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Thursday, November 20, 2014

Arun Shourie on Lessons learnt from Reforms

Arun Shourie on Reforms (PTI file photo)
From the time of mid-1960s when those who argued for liberalisation were traduced as “agents of capitalists” as “World Bank-IMF men”, India has come a long way but there is still lots to be done as per many experts including Arun Shourie, the noted winner of the Ramon Magsaysay Award for Journalism in 1982.
Shri Arun Shourie’s Book “We Must Have No Price” can be purchased from Amazon – click here and Flipkart – click here
According to Shourie, India only changed its stand towards “socialism” when the Soviet Union itself broke, in a word, as the Marxist Quran got disowned in its own Mecca. As yet Shourie says that the correctives were not set in motion until there was a complete breakdown in India’s external account to furnish the weak and imprisoned political class the excuse to do the obvious things.
The major issue he says with Reforms in India has been that “Reforms of the more basic sort have been implemented only during two phases: during 1991-1993, the first half of the Prime Ministership of PV Narasimha Rao, and during 1997-2004, the Prime Ministership of Atal Bihari Vajpayee. As against these, Reforms in China have been more or less a continuous pursuit.”
He mentions in the book, “We Must Have No Price” that just as our leaders were for “Socialism for the masses”, many of our entrepreneurs are for “Liberalisation in all sectors except mine”. This he says is an unexpected obstacle that reforms have to face. As per Shourie, one well-known problem in executing Reforms is that “Those who are liable to benefit from them are diffuse and scattered, and the benefits that are liable to accrue to them lie in the indefinite future; on the other hand, the dislocations that Reforms are liable to cause are here and now; the ones Reforms are liable to dislocate are concentrated in industries, in tight geographical areas; they are liable to be organised.”
Also several characteristics of the media propel it to be an obstacle to Reforms as per Shourie. He says for media, everything comes to have two sides. At the least, national resolve is dissipated: people are dissuaded in advance from putting up with any dislocation for the change. The difficulty is compounded by what has come to be the very nature of “news”. Shourie says that
“The media will be full of stories of inefficiencies of the way things are. But the moment you change them, journalists will rush to the person opposing the changes, to the workers who have opted for the Retirement package, to allies of the Government who are opposing the reform.”
Just as Prime Minister Narendra Modi has always advocated the role of States in bringing about Reforms and not just leave it to the Central Government, so advocates Shourie. He says, “It is a fashion today to say that Reforms should be “inclusive”. But, in our Constitution, each of the sectors that would ensure immediate benefits to the rural areas, to the poor are in the States’ or the concurrent list.”
These sectors include Agriculture; Irrigation; Health; Education; Rural infrastructure, in particular rural roads; Drinking water; Electricity; Housing. When you implement Reforms but there is no improvement in these, the people are easily led to believe, “They are only worried about the industrialists.” The Left as well as the activists get the ammunition to shout, “Reforms are elitist.”
“One of the principal steps that can be taken today to push Reforms is to reshape allocations among States so as to hugely reward the ones that carry through the changes that the country needs.”
Shourie, however, sadly concludes that even when there is a pressing need for them, just don’t get done. A succession of Finance Ministers have announced plans to reform the Public Distribution System; to bring down government equity in banks; to open up sectors like insurance more aggressively; to overhaul the pension system, but none has been able to make any headway on any of them.

Friday, October 31, 2014

Arun Shourie on China and Tibet


Arun Shourie on China and Tibet

Arun Shourie on Tibet

Post 2014 Lok Sabha elections India has witness drift from the Nehruvian policies that have influenced India since independence. This raises a question and a hope about India’s policy towards its neighbour Tibet which has acted as a buffer state between India and China. Arun Shourie, the noted politician and the recipient of the Ramon Magsaysay Award for journalism in his book “We must have no price” has dedicated an entire chapter on India’s Tibet Policy.

Mr. Shourie mentions how under Nehru’s firm hand, the Indian Government shut its eyes to the roads and other infrastructure which were being built in Tibet. He states that,

“Indeed, the “policy” was carried further. The view was taken, and enforced, that we should not only not ourselves raise, we should oppose efforts by others to raise in a forum like the United Nations what was being done to Tibetans. This, Panditji laid down, is what would be in the best interests of the Tibetans themselves.”

Just as Mr. Shourie has forewarned us we see that the net result of shutting eyes to Tibet was that the Chinese having already swallowed Tibet are now making systematic inroad onto the southern slopes of the Himalayas. There is another feature about India’s stance towards Tibet as per Mr. Shourie which is a feature that reveals a lot about us as a people, a feature that goes beyond the attitude of successive Indian governments.

