‘We have autonomous regulators, but there is limited oversight…we don’t ask them questions we should’

•P. VAIDYANATHAN IYER: What does one do when politicians and ministers look at regulatory bodies as their own turf?

Independent regulators and autonomous bodies were created and have been enacted by Parliament to be independent of the political and administrative executive. If an independent regulator is not to report to a minister or secretary, who is it reporting to? What is the oversight mechanism that is envisaged in the concept of an independent regulator? People haven’t realised that Parliament has a legislative role of enacting law, and more importantly, the role of overseeing the executive. A parliamentary committee model is in place to question a regulator about its actions. However, as the regulatory oversight mechanism is not working, people will do what they have to do. As the regulator is not accountable to anybody, it can get away by saying it is only accountable to Parliament, which — being an MP — I frankly don’t think is a great place to be reporting in to.

•RISHI RAJ: You talked about cartelisation, about companies raising prices at one go. Car companies have been raising and cutting prices together. Last year telecom companies did the same with tariffs. We see the same thing happening in steel and cement sectors. Should the government intervene every time?

In my opinion, the government should not intervene. It’s not an issue for the PM or FM to be talking about. If we are a free market economy and if the industry sees a shortage, they will do what investors do — exploit it. That is the very nature of a free economy and free market. There is an institutional intervention mechanism that has been built into system — the Monopolies and Restrictive Trade Practices Commission (MRTPC) or Competition Commission. The institutional role of the MRTPC role is to ensure that there is no market behaviour akin to a monopoly. . . I have all along contended that the regulatory framework is falling behind the increased sophistication of market players.

•CITHARA PAUL: Has your perception of Indian politics, or rather, Indian politicians, changed after your Rajya Sabha experience?

My perception of politics was dictated a lot by what appeared in the media before 2006. I hated them as much as all of you. But I have met some of the finest, smartest thinkers after joining politics. And I am saying this not to give any carte blanche to politicians. People like Sharad Joshi. I didn’t even know about the caste system in the Muslim community. There is a gentleman called Ali Anwar from whom I learnt a lot about this. About Karnataka, for example, when I campaigned for my election, I used to hang around the Vidhan Sabha and I met people who can’t have a conversation in English but had wisdom and knowledge that made you humble. I continue to maintain today that my first day in Parliament was like going to school.

•VANDITA MISHRA: The general impression about Karnataka is it is a state where corruption or criminalisation of politics is not as serious a problem as let’s say it is in Uttar Pradesh. It’s not just a north-south divide that’s peculiar to Karnataka. What do you think that is?

I agree with you. I can tell you from first hand experience. I think that the political class in Karnataka — notwithstanding the bad press that Deve Gowda gets — at the end of the day is genuinely concerned about their constituency and they have worked very hard for it. And I have seen that even for MPs (from Karnataka, who are here in Delhi) that there is a whole work ethic for them. Now why it happens, I don’t know. Because there is definitely a trend in Karnataka, which I haven’t compared with other states, where MLAs repeat. Anti-incumbency in MLAs is lower. There are people in BJP today who were MLAs in Congress and so on. So obviously, there’s something they are doing right.

•AMBREEN KHAN: What’s your take on the forthcoming Karnataka elections?

I think Karnataka elections are very interesting and let me give you a disclosure: we have a commercial interest in a media channel. So what I give you is there official house line. It is for the first time in Karnataka that BJP has been trying to position a campaign or a manifesto around a man, who happens to be a Lingayat. And they are doing that assuming that they can cut through all the normal caste equations. I’m not convinced that that will happen.

It’s an interesting exercise and it will be very useful to see what happens . . . I’m actually calling a hung Assembly.

•VANDITA MISHRA: How do you think caste equations will play out?

Traditionally, what has happened in Karnataka is that you either say that he is my CM and then you have images and pictures on all other campaigns of every community. You’ll have a Lingayat, a Dalit, a Muslim, which is what Congress is doing interestingly in Karnataka. The BJP has chosen to go only with Lingayat a face. So I don’t know the answer to that. It will be interesting to see what happens. Mr Yediyurappa is very confident of winning the elections.

•RISHI RAJ: Though the telecom sector has grown, there has been a mess on spectrum auctioning and entry of new players. Do you think the regulator is partly or fully to blame for it?

Why do we not hold them fully responsible and give them these exit routes? From 1997 the regulator has been fully responsible for new operator, licensing conditions, spectrum allocation etc under the TRAI Act.

•D.K. SINGH: How is that when more and more people are getting disenchanted with politics, more industrialists are getting into it? Every time an industrialist contests as an independent candidate, he is sure to win by maximum margin?

