‘Everything shows that the Prime Minister knew and did nothing about the (telecom scam)’

Source: Indian express

SUNIL JAIN: Kapil Sibal claims A Raja followed what the NDA government had done on spectrum allocation. As telecom minister during the NDA government, can you explain what you did?

Arun Shourie: People today cannot visualise what the the telecom sector was like at that time. Tele-density today is 60 per cent, at that time it was 4.1 per cent. There were large parts of the country where despite bids being invited, not a single operator had bid. There were parts of the country where bids had been won and licenses had been granted and their services had not yet been activated. For example, Northeast, where nobody had taken the licence. The whole sector was collapsing. It was rescued from that by shifting from fixed fee to revenue sharing. A third factor was that there were 20 types of licences and fees and this led to much litigation. The whole sector was caught up in litigation--we have had a small glimpse of that in the exchange of letters between Mr Rajeev Chandrasekhar (Rajya Sabha MP)and Mr Ratan Tata. There were a host of issues related to licences and subsequent litigation and Ataliji (Prime Minister Vajpayee) told me that this sector needed cleaning up. I felt the main problem was the splintering of licences. This was one of the two or three sectors which was still left in the licence quota raj phase. I felt we must unify licences and the government should be technology neutral, it should be service-provider neutral, it should be service neutral. The idea emerged for a unified licence, in which a service provider can provide any service to any user anywhere in the country using any technology. This matter was referred to TRAI. TRAI wrote a very good report at that time (October 2003), the substance of which was that you should be technology agnostic, don’t go in for a universal licence in one go because it will lead to complications. They suggested we do it in two phases.

Sunil Jain: We understand that there was a controversy around Reliance and WLL, which was illegal at that time. TRAI came out with a recommendation, saying let’s go for UASL (Unified Access Service License), which meant that whoever had a fixed licence can offer WLL services. The second recommendation was that having done this, any future person who wanted to offer mobile services, will have to do a multi-stage bidding for that.

Arun Shourie: The concept was you will have automatic authorisation for anybody who wants to come in. With a low entry fee, divorce the spectrum from the licence. Whereas the earlier practice was that spectrum was given as a part of the government obligation for having allowed you to provide a service.

SUNIL JAIN: So TRAI allowed people the option of moving to UASL and in future, if anybody wants to offer a new service, please do multi-stage bidding for that.

Arun Shourie: Only after the unified licensing regime is introduced, please don't forget that phrase. But the unified licensing regime has not been introduced till today.

Sunil Jain: Let us assume for the sake of argument that BJP did everything wrong and was favouring people. Of the licences issued, you issued only some of them, the rest were all issued by the Congress minister. In 2005, the Congress came out with some new guidelines for what the prices should be for UASL. Would this be your answer to Sibal that if you assume we were wrong, in 2005 December when you issued new guidelines, why did you stick to the Rs 1,651 crore price?

Arun Shourie: That is a good argument which I shall remember. But you have to look at the growth in tele-density--that is what determines whether the 2001 price is justifiable or not. Between 2001 and 2003 there had hardly been any improvement in tele-density, but if you use the same price in 2009, then obviously that is wrong when tele-density has increased to 48 per cent. The point about Raja is that he followed no principle, no policy.

First-come-first-served was never the only criteria. When Raja said first-come-first- served, there were 539 existing applications. In a first-come-first-serve situation, those should be processed first. But he didn't process them. He contacted the real estate companies and said bring in your applications with a cut-off date of October 1. Four months later, he made September 25 the cut off date. A large number of applications were removed but not the ones he wanted to favour. Then he changed the basis of the first-come-first-serve process. He changed it from the date and time of receipt of application to the date and time on which letters of intent conditions are fulfilled and paid. That means you must bring Rs 1,651 crore, as CAG says, in 41 minutes. After that, he was still not able to give Swan Telecom the amount of spectrum which he had contracted for and so he changed the priority list in circles which are very lucrative today, like Punjab and Maharashtra and this was the first-come-first-served process. So to say that I am following Arun Shourie’s footsteps is wrong. I have said this many times--Raja, stop following my footsteps, follow my advice. My advice is turn an approver. Even your leader Mr. Karunanidhi has said one man could not have made so much money all by himself, so tell us who are the other persons.