He says that the Buddhist tradition was forgotten in India, however, among the places in the world, where this great heritage of mankind, and the Buddha’s doctrine and practice, were preserved has been Tibet. The great Tibetan masters have been with us and amidst us now for 50 years. Mr. Shourie says that,

“It is often said, “But we had no option in 1949-50.” Take that to be true for a moment. They tragedy is that six long decades later, we remain a country without options.”

Mr. Shourie says that it is weakness that lies at the root. The rest, accepting Chinese “suzerainty” one day, “sovereignty” the next; accepting Tibet as an autonomous region within China one day and as in internal affair of China the next; these are just successive steps to “operationalise” that weakness, so to say.

Mr. Shourie rightly says,

“Unless we acquire strength comparable to that of China; unless we build up an alliance system with other countries that are concerned about Chinese intentions and might, we will be left with hope as our only policy: the hope that “ultimately truth triumphs,” that “ultimately tyrannies dissolve,” the hope that like all else “ultimately China too will evolve towards freedom and democracy.”

After witnessing the moves of China in the recent year it is very clear what China wants to be. It is obvious that China wants to be the dominant power in Asia and one of the two major powers in the world. It regards India as a potential nuisance; a nuisance that must be confined within South Asia. The onus is now on the Indian Government as to how it wants to review its Tibet Policy. While the new Indian Government decides on its Tibet Policy it must know that for China conquering and suppressing Tibet, militarising Tibet and stationing air and nuclear bases in Tibet are part of China’s larger policy.

Source http://www.niticentral.com/2014/10/25/arun-shourie-china-tibet-241858.html

Arun Shourie on Strategic Thinking


Arun Shourie on Long Term Thinking

Arun Shourie on Long Term Thinking

Arun Shourie in his book “We must have no price” says that a host of factors are liable to affect the security of our country, some here and now, others in the middle distance. And some will affect us 20 or 30 years from now. Here it is important to know that the last lot are no less important for that reason: their effects could be absolutely devastating, as we shall see, and preparing for them will take all of 20 or 30 years.

Arun Shourie then goes on to talk about the nations in our neighbourhood.

Pakistan:

Among the factors that bear upon our security here and now, is the course events are taking in Pakistan. Mr. Shourie adds that a development which will affect our security in the immediate future, a development which transcends Pakistan but which is now centred on what is happening there, is the foreseeable withdrawal of the US in defeat: from Iraq, Afghanistan and Pakistan.

Nepal:

The UPA government’s neglect of the situation in Nepal is as per Mr. Shourie one of the costliest blunders. He says that outsourcing foreign policy to CPI(M) ensured monarchy was abolished in Nepal, China got gateway to descend to the southern slopes of the Himalayas and Pakistan got to bring up string of madrasas and mosques right along the Indian border.

Bangladesh:

Mr. Shourie says that the illegal migrants from Bangladesh in West Bengal and Assam has altered the demographic balance in the states to such an extent that who shall be elected in over third of the seats in the Assam Assembly and in close to a fifth in the West Bengal Assembly is now decided by illegal migrants.

Sri Lanka:

As per Mr. Shourie the LTTE cadres who have escaped can set up pockets in the Nilgiris or links with our insurgents. This would create problem later on for us but as of now Sri Lanka poses no immediate threat.

China:

China is the biggest threat for India as per Mr. Shourie. He says that Chinese rulers have translated economic strength into military muscle, as well as diplomatic influence. So much so that no country is prepared to speak the truth to or about China. He adds that China has a definite view about India: that it is a potential nuisance, and, therefore, it has to be kept busy in South Asia. Accordingly he says China has ringed India: Pakistan as a willing instrument; a fully militarised and nuclearized Tibet; a friendly Nepal; Bangladesh with which it has a military pact and which is by now dependent on it for arms and equipment: Myanmar as a dependency.

As per Mr. Shourie we need to make nationalism respectable again and we must make pursuing the national interest legitimate. To be able to face the danger we must educate people that bombing terrorist camps will not help. It simply solidifies people behind regimes. He also suggests that we must exhume the connections of, the selective humanism of liberals, civil rightists, and peace-mongers. He adds we must make our decision-makers think beyond clichés.

He gives the most useful tip by stating that to protect our nation we must help create the environment, the climate of opinion and provide alternatives to the people and leadership by great intellectual works. We need to look decades ahead and foresee the likely transformation in the nature of warfare; likely evolution of countries and to the availability of resources for us.

As Walter Lipmann put the matter succinctly: “A nation has security when it doesn’t not have to sacrifice legitimate interests to avoid war, and is able, if challenged, to maintain them by war.” We need to make our nation secure.