First of all, I have no mandate and do not consider myself among the pack of industrialists. I joined politics because I spent some years being hammered by the political system. It was made very obvious to me how politics and politicians can destroy you in this country. Therefore, I defend the issue of industrialists entering politics. Second, I was fortunate enough at that point to be one of the younger guys on the PM’s council for trade and industry. I used to prepare notes — let’s solve the rural problem, let’s do this for telecom — and give it to somebody. After a year, I realised these notes often got shredded. The day of wisdom dawned on me when a particular minister whom I will not name said, ‘Arey aap apne matlab ke kaam karo naa, why are you giving me all these nation-building notes? Tell me what you want.’ So I figured out that from outside the system if you want to influence the system, it is never going to work.

•SEEMA CHISHTI: What do you think about industry members being on standing committees with conflicting interests?

I’ve said again and again that it is wrong. If an MP has commercial or any other form of interest, he has no business participating in debate, policy making or being on the parliamentary committee.

•D.K. SINGH: What is your take on the PM’s diatribe against conspicuous consumption?

You either have to choose that you are free market economy, and then have a model of regulation, or you choose to be a controlled economy, where the government shall occasionally wake up and say — ‘Thou shall not spend, buy. Thou shall not give salaries.’ But you can’t have this twilight zone of not knowing where you are. Investors and industry are here to make money. This year at FICCI we have tried to inculcate some amount of nation building. Some of it is non-profit oriented, like environment. But at the end of the day, the market player is in the market to maximise and he will act exactly as any market player in the world would.

•SUBHOMOY BHATTACHARJEE: If Manmohan Singh appears at FICCI , can you stand up and tell him that it’s not a great idea?

Within FICCI, yes. But he hasn’t said it there. This is election season, so you should expect politicians to say a lot of things that are aimed for making an impact more than them believing in it.

•P. VAIDYANATHAN IYER: Will you ask your members to disclose how they fund parties? Will there be more disclosure in corporate funding of elections?

No. I want to take on what I believe I can do at FICCI. I don’t want to take on what is not going to ever be realised. FICCI is not about dictating people’s political ideology and how they conduct themselves. I want to position FIICI as less of a lobby and more an advocacy body. It should focus on issues in terms of long-term sustainability of the economy, institution building etc.

•SONU JAIN: You had spoken about a common minimum program at FICCI that you had implemented in Karnataka. Have you been able to influence young people in Bangalore and make elections more issue-based rather than caste-based?

We presented the common economic agenda in the Raj Bhawan. I think all the three leading parties — BJP, Congress and JD(S) — have included various versions of the agenda in their manifesto to come up with a new model on how to run Bangalore. On getting people to vote, 5-6 months ago I ran an advertisement campaign getting people to register if they want good leaders. In a week’s time, we had 2.4 lakh people logging on to my website.

•SANDEEP SINGH: What are the corporates thinking in terms of current economic scenario? Do you see a medium-to-long-term slowdown in corporate profitability growth?

FICCI’s position is the same as mine. We see things getting slightly worse before they get better. A combination of global uncertainty and our domestic inflation management strategy will definitely be destructive to corporate growth. You will have one year of reasonable volatility on both revenues and cost front and have to wait it out.

•SUMANT BANERJEE: As FICCI president, do you believe that it’s a logical philosophy that one industry needs to be curbed so that another industry can grow? I am asking with reference to raw material being conserved in the industry.

I believe in a free market, market players exploiting the full potential of what they can do. I don’t believe in these kinds of measures to artificially reduce the numbers. You have to be very clear about what you want to do. I don’t believe that this is a sustainable way of doing it. If you believe in free market principle then this kind of intervention by the government is not terribly healthy.

•SUMANT BANERJEE: But intervention is not because of pricing alone, it is also because of the fact that this is a commodity that is non-replenishable. So if it goes out of the country and it goes to China and they become a powerhouse?

That’s an argument that has been around for 20-15 years. You can create any argument you want, but what is the objective? Resource is being replenished. I haven’t seen any study stating there is a rate of depletion of iron ore and therefore we should ban exports. If depletion is the issue then you should say that government has a policy that only so many million metric tones of iron ore shall be mined. There has to be an overall policy on how to exploit a natural limited resource. So I don’t buy this argument. If exports have to be banned in the name of depletion, that is the argument that is steel industry is making.

•SUMANT BANERJEE: There is already a huge debate between the finance and commerce ministries.

But driven by what? Driven by steel industry versus iron ore industry. I am part of neither of them. I don’t have a stake in iron ore.

•SUMANT BANERJEE: This is the first FICCI president who is saying this on record.

I still want to be part of this argument. I have told FICCI members that we are against cartelization. Some people didn’t like it but that doesn’t stop me from saying it.

•P. VAIDYANATHAN IYER: Since you know the telecom sector so well, do you think there are price cartels in telecom?

It is a difficult question. I have said publicly that there is enough evidence to show that there are concerted price increases and decreases. The regulator, however, brushed it aside by calling it coordinated pricing or something like that, which in my book is cartelisation. I think there is enough evidence to show that there is some coordination and I think the industry or the company should be a bit smarter about what they do. I am not advocating cartelisation, but the least they can do is be a bit smart about it.

(The transcript was prepared by Smita Aggarwal)