Rishi Raj: The Prime Minister’s silence has been an issue. The Cabinet decision of 2003 said that finance ministry should always be involved in pricing of spectrum. So when Raja did not listen to the finance ministry as well as the law ministry for auction, the two ministries could have independently approached the Cabinet on the matter, which they did not do. How do you view this?

Arun Shourie: That shows the character of the government today. Chidambaram wrote a letter and there are several letters on record written by Subbarao--who's now the RBI Governor, but was then the Finance Secretary--saying don’t do this. By contrast, I discussed every single matter with Jaswant Singh, Finance Minister then and head of the Group of Ministers which considered the TRAI recommendations. More than that, the finance ministry is institutionally represented by the member finance in the Telecom Commission. In Raja’s time, the member finance got so disgusted with Raja’s illegalities that she sought premature retirement. It is my personal knowledge that Prime Minister had called Nripendra Misra, who succeeded Pradeep Baijal as the chairman of TRAI, to brief him. He said that Raja had claimed he was following TRAI recommendations, was that the case or not?

Nripendra Misra said no, he was not. Then Pranab Mukherjee called him and Nripendra Misra told him the same thing. Nripendra Misra came to me after a few months and said this is what they have called me for, what should I do.

I said please put it on record, files last a long time. So Prime Ministerknows from Nripendra Misra, from the press, he knows of the violations reported by every operator. He himself writes a letter saying that complaints that are coming in, please consider a transparent procedure for auctioning the spectrum. As I have mentioned, Sibal is the advocate of Raja and not of the government. Each time he defends Raja, he implicates the Prime Minister.

There were two persons who were handling affairs for Raja, one was Chandolia (Raja's private secretary) and there was another person. Raja was cruel to this other person, he fell out, he sought transfer from the department, started giving out information, none of the journalists wouldtake it. He was receiving threats, lures of money but he was the hero of the entire situation, he kept giving out information. In August-September 2009, I met the PM outside the Rajya Sabha. I told him that ‘under the umbrella of your good name loot is going on’. I showed him a list of the front companies and what Raja was doing. I told him about this person and that he was ready to give the entire evidence on record. I asked if I could meet Principal Secretary TKA Nair. Then I could give him all these papers and CBI or someone could investigate. I waited for one month but there was no call. I then contacted Ashwini Kumar, Director, CBI. I gave him all the papers and said, there is this man and here is his telephone number, he will give you all the evidence. CBI contacted him and had a series of meetings with him. Nothing happened so I asked the CBI what happened and they said, `Sir your man knows everything, we have followed up, everything is ready but we have to wait for a nod of the Prime Minister'. Nothing happened and nothing was going to happen. Then this meteor of CAG fell and Raja was indefensible. All the companies of Raja that have been raided are in the list that was given to the CBI at that time. It turned out to be absolutely correct. The rapidity with which they are able to move right now is precisely because they knew everything already. The Prime Minister has to be encouraged to be a good man, a good man means who enforces goodness in the circles which are under you. In this case, everything shows that Prime Minister knew and did nothing.

Shekhar Gupta: Does the CBI have sufficient evidence to convict people?

Arun Shourie: Yes. I had been told that in one set of transactions, they have been able to track the money trail. I would not be surprised if some of those persons--not just Raja and his advocate Kapil Sibal--are also deflecting attention to a JPC, and other matters. They don’t want the prosecution to proceed.

Shefalee Vasudev: Everything seems to be falling apart--civil society and the state. If you had to start a clean-up process, would you start with judicial reforms?

Arun Shourie: When such situations arise, think of Gandhiji’s phrase: anything, anyone, anywhere, anytime. We should not think of just judicial reforms, police reforms or qualifications for legislators. Many people are now feeling that the situation is ripe for another people’s movement. Political parties feel they don’t have the credibility at the moment, they have to find some non-political faces to start the process. You can guess the names they are gravitating towards--APJ Abul Kalam is one and three former chief justices of India. People feel the situation is ripening for a people's movement--the government is being buffeted, it will continue to flounder.

Ravish Tiwari: The Opposition today is looking for a protagonist. The BJP is going through a power game within its own ranks. There is no protagonist like VP Singh in 1989. What is the remedy?

Arun Shourie: I don’t want to comment on the BJP. But sometimes, erratic things throw up protagonists. I am not saying this is going to happen. It is a very different public today and a very different country where money-making is accepted and looked up to. People have got accustomed to these things. So I am not saying this is the solution. But from random situations, protagonists do rise. For instance, who thought that Mohamed ElBaradei would become the focal point of a people’s movement in Egypt? However, mass movements, even if ignited, can remove but cannot construct. Construction requires a much longer effort.