Source http://www.niticentral.com/2014/10/26/arun-shourie-strategic-thinking-241861.html

Arun Shourie on Liberty versus Security


Arun Shourie on Liberty versus Security

The choice between individual liberty and national security has always been tricky one. However, as per the noted author, journalist and former minister in the Atal Bihari Vajpayee government, Arun Shourie individual liberty and national security have to be balanced.

In his book “We must have no price” he says

“Which of the two will have to be given primacy at a particular time depends on the situation in which the country is placed at that juncture. The Constitution has, therefore, balanced each right and liberty with the grounds on which it may be subjected to reasonable restrictions.”

Mr. Shourie suggests that what should get prominence over the other depends on the circumstances prevalent at a particular time.

“Today, the country is being subjected to a war – engineered, instigated, equipped, directed, financed by powers and groups that are out to dismember India: the Supreme Court has, therefore, been absolutely right in approving legislation that is necessary for enabling the security forces and the investigating agencies to prosecute that war, even though that legislation may result in curtailing some liberties of some individuals. The courts are, of course, absolutely right in affirming that it is their duty to see that power is not misused.”

As per Mr. Shourie we must distinguish between the liberty of (1) the one who is out to break India or to overturn our constitutional system by violence, and those who help him; (2) the liberty of a member of the security forces who has to face the bullets of the first lot; and (3) the liberty of the ordinary citizen. Having made these distinctions, we should respect the liberty and rights of the first lot, that is those who take a gun in their hand and those who aid them only to the extent to which they respect the liberty and rights of their victims.

He suggests that we must equally expose political parties that jeopardize vital legislation for the sake of votes of one section or another. Mr. Shourie says that the balance cannot be maintained unless the lawyers too rise above legalism, unless they rise above the self-serving notion, “We have to defend whoever comes to us for help.” The fact is that they don’t. But I am on a different point: they shouldn’t.

As per Mr. Shourie even greater responsibility rests with those who are in public life and discourse. As we have seen, by and large, the courts have taken cognizance of the threat that the country faces. Even as they safeguarded liberties, they have put their seal on laws that were required to fight the menace. That is far more than can be said of politicians and many in the media. The fabricated miasmas they have used to undo legislation show how they will cast away the requisites of national security for votes in the one case, and to be intellectually fashionable in the other. Neither the security forces not the courts can save the country when those in control of legislatures and public discourse act in this way.

Mr. Shourie rightly says that unless we effect changes of this kind, we will have to wait upon terrorists to settle our debates!

Source http://www.niticentral.com/2014/10/24/arun-shourie-liberty-versus-security-241849.html

Friday, October 24, 2014

Arun Shourie on Pakistan – Diplomacy or War


Arun Shourie on handling Pakistan

Arun Shourie on handling Pakistan

On August 18, 2014, India called off foreign secretary level talks with Pakistan which were scheduled to be held on August 25 in Islamabad. The talks were called off in the wake of Kashmiri separatist leaders being invited to meet Pakistan’s High Commissioner Abdul Basit. This created lot of buzz in the national as well international media. Arun Shourie in his book “We must have no price” has dedicated an entire chapter to India having only a choice between Diplomacy and War when it came to Pakistan.

Mr. Shourie states that every time there is a change in the leadership in Pakistan the advocated in the Rajya Sabha use the well-tested argument: “Don’t you see, whenever there has been democracy in Pakistan, relations with India have been better? If we don’t reach out, these leaders will weaken. The Army will be back, and relations with India will worsen once again.” He states that India has only two options to deal with Pakistan which are Diplomacy and War. He adds that “I believe the current leadership understands that …”, can’t be the basis of policy with Pakistan as it has been able to use a third option against India for 30 years. The third option being terrorism as Pakistan has built the requisite capacities and we have not.

He further states that Diplomacy for India is going from one capital to the next requesting others to do our work for us. Sadly things don’t end at that for India and as no sane person wants to go to war, the only option India has is dialogue. Pakistan on its part has shown that it will not fulfil the pledge it had made of not allowing the territory under its control to be used for terrorism against India, thus India recommences dialogue, confident that the next assault will make us forget the last one.

Mr. Shourie also brings to the notice that the Vajpayee-Musharraf Declaration had carefully chosen the words: Pakistan shall not allow the territory “under its control” to be used for terrorist attacks against India. This was replaced with “its territory” by former PM Manmohan Singh. This he said meant two things – 1. India recognises Pakistan Occupied Kashmir (POK) as Pakistani territory. 2. Pakistan can use POK for terrorist attacks against India.

