and software czars like Narayan Murthy managed to ensure they didn’t get hit by the budget proposal to tax software firms they escaped because their firms were registered as Software Technology Parks (STPs), and the budget didn’t take away the 10-year tax holiday that STPs enjoy. All this, of course, gives an ironic twist to the innocent phrase “the government means business”!