Soma Das: A few days ago, you said that Pranab Mukherjee is one of the best PMs we are yet to have.

Arun Shourie: He is certainly one person who has goodwill across the political spectrum. He is certainly mature, I don’t know about other things. Many persons are seeing a window of opportunity for themselves between Mr. Manmohan Singh demitting office and Rahul Gandhi not being ready, so ‘kisika bhi number aa sakta hai.’

Shekhar Gupta: Has the CBI been in touch with you?

Arun Shourie: I had rung up Mr. A P Singh, the CBI Director, about two months ago, saying that now that you are questioning former officials like Pradip Baijal and Vinod Vaish, I am sure you would want to question me, so I will come any day. The date has been fixed for February 21.

Shekhar Gupta: Is it your instinctive sense that whatever the CBI is doing is right?

Arun Shourie: They are absolutely on the right track. The reason is twofold: the monitoring by the Supreme Court and second, it is not difficult to be on track when public pressure is so intense. Supreme Court must continue to monitor it like a hawk and public pressure must continue. We must never forget that this is just the first stage, even the investigation is not over. After that the trials will start, appeals will be made, etc. So this requires perseverance.

Amitabh Sinha: Jairam Ramesh has been taking your name in the Lavasa controversy. You live in Lavasa, can you tell us what you think of the case?

Arun Shourie: For reasons that do not have to do so much with the merits of this case, Jairam has taken an extreme position. I had sent him an email in this regard saying, please don’t think of ‘either-or’ but ‘and-also’. Secondly, if the state of India gives clearance to POSCO or Vedanta, and they spend time and money and then, seven years later, you say stop the work, it brings the Indian state into question. In the case of Lavasa, I can tell you, the developers are thinking in terms of a model, they are aiming for international recognition. So they are having bio-mimicry workshops, plantation workshops and hydro-seeding and they take great pride in that. Sitting in Delhi we can’t realise what happens but there were 8,000 workers there, mostly from Bihar with their families and little children and suddenly no work. Many of the local people had opened vegetable shops, milk stalls--all closed. The real issue is that there should be some norms. I am told Jairam will give the clearance on February 14 for the first stage of Lavasa, so I hope that happens.

Ravish Tiwari: In the name of social expenditure, we are spending Rs 30,000 crore on NGREGS while the allocation for rural roads is only Rs 10,000 crore in the budget. Similarly, you are coming out with food security rather than creating infrastructure for storage. So how are these things going to play out for the future of the country?

Arun Shourie: Only educated people who are not going to stand for elections can oppose this. Schemes like NREGS are like throwing money out of the window. Unless delivery measures are improved, all these populist measures are going to boomerang. I opposed this at that time to the great discomfiture of the masters in BJP. Populist measures are a main cause of the current inflation. People like Yashwant Sinha, who work in their constituencies, will tell you this is nothing but centralised corruption.

Ravish Tiwari: Has India lost its story?

Arun Shourie: In America, you are getting just one per cent interest, here it is 8.5-9 per cent. That is why FII money is still coming in. I meet investors all the time, and they are all now expressing concern. They say that the long-term Indian growth story remains but we are all living for the short-term and what about that?

Transcribed by Smita Aggarwal & Sweta Dutta

For the longer version, visit www.indianexpress.com

On their own yardstick

Arun Shourie: Thursday, March 27, 2008

Arun Shourie puts the Budget to the aam aadmi test and argues why the UPA fails miserably

One problem is that while the Government committed itself in that new scripture – The National Common Minimum Programme – to doubling the proportion of GDP that is devoted to social sectors like health and education, in fact, as NC Saxena, member of the UPA’s National Advisory Board, points out, the proportion continues to hover around half the pledged targets.

But that is the lesser problem. The even more debilitating one has been much in the admonitions of the Prime Minister and the Finance Minister. In his Budget speech for 2005/06, Chidambram drew pointed attention to this: ‘At the same time,’ he told the Treasury Benches that were cheering his announcements of higher outlays, ‘I must caution that outlays do not necessarily mean outcomes. The people of the country are concerned with outcomes. The Prime Minister has repeatedly emphasized the need to improve the quality of implementation and enhance the efficiency and accountability of the delivery mechanism.’