This Mr. Shourie said was not a case of bad drafting as pointed by the former PM Manmohan Singh but it was the indefensible concession which he has made for Pakistan. He says that this was all done to suit the conductor the US. This he said was because the US was dependent on Pakistan to curb the terrorists along its Afghan border and thus was delivering to Pakistan what our neighbour has not been able to get on its own.

The recent move by Prime Minister Narendra Modi suggests that he may have taken heed to what the renowned author, politician and the former economist with the World Bank had writren on Pakistan. The Modi government showed that like the past governments his government will not treat meetings between Hurriyat leaders and Pakistani government officials as non-events. Modi government made it clear that what was acceptable to the previous governments including the previous NDA government. This move meant that finally India made it clear to Pakistan that it will respond in appropriate manner if more red lines are breached by Pakistan.

Source http://www.niticentral.com/2014/10/23/arun-shourie-pakistan-diplomacy-war-241827.html

Friday, October 3, 2014

Arun Shourie takes on Girish Karnad on Freedom of Speech

File photo of Arun Shourie
Arun Shourie the noted journalist, author and former Minister in the Atal Bihari Vajpayee Government, took on prominent writer/actor Girish Karnad at length during the Bangalore Literature Festival on the topic of whether India was gagged and bound by illiberal laws.
Both Arun Shourie and Girish Karnad were on a panel discussion titled – A Country Gagged and bound? moderated by Arshia Sattar‏ with Shubha Mudgal, Siddharth Dhanvant Shanghvi, Joe D’ Cruz, Rajiv Malhotra, Swapan Dasgupta and Sankarshan Thakur‏ also participating as panelists.
Reacting to arguments that India’s laws were illiberal, Shourie said that because of the Constitution of India, we are one of the freest countries in the world and among the freest societies in the world. There will always be individuals who will take offence to anyone but in general because of our culture and because of great diversity and size of our country, freedom has been sustained.
The Ramon Magsaysay Award winner added that our Constitution limits the ability of the State to put restrictions up to the limit of reasonable restrictions and it is the courts that will decide what is reasonable and what is not. The Indian Supreme Court and most of the High Courts too have been staunch protectors of Freedom of Speech. Also any Government that has raised hand against free speech or free media had had to withdraw the hand. Shourie drew at that point in time the attention to Jagannath Mishra’s Press Bill and that it had to be withdrawn. He went on to add that the same thing happened when the late Prime Minister Rajiv Gandhi tried to shut us up with the Defamation Bill. He said that this doesn’t happen just because of the courts but because people feel that free speech is a must for complete freedom.
Shourie added in his inimitable style that when it comes to social media, yes, the licence is used to cross the limits and people are trolled but for that he said that one has to be thick skinned. As he felt that if one tries to control what is said on the social media which is such a loose medium, then one will again have to allow the Government to take things in its hands and this would mean more restrictions. He shared his own example saying that people have created fake Twitter account in his name and also a Facebook page. He added that he doesn’t look at all that is put up there and also requested people not to trust information supplied through such accounts as coming from him.
He quoted Balasaheb Thackeray who used to say that remote of the TV is in our hands, so, if we see something being telecasted which is not of our taste we can always switch it off. He had an excellent advice for the supporters of Prime Minister Narendra Modi on the social media. He said that it would be best if they stuck to the facts and get trapped by the tactics of defaming others that is used by the supporters of the others. He said that facts are on our side and it would be best to use them to counter the trolls. He requested supporters of the Prime Minister not to abuse those who do not support or say nasty things about the Prime Minister. He said that abusing those who have counter view of the cause that one supports only causes harm to the issue they are supporting.
All reforms offend. Don’t believe all that you read on the Internet about an individual. Please verify the facts before framing opinions about anyone.
While replying to the query raised by Girish Karnad, he said that when he was talking about the facts he meant that he wouldn’t want people to be abusive on the social media. He preferred sticking to the facts. He said,” We should present facts as we see them adding that we should present the facts after due research as we present facts for a case to the prosecution.”
He also talked about Left Liberals and added that for 40 to 50 years, the Leftists presented history in a certain way and now the facts are being challenged. He said that Left has presented its facts to the prosecution so have they presented theirs. He said over the time, it will get sorted out. He also talked about how the changes always offend someone or the other. He cited the example of now banned Sati System. Speaking about the system, he said that there must be those who had preferred the system in the past and they were all offended when Raja Ram Mohan Roy and others objected to it. He said that when we are interpreting law, we should remember that it is for the court to decide as to should a voice be muscled just because it is offending someone or is there a real need to do so.
Shourie in a lighter vein talked about how it was important to have thick skin and little contempt for those who shout at others. He said that being a member of Opposition, he used to shout at the then Finance Minister and the current President of India Pranab Mukherjee after he had signed a treaty with World Trade Organisation (WTO). He said that he and other Opposition leaders used to shout at Mukherjee that he had mortgaged the sovereignty of the nation. To which Mukherjee had once said that he has lost the count as to how many times he has mortgaged the sovereignty of the nation.
He was also in the favour of Section 66A being struck down as it was being misused at the lower level. For media’s voice being suppressed, he said that if media is so much in the favour of the people, it will be people who will stand up for them when media is being suppressed. He also suggested that one should not believe all that one reads on the social media about someone. He asked people to verify the fact and then form and opinion.
While referring to the recent Internet block out in Vadodara, he said that if the riots spread and people get killed then public is bound to say why simple steps like blocking Internet weren’t taken to stop riots from spreading. He added that curfew during riots was also a form of curtailment of freedom (freedom of movement) but that was necessary to stop people from coming onto streets and killing each other. Shourie concluded by stating that one should not become a fundamentalist on any issue even if it is in the context of defending Social Media freedoms that are liable to misuse.