So what did he propose to do? ‘During the course of the year, together with the Planning Commission, we shall put in place a mechanism to measure the development outcomes of all major programmes,’ he told Parliament. ‘We shall also ensure that programmes and schemes are not allowed to continue indefinitely from one Plan period to the next without an independent and in-depth evaluation.’ Given that activists were said to have the ear of the Highup, Chidambram added, ‘Civil society should also engage Government in a healthy debate on the efficiency of the delivery mechanism.’

Two years went by, little happened. Chidambram returned to the theme in his Budget of 2007/08. ‘There is no dearth of schemes,’ he told Parliament, ‘there is no dearth of funds. What needs to be done is to deliver the intended outcomes.’

The Prime Minister has been proclaiming the desideratum just as frequently and even more emphatically. ‘We have generated adequate resources in the last three years for use in social sector without sacrificing fiscal prudence,’ he told the ‘Roundtable on India’ organised by The Economist in March 2007. ‘However, we cannot spend our way to prosperity and having tangible outcomes is, therefore, as important as increasing outlays. This is the single biggest concern of our government today and we have to address this issue if we need greater returns on our social investments.’ And a few months later, in November, 2007, he told the full meeting of the Planning Commission, the Gross Budgetary Support provided for in the 11th Plan is almost double what it was in the 10th Plan. More than that ‘the architecture for inclusive growth’ has been laid out, the ‘basic elements’ of that architecture ‘are now fully in place.’ ‘This is a matter of satisfaction and indeed of pride,’ he said. ‘For the next few years, the emphasis must be on ensuring that these programmes deliver what they promise. We must work purposefully to realise the socio-economic transformation the Plan seeks to achieve.’

And what is happening on the ground? After all, these worthies are not consultants to Government. They are the ones directing it. The answer can be gleaned by picking up any one of what Chidambram calls ‘the flagship schemes’ of this Government.

If this is the flagship…

‘The object is to guarantee 100 days of employment in a year to one able-bodied person in every poor household,’ Chidambram told the cheering MPs during his Budget speech for 2004/05 as he explained the Government’s commitment to the poor. So, what was he going to do? Pending legislation, the Food for Work Programme is being extended to 150 districts.

And where is the money to come from? Chidambram’s solution was one that has become the hallmark of this Government: ‘Allocations under different schemes will be pulled together to support the Food for Work Programme,’ he declared. There are substantial funds totaling over Rs. 6,000 crore under SGRY, SGSY, SJSRY, REGP and PMRY.’ A typical stratagem: if there is one big programme, split it into five and announce five path-breaking, closer-to-the people initiatives; if there are five programmes, club them, and announce one historic initiative! In either event, rename them – giving them one of the two permissible names.

In the 2005/06 Budget, while announcing that he was increasing the allocation for this programme to Rs. 11,000 crore, Chidambram correctly noted that there were two components to the allocation – a cash component and a food component.

By the 2006/07, the commitment had got altered, a word got slipped in: while the original commitment was to ‘guarantee 100 days of employment in a year to one able-bodied person in every poor household,’ the commitment now became to guarantee 100 days of employment in a year to one able-bodied person in every rural household. As for allocation, Chidambram said, ‘In the current year, under a clutch of schemes including the Food For Work programme, a sum of Rs. 11,700 crore is expected to be spent on rural employment.’ A few sentences later, the figure was given as 11,300 crore. And there was to be in addition, Rs. 3,000 crore under the Sampoorna Gramin Rozgar Yojna (SGRY).

In the Budget for 2007/08, the scheme was expanded from 200 districts to 330, and the allocation was increased to Rs. 12,000 crore, plus another Rs. 2,800 crore for (SGRY) for rural employment in districts not covered by NREGS.

In this new Budget, Chidambram proclaims, the National Rural Employment Guarantee Scheme ‘has proved a historic measure of empowerment of Scheduled Castes and Scheduled Tribes, and, especially, women’; that the allocation for it will be raised to Rs. 16,000 crore, and that it will be rolled out to all 596 rural districts of India.

In a note that he has sent to all the Highups, NC Saxena punctures the balloon. First, he points out, since this Government took office, the allocation for rural employment has actually fallen! While Chidambram has been parading financial outlays, he has forgotten to mention what has been happening to that other component of outlays on this programme, the food component: this, Saxena shows, was sixty eight lakh tonnes in 2005/06; it fell to twenty four lakh tonnes in 2006/07; and this year, it was just a little more than seven lakh tonnes till Novemebr, 2007, and may not reach even fifteen lakh tonnes by end-March 2008. Converting these figures into cash, Saxena points out, the outlay by the central Government on wage employment schemes has come down from Rs. 18,406 crore in 2005/06 to Rs. 15,000 crore.