Friday, September 5, 2014

Is this the way to energise civil servants?


CBI move to investigate the disinvestment of Udaipur’s Laxmi Vilas hotel on the basis of an anonymous oral complaint, 12 years after the decision, holds a lesson for those who are trying to get the bureaucracy going.
Hindustan Zinc was privatised in April 2002. The privatisation was challenged on various grounds in the Supreme Court. In December 2012, after hearing counsel, the SC rejected the challenge.
That did not deter the CBI. In February 2014 — TWELVE years after the disinvestment, and with HARDLY A YEAR having passed since the SC delivered its judgment — the CBI launched a new “investigation” into the disinvestment.
When its officers came to me, I asked them about the complaint on the basis of which they had commenced the investigation. They said that there had been nothing in writing, just an oral complaint!
The same pattern has now been repeated in the case of the disinvestment of Laxmi Vilas Hotel in Udaipur. The hotel was disposed of in 2002. Of the ITDC’s 20-odd hotels, this one had distinguished itself
by incurring the highest loss: to earn gross revenue of Rs 2 crore a year, the hotel spent Rs 3 crore — a loss of 51 per cent. The occupancy rate of the hotel had fallen to 26 per cent. Far from being a luxury palace, the place was in shambles — the plant and machinery were defunct, the furniture, etc were in the sorriest state that you can imagine. This will be evident from two elementary facts. ELEVEN parties expressed an initial interest in bidding for the hotel. FIVE of them carried out thorough due diligence. Such was the condition of the property that four of the five dropped out. I am informed that Bharat Hotels — the winning bidder — had to spend Rs 25 to 30 crore on renovating the place and getting its plant and machinery in working order. Furthermore, the quality of the staff was such that Bharat Hotels had to spend another Rs 3 to 5 crore on voluntary retirement schemes.
TWELVE years after the disinvestment, the CBI has registered an FIR — naming, among others, the then secretary of the disinvestment ministry and accusing him, among other things, of “dishonestly and fraudulently and with mala fide intention” doing this, that and the other. On what basis? The FIR itself states that it has been registered on the basis of “an anonymous complaint”. I will come in a moment to the utter indefensibles that mar the FIR, but the first point to consider is: Should any agency have the authority to harass civil servants for decisions taken 12 years ago? Should it have the power to ruin the reputation of civil servants and to put them to endless trouble 10 years after they have retired? Should it have the power to ruin people’s reputations on the basis of “anonymous complaints” and “oral complaints”?
One of the main objectives of the prime minister, and key to the other objectives he has in mind, is to energise the bureaucracy. Which is the civil servant who will take decisions, who will accept responsibility, who will stick his neck out, if 12 years from now, 10 years after he has retired, when he has no access to lawyers or records, he is going to be hauled up by sundry inspectors and SPs of the CBI?
Courts of no consequence
Nor does the parallel with Hindustan Zinc end there. That privatisation had been challenged and the challenge was rejected by the SC. The privatisation of this hotel too was challenged — and that challenge too was rejected, this time by the Rajasthan High Court. And the central ground on which the privatisation was challenged, and the ground that was decisively rejected by the high court, is the very ground on which the FIR focuses — a ground to which I shall revert in a moment. But first, the question that arises from that simple fact of rejection by the courts: when a high court has upheld a sequence of decisions, when the SC itself has done so, should an agency such as the CBI be able to open the matter yet again and start harassing officers and others?
And to open it TWELVE years after a decision has been taken? Shouldn’t there be a period of limitation?
Ruined reputations
Nor is it just a matter of harassment, though that is bad enough. No one who has not been put through the mill can imagine the strain and distress to which the person and his family are subjected by such inquisitions and “raids”. What about the irreparable damage to the person’s reputation? What bunkum did the CBI not put out just the other day about two distinguished civil servants, C.B. Bhave and P.C. Parakh? And what has it said now, while closing the cases against them? Should the CBI not be made to pay for the calumny it had hurled?
But I do feel that in this regard others also are at fault — the press, civil servants as a group and even the victims.
Has the CBI not somersaulted a sufficient number of times for the press to realise that it must not swallow and propagate what such agencies put out?
And the civil servants — haven’t they seen a sufficient number of times how they have themselves behaved in the wake of investigations against their colleagues? The moment the CBI says it has commenced an inquiry against X, his erstwhile colleagues treat him as a leper. Till yesterday, he was your colleague and friend, and now you avoid him. Shame on such colleagues and friends! That is no way to be: on the contrary, we must be fortresses around the honest, and all the more so around one who has been a colleague and friend, and of whose competence and integrity we have had personal knowledge.
And the victims — they are so easily felled, most of all by the apprehension that their reputation has been ruined. Such agencies and their concocted FIRs can ruin our reputation. Being calumnised by the dishonest is actually a badge of honour! I address audiences once a week or so. On these occasions, as is custom, the hosts use superlatives to introduce me — the positions I have held, the awards that have been given me, the books I have written… When my turn comes, I always say, “But the organisers have left out my two main distinctions. First, I am the only editor who has been dismissed from his job, not once but twice. Second, I have what none of you have — I am the only one here who has three certificates of honesty from the CBI.” So: thicker skins and a little contempt for the calumners!
The hotel
And now a few points about the hotel that is the subject of the new FIR.
The CBI has put out that the actual value of the property was Rs 151 crore, and government sold it for Rs 7.5 crore.
To substantiate that Rs 151 crore figure, the CBI says that the Rajasthan government itself had asked Bharat Hotels — the company that won the bid — to pay Rs 15 crore as stamp duty. True to character, the CBI conceals the fact that this demand, made by the local officer, has been stayed by the courts!
Next, it says that the hotel has 29 acres of land. It conceals the fact that this land, being adjacent to the lake, falls within the Coastal Regulation Zone and that nothing can be built on it. I am told that Bharat Hotels sought permission to add some rooms. And that the municipality refused permission on the ground that the land falls within the Coastal Regulation Zone. I am told that a case is currently before the SC against establishments that have constructed or added to structures along the lakeshore. Bharat Hotels has NOT been arraigned in the case.
But assume for a moment that, in spite of the regulations and in spite of the refusal of permission by the municipality, Bharat Hotels has built additional accommodation.
In that case, Bharat Hotels and the persons with whose connivance it has built the additional accommodation should be arraigned — not the disinvestment process and those who were associated with it.
Moreover, such absurd figures were the gravamen of the grounds on which the disinvestment was challenged. While rejecting them, the court rightly pointed out that a buyer does not buy assets in the abstract. He buys them for their business potential, that in the instant case he was buying not assets but shares of a company considering their earning potential.
There is another telling point. I am not sure if the CBI investigators remember that 10 per cent of the shares of the ITDC, the government company that owned the hotel, were owned by none other than the Indian Hotels Company of the Tata Group. It was compensated for its equity at exactly the same rate that the government got from the disinvestment. Had the property been worth Rs 151 crore, would the Tata Group — a private company, answerable to its shareholders — have accepted Rs 70 lakh (10 per cent of the value for which the hotel was sold) and thereby sacrificed Rs 15 crore (the 10 per cent share that would have accrued to them if the value of the hotel had been Rs 151 crore)?
Contrary to what the CBI has insinuated, the asset valuer was jointly chosen by the financial advisors (Lazard) and the ITDC from among the list of government-approved valuers. Five or more valuers from the government-approved list were invited to make presentations. Their qualifications and experience were jointly examined, and then alone was the particular firm chosen for the task.
That care marked every other step also. As in every case of disinvestment, every single one of the prescribed procedures was meticulously followed. Every step of the process, including the setting of the reserve price and the acceptance of the final bid price, was taken with the explicit approval of the Cabinet Committee on Disinvestment. In particular, the shareholders agreement was cleared by the law ministry thrice over — at the draft stage, at the stage when it was frozen and finally when the bids were to be accepted. The then law minister is the one link between that cabinet committee and the present government: he was law minister then and a member of the Cabinet Committee on Disinvestment, and is in-charge of the disinvestment department in the present government. He has stated in an interview that he is well acquainted with every aspect of the disinvestment and that everything about the transaction was in order.
Telling figures
A young analyst, well acquainted with valuations, draws my attention to a series of facts that show how way off the CBI’s imaginative figure of Rs 151 crore is. I will list just a few of them.