The second point he makes is almost cruel! Recall the other part of the announcement: the programme will be extended to all 596 rural districts of India. But one-fourth of the districts are short of labour, Saxena points out! ‘Reckless expansion will only promote migration and fudging of documents,’ he writes.

That must have been obvious, even to Chidambram. So, what happened? Rahul Gandhi, with his insights into India, is said to have ‘suggested’ that the programme be extended to all districts. The revelation having descended, Chidambram at once did the needful, as they say in Government! ‘They are perfect practitioners of dialectics,’ that distinguished civil servant, the late Ashok Mitra told me about the type, ‘Strong to the weak; weak to the strong’!

And then there is the fatal point, one to which …. has already drawn attention in The Indian Express: larger outlays or smaller, on the ground the programme is riddled with leakages, fraud and the rest. In the draft report on the Performance Audit of the NRGES that has been sent to Government in December 2007, the CAG states, among other things, that under the programme

•Only 3.2 per cent of the registered households have been given 100 days or more of employment;

•The average employment that has been provided to each household is just 18 days;

•While projects are to be taken up in low-wage areas, such areas have not even been identified in 53 of the test districts;

•Works have been taken up without the kind of planning and scrutiny that the guidelines require – on occasion just on the ‘recommendation’ of VIPs;

•While no more than 40 percent is to be spent on materials, in case after case much higher proportions – on occasion up to 80 per cent – are being spent on materials;

•Materials are being purchased without the mandatory tenders being called;

•Contrary to guidelines, work has been assigned to, and payments are being made to contractors and the like;

•Registers of materials received, and utilized of work assigned and executed are not being maintained;

•Workers are being paid wages that are far, far less than the minimum prescribed;

•Muster rolls as well as registers of materials and payments are being fudged wholesale – the report is full of shameful examples;

•When wages are not paid in time, workers are to be paid a compensation; this is not being paid – ‘because it has not been claimed,’ say those in-charge…

And so on. NC Saxena draws attention to these findings also about this ‘flagship’, saying only, ‘As regards its implementation, I think the CAG has said whatever needs to be said.’

Another flagship

Another ‘flagship’ that Chidambram mentions in his Budget is the provision of drinking water. This too has all the hallmarks of this Government.

‘I turn now to one of my big dreams,’ Chidambram declared in his Budget for 2004/05. He described how ‘Water is the lifeline of civilization,’ and lamented that the water bodies of yore had fallen into disrepair, and said that, ‘I therefore propose to launch a massive scheme to repair, renovate and restore all the water bodies that are directly linked to agriculture.’

So, what shall be done? ‘In the current year, we shall begin with pilot projects in at least five districts, and we shall select at least one district in each of the five regions of the country. The estimated cost is Rs.100 crore.’ The big dream has become a little dreamlet. Even so, from where shall the funds for even this dreamlet come? ‘Funds for the five pilot projects will be drawn from existing programmes such as SGRY, PMGJSY, DPAP, DDP and IWDP. Once the pilot projects are completed and validated, Government will launch the National Water Resources Development Project and complete it over a period of 7 to 10 years.’ And then there is the LIC, and those much derided institutions, the World bank, and others. Funds will not be a constraint.

The much bigger dream, of course, has been the Rajiv Gandhi National Drinking Water Mission. In this year’s Budget, Chidambram lists it again as one of the ‘flagship programmes’ of the UPA. He increases the allocation for it from 6,500 crore to 7,300 crore. And he carves out Rs. 200 crore out of this for providing drinking water for schools.

Excellent. Who can deny the importance of water? Who cannot agree that it is a shame that even 60 years after Independence we are not able to provide drinking water to all our people?

The first thing we have to remember is that this is almost an ancient programme. It used to be known as the Accelerated Rural Water Supply Programme – ARWSP.