* Laxmi Vilas Palace was one of the 20-odd properties owned by the ITDC and amongst the smallest. Further, of its properties, it was the one that was making the highest losses.
* Between 1996 and 2001, the occupancy of Laxmi Vilas Palace came down from 41 per cent to 26 per cent and the hotel faced heavy losses.
Note that the overall occupancy in Udaipur was still 41 per cent in 2002.
* Given the abysmal performance, the net profit margin reduced from 34 per cent to a loss of 51 per cent; to earn gross revenue of Rs 2 crore, the hotel spent Rs 3 crore! At the time, the average hotel in India made Rs 4.5 crore in revenue and Rs 1 crore of net profit (assuming a 25 per cent margin).
* A valuation of Rs 151 crore for the property, as suggested by the CBI, would imply a valuation of over Rs 3,000 crore for the 20-odd ITDC hotels in 2001-02. Compare this figure with the valuation of the Tata Group’s Indian Hotels (one of the most efficient private operators, which owns the Taj Group of hotels and had at that time 65 properties with around 8,100 rooms). This latter chain had an equity valuation of barely Rs 800 crore in 2002.
* The full enterprise value of the Taj Group in 2002 was Rs 2,400 crore for the 65 hotels it owned; each Taj hotel had an average of 125 rooms. At that valuation, each Taj property was being valued at Rs 36 crore. Laxmi Vilas was and is a 55-room hotel; so, even on Taj benchmarks of valuation per room, it would be worth Rs 15 crore! At the Rs 3 crore a room that is implied in the CBI’s figure, Indian Hotels (with a portfolio of around 8,100 rooms) should have been worth Rs 24,000 crore in 2002 itself; that is, more than twice what the company is worth in 2014!
Other comparables also highlight the imaginativeness of the Rs 151 crore valuation:
* HVS are one of the leading consultants and valuation experts in the hotel space globally. They do a detailed assessment of hotel values by city. While they did not do a study for Udaipur, they did one for Jaipur. Their estimate for a hotel in Jaipur in 2002 was Rs 12 lakh per room for a medium-class hotel and Rs 30 lakh per room for a luxury property. Similarly, their range for Agra was Rs 9 lakh to Rs 12 lakh per room.
Udaipur was not part of the golden triangle and had lower occupancy rates and far lower rentals in comparison with both Agra and Jaipur. Based on their assessment and an average rate of Rs 12 lakh per room (accounting for the poor profitability of Laxmi Vilas), one gets a value of Rs 6.6 crore for Laxmi Vilas. Even at the high-end valuation of Rs 30 lakh per room, one gets a value of Rs 16 crore!
* In accordance with the HVS studies, even today a luxury hotel in Jaipur would be worth Rs 77 lakh per room; that implies a value of Rs 42 crore for a 55-room property, 14 years after the disinvestment of the Udaipur hotel!
* Lands End Hotel in Mumbai was purchased by the Taj Group at Rs 80 lakh a room in 2002. This was the highest prime property sold in India in that year. However, if we go by the CBI allegation of a value of Rs 151 crore for Laxmi Vilas (a 55-room hotel), we would have to place the value at Rs 3 crore a room in Udaipur. Udaipur had an occupancy rate of 41-42 per cent over 1999-2002 and room rates of Rs 1,900, as against Rs 3,500 for Mumbai.
* In 2011, Sinclair Hotels purchased Savannah Hotels in high-end Whitefield in Bangalore for Rs 38 lakh per room. At this 2011 valuation, Laxmi Vilas would be valued at Rs 20 crore.
* In 2008, Mahindra Holidays & Resorts purchased Hotel Ooty Villa Park from PVP Ventures — a 100-room property — for Rs 33 crore (including all amenities and assets). This is in 2008 — six years after one of the fastest growing periods in terms of real-estate pricing in India.
* In 2014 (12 years after the Laxmi Vilas transaction), Royal Orchid sold its 155-room property in Hyderabad for Rs 175 crore. Even at this price of Rs 1.2 crore per room, the Laxmi Vilas property would be worth Rs 70 crore. How is the price for a five-star property in Hyderabad 12 years later still unable to justify the supposed Rs 151 crore valuation in 2002?
I can go on adding to the list. But the point will be obvious: we can be fairly certain that the CBI officials in Jodhpur would be innocent of such comparisons. There is a real problem here, and it holds a lesson. Even if one sets aside conspiracy theories, the problem is that the CBI staff, especially at the lower level, just do not understand valuation and other aspects of such transactions. I have had personal exposure to this innocence — when the CBI officials came to ask me about the disinvestment of Hindustan Zinc, for instance.
At the least, that holds one lesson for all who are today trying to get the bureaucracy going: among the reforms that are urgently required is to upgrade the domain knowledge of officials working in our investigating agencies. Otherwise, goaded by pep-talks, honest officers will take decisions on complex matters, only to be hauled up 10-12 years later by persons innocent, at least of considerations that bear on those decisions.
The writer, a former Rajya Sabha MP from the BJP, was Union minister for communications, information technology and disinvestment
Source 
http://indianexpress.com/article/opinion/columns/is-this-the-way-to-energise-civil-servants/99/