Second, its implementation remains woeful, living up to Rajiv Gandhi’s statement that only 15% of outlays reach the poor in whose name they are defrayed. As Ganesh Pandey and Ravish Tiwari have reported in The Indian Express, the CAG has conducted a Performance Audit of this flagship also, and sent his findings to the Government in December, 2007:

•While guidelines require that states prepare Annual Plans for works that are to be taken up, of 26 states, 8 had not prepared the required Plans at all. Of the remaining 18, 9, while saying they had prepared them, did not submit them to the central Government; 10 had put together something at the state-level but these had no district or lower level details; Plans drawn up by 10 turned out to be ‘sketchy’; 9 had no shelf of schemes and likely size of allocations.

•While the guidelines require that 35 per cent of the outlay be on schemes that benefit SC/STs, the CAG’s Audit finds that in state after state, no separate targets or schemes have been formulated for the Scheduled Caste population; that the allocation, instead of being 35 per cent of the total, is much, much lower.

•An enormous portion of the funds have been diverted – for paying salaries, for defraying office expenses, for paying outstanding bills, for other schemes.

•Works said to have been completed do not exist; works have been ‘completed’ in non-existent villages; in other cases they have been taken up in villages that are already ‘fully covered’; works have been abandoned – in typical cases, pipes have been laid only part of the distance, pools have been dug where there is no water.

•Guidelines provide that the quality of water must be assessed: it is not assessed at all – water treatment plants have just not been installed as required.

•One half the Rural Protected Water Supply projects and a fifth of the tubewells shown as ‘completed’, found to be ‘non-functional’ or abandoned.

•In state after state, the expenditure figures turn out to be manifestly inflated; they turn out to be not just without authorization but ‘fictitious’.

•The Guidelines have provided a remedy very close to Chidambram’s heart – they require that Village Monitoring Committees and Special Monitoring and Inspection Units be set up; the CAG finds that in 14 states the committees are not holding regular meetings; 21 states have not nominated the required officials from the Health Department; 15 states have not established Special Monitoring and Investigation Units; in the remaining 11 states, these MIUs do not carry out field-level monitoring of quality of water, adequacy of service, etc.

•Guidelines require that the central and state governments monitor and evaluate the works from time to time: in 22 states, no evaluation studies have been carried out at all; in 17 states, officials from state headquarters have not visited districts, blocks and villages for inspections.

A ‘flagship’?

Or the tattered rag covering a sunken vessel?

(To be continued)

For all stories visit www.indianexpress.com/arunshourie

'Action completed'!

Arun Shourie: Wednesday, March 26, 2008

Arun Shourie puts the Budget to the aam aadmi test and argues why the UPA fails miserably

The document is Implementation of Budget 2007-2008, and is one of the important documents that have been distributed with this year’s Budget. ‘In keeping with the endeavour of the Government of India to promote transparency and accountability,’ writes the Finance Minister, P. Chidambram, in his Foreword, the document has been compiled. It contains ‘the status of implementation of announcements’ that were made in the preceding Budget. ‘I am happy to place this brochure before the House,’ he writes.

The item for which those words appear in bold italics – it is one of the several items for which they appear in the same way – is ‘Mumbai as an International Centre.’

‘Action completed’? Has Mumbai become the International Financial Centre that the Government had said it would be made?

You will recall that over the last three years, three big announcements have been made for Mumbai – and each of them has been splashed across our papers in huge, bold headlines. Mumbai was inundated by a traumatic flood on 26 July, 2005. The Government announced a special package of Rs. 1,260 crore to ‘rejuvenate’ the Mithi river – this was to be one of the steps that would prevent that kind of a flood. Not one paisa has been disbursed since then.

Next, the Prime Minister announced that funds would be given to metamorphose Mumbai into another Shanghai. Not one paisa has been given since that announcement. A power-point presentation has indeed been made to the high-ups – it is a compilation of sundry projects that have been conceived and commenced by a succession of governments.

And then came the announcement that Mumbai would be made into an International Financial Centre. Another ‘special package’ was announced – to much fanfare: a ‘special package’ of Rs. one thousand crore. For months, my friend and colleague, Kirit Somaya tried to find out how much money has actually reached the Maharashtra Government. Nobody would tell him. But he is not the kind to give up. He filed an application under the Right to Information Act – just imagine the commitment of our governments to -- what was that expression of Chidambram? -- ‘transparency and accountability’ that to get to know how much they have given in their generosity for such a worthy cause, a citizen has to take recourse to the Right to Information Act! Kirit strained for two months. Eventually, he received the information in July 2007: the total amount that has been given by the Centre is Rs. sixteen crore sixteen lakh.

The proclamation? Rs. one thousand crore. Actually given? Rs. sixteen crore sixteen lakh.

Then how is the ‘Action’ ‘completed’?

That tract of transparency and accountability explains:

‘The Report of the High Powered Expert Committee to make Mumbai an International Financial Centre has been released. The full text of the report has also been placed on the Ministry’s website… inviting feedback from the public.

‘A presentation was made to the Prime Minister on August 24, 2007. The recommendations identified for priority implementation have been circulated to the concerned regulators/agencies for comments/views on the process of implementing the recommendations. An Action Plan has been drawn up and is being implemented.’

Thus,

•Report received

•Put on the Ministry’s website

•A presentation made to the PM

•Recommendations circulated to regulators/agencies for comments/views

Action completed!! Not that the project has been implemented. Not even that ‘the process’ by which it will be implemented has been settled. Just that the ‘comments/views’ on the process by which it is to be implemented have been invited.’ But ‘Action Completed’, it is!

And the sequence is typical. Given the concern of this Government for the poor, it is de rigueur to talk about the unorganized sector, and that is what Chidambram did in his Budget for 2005/06. ‘The unorganized or informal sector accounts for 92 per cent of the employment and absorbs the bulk of the annual accretion to the labour force,’ he said. The ‘possible solution’ is PURA or Provision of Urban Amenities in Rural Areas. A Commission has proposed action along these lines. And then the typical commitment, much praised recently for cleverness: ‘Once the proposals are firmed up, Government will take up the creation of a few growth poles, as pilot projects, in 2005-06.’

President Abdul Kalam was still in office. He used to propagate this idea of Professor PV Indiresen. Hence, a few ‘pilot projects’, but those also in the indefinite future – when the proposals have been firmed up. Kalam gone, PURA gone. No mention in subsequent budgets.

But commitment to the poor continues. The poor are at the heart of the Government’s thinking, the Prime Minister and the Finance Minister have proclaimed times without number; to the poor, what matters most is food; for delivering food to them, the Public Distribution System is the key; and for making that system effective, the key is to improve the working of the Fair Price Shops.

‘Fair price shops constitute the backbone of the food security system for the poor,’ Chidambram told Parliament in his Budget for 2004/05. ‘We shall address the weaknesses in the system and strengthen public distribution,’ he promised. ‘I shall return to this subject a little later.’ That was in para 15. You had to wait for 60 paragraphs to learn what Government would do on this vital matter. An idea has been suggested, he said – that Government should distribute food stamps to the poor, and the poor should be able to go to any designated shop and procure the food. And so, another pilot: ‘I propose to introduce a pilot scheme for distributing food stamps, instead of distributing food through fair price shops, in two or three contiguous districts in a selected state. I sincerely hope that one of the States will come forward to associate with the Central Government in this experiment.’

Three years later, the pilot had disappeared, but more managerial types had alighted. Chidambram has continued to feel the urgency of improving the public distribution system. And so in the Budget for 2007/08, he took the definitive step for improving them: ‘A Plan scheme for evaluation, monitoring, management and strengthening of the targeted PDS will be implemented in 2007-08, and this will include computerisation of the PDS and an integrated information system in the Food Corporation of India.’

Come this Budget, and Government has moved higher up the technology scale: not mere stamps, not mere computerization and integrated information systems, an all together new, and technologically more advanced pilot. ‘An idea that has been growing,’ Chidambram says in this year’s Budget, ‘is to deliver subsidies to the target group through smart cards. Finally, I have found two willing partners -- the State of Haryana and the Union Territory of Chandigarh. They will introduce, on a pilot basis, a smart card based delivery system to deliver food grains under the PDS in Haryana and Chandigarh, respectively…’

And in the meantime, all the weaknesses of the Public Distribution System, to correct which Chidambram was going to revert later in his Budget of four years ago, continue unabated, all the leakages continue unchecked. In its report of April 2005 on the Targeted Public Distribution System, the Planning Commission records some of these ills:

•The implementation of TPDS is plagued by targeting errors, prevalence of ghost cards and unidentified households;

•Though the off-take per household has shown some improvement under TPDS, yet only about 57% of the Below Poverty Line households are covered by it;

•Leakages and diversions of subsidized grains are large and only about 42% of subsidized grains issued from the Central Pool reach the target group;

•Over 36% of the budgetary subsidies on food are siphoned off the supply chain: in several states, much higher proportions are siphoned off – 42% in Assam, 82% in Bihar, 42% in Gujarat, 56% in Haryana, 43% in Karnataka, 62% in Madhya Pradesh, 76% in Punjab, 61% in UP;

•Another 21% of the food subsidy reaches households that are above the Poverty Line;

•The cost of income transfer to the poor through PDS is much higher than that through other modes.