Sunday, August 31, 2014

Arun Shourie defends Laxmi Vilas Palace hotel selloff in 2002


NEW DELHI: Former Union ministerArun Shourie on Sunday defended the sell-off of ITDC-owned Laxmi Vilas Palace Hotel in 2002 for which the then disinvestment secretary Pradip Baijal has been booked by the CBI for cheating and under-valuation of the property. Expressing surprise at the CBI case that's based on an "oral complaint", Shourie wondered if decisions and allocations done years ago were struck down like this, what effect it will have on Prime Minister's efforts to energise bureaucracy.

"If after 12 years you are going to charge the secretary, joint secretary and other officers without even questioning them once, PM's expectations of an energised bureaucracy are not going to be met," he told ET.

Shourie, who was the then minister for disinvestment in the Atal Behari Vajpayee-led NDA government, explained in detail how correct procedures were followed for the evaluation and sale of the hotel.

"Arun Jaitley is the common factor between the Cabinet Committee on Disinvestment (of 2002) and the present NDA government, where he handles the department of disinvestment. The Committee had cleared the disinvestment after scrutinising all the documents and procedures," said Shourie, who was widely tipped to be an important member of the Narendra Modi's cabinet.

He said that the file of the Share Holding Agreement of the property was cleared by Jaitley as law minister at three different levels.

"I am absolutely certain that every procedure was followed. There was a vigilant law minister, and his ministry cleared the file three times," explained Shourie. The first time, the file went to law ministry for whetting of the document.

It went again after the agreement was finalised and bids were invited, and then finally again when the bids were received, he said. Jaitley, in an interview to this newspaper published in today's edition, too, said there was no sign of wrongdoing in the Laxmi Vilas Palace deal.

"I have been, as a minister at that time, a witness to those transactions and I have no doubt in my mind that all the disinvesment transactions were completely above board," Jaitley told ET.
Source http://economictimes.com/industry/services/hotels-/-restaurants/arun-shourie-defends-laxmi-vilas-hotel-selloff-in-2002/articleshow/41380661.cms

Thursday, August 21, 2014

13th Hormis memorial lecture : video

https://www.youtube.com/watch?v=xX_gJi3wbpA

Arun Shourie spells out 15 tenets to boost economic growth in India


PTI, Kochi Wednesday, Aug 20, 2014 10:22 hrs

Former Union minister for disinvestment Arun Shourie today spelt out 15 cardinal principles to resolve India's growth hiccups. (Reuters)

Former Union minister for disinvestment Arun Shourie today spelt out 15 cardinal principles to resolve India's growth hiccups. (Reuters)

Former Union minister for disinvestment Arun Shourie today spelt out 15 cardinal principles to resolve India's economic growth hiccups and put the country on a higher growth trajectory.

"The first lesson that India should learn is to face the facts. Do not go by declarations but go by the facts. The second cardinal principle that the country should learn is to change. You must change in tune with time. Incessant and incredible steps to change are required," he said.

The third norm to spur growth is to focus on all sectors and it is no longer enough for India to be excellent in one or a few sectors. India being a large country should excel in sectors across the board, he said, delivering the 13th commemorative lecture organised by FedBank Hormis Foundation.

The next was that incremental steps to change were no longer enough. "What is needed is a tectonic shift in approaches," he said.

He said the country should be able to own up facts rather than shy away from them. Also the fact was that today's is a 'heartless world' which leaves no room for second rates but a country like India's size should be first rate in all spheres.

"The country must muster enough courage to shed shibboleths and old habits. Also building partnerships across the spectrum of society is an important step towards success. Giving more powers to states by devolving it from the centre is also important."

Federal Bank Chairman Abraham Koshi, Bank's MD and CEO Shyam Srinivasan, ED Abraham Chacko, FBOA General Secretary Paul Mundadan and Raju Hormis, CSR Head, Federal Bank also spoke on the occasion.

Source http://financialexpress.com/news/arun-shourie-spells-out-15-tenets-to-boost-economic-growth-in-india/1281032/

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