The Comptroller and Auditor General released his own findings in 2006. In his Performance Audit on Management of Foodgrains, the CAG concluded, first of all, ‘The results of the 59th round of the National Sample Survey of NSSO revealed that: almost 71 per cent of farmers had not even heard of the concept of Minimum Support Price. Even in Haryana and Punjab (which together contribute 56 per cent of all rice procured and 85 per cent of all wheat procured in the country), 37 per cent and 38 per cent of farmers respectively were unaware of MSP; and almost 81 per cent of farmers were effectively unaware of how to use the MSP programme.’ Second, the Audit once again laid bare all the holes with which we are familiar:

•The number of households Below the Poverty Line in the records of the state governments is a third higher than in the records of the central Government. This has the effect of scaling down of rations, says the CAG.

•Lists of beneficiaries are not updated, and this enables bogus cards to continue.

•Large number of cases have come on record in which ration cards have been issued to households that are not eligible for them: cards issued far in excess of numbers who are Below the Poverty Line; cards issued to households whose income is far in excess of the poverty line; households managing to get food under one scheme as well as another one; ration cards issued on the recommendations of VIPs with no further verification; the cards issued in one state are almost double the number of households that have been found to be Below the Poverty Line by a survey of the Rural Development Department.

•Foodgrains are distributed at lower than the prescribed scale of issue by four to 25 kg in several states and Union Territories.

•Grains are diverted in state after state.

•In Punjab and Haryana substandard rice is accepted on a vast scale.

It is not that ‘solutions’ have not been thought of. It is just that they have all met the familiar fate. To ensure proper monitoring of ration shops an Area Officers Scheme has been devised. The officers are to inspect the shops regularly. The CAG’s finding? ‘There was 96% shortfall in inspection by Area Officers under this scheme between 2000 and 2004/05…’ Vigilance Committees are to be formed, and they are to independently monitor the shops: in 24 states and Union Territories, the CAG finds, the Vigilance Committees have not been formed or are defunct and ‘non-functional’…

Nothing surprising in any of the findings – they are endemic. They have marred the Public Distribution System for decades. It was precisely to purge the system of them that Chidambram was flying all those pilots… The assurances are being implemented, the work is in progress, Chidambram’s brochure informs us.

The system, of course, remains as it has been.

(To be continued)

For all stories visit www.indianexpress.com/arunshourie

An Extreme Case is not an Exception

Arun Shourie

That an area as large as Bihar should sink into quicksand is alarming enough by itself. But one of our problems is that collapse in Bihar no longer shakes us: "O, that is Bihar," we shrug.

Bihar is an extreme case, yes. But the point about an extreme case is that it is but one end of a continuum. Bihar is far from being an exception. Even the most prosperous states today exhibit the same symptoms. Not just Bihar, but Punjab too is having difficulty paying just the salaries of government staff. Not just Bihar, but state after state -- Rajasthan is the example of the month -- has defaulted on the repayments it has to make to the Centre. In Assam�s case, all financial transactions had to be halted, and the treasury had to be closed last week, as the state had no funds to meet even the day�s liabilities. It isn�t just that almost all of plan expenditure of Bihar is now financed through central funds, that is so in the case of most states: Rakesh Mohan, the director of the NCAER, draws attention to a telling figure -- as recently as the Sixth Plan, balances from current revenues financed 40 per cent of state plans, in the Eighth Plan their contribution was zero, today it is a substantial negative. It isn�t just that state enterprises in Bihar are in a woeful condition, they are in more or less that condition across the country: another figure that Rakesh Mohan mentions -- state enterprises were projected to contribute Rs 4,000 crore to the financing of the Eighth Plan, their actual contribution was minus Rs 2,723 crore.

All sorts of devices have been contrived by the Centre and states to camouflage defaults by state governments, all sorts of devices have been fabricated by states to divert central funds meant for capital expenditure to pay wages and salaries. A senior functionary was educating me the other day to the mystery behind plan projects remaining incomplete for years and years on end in state after state. There is more than lethargy, he explained. Under our system of accounting, so long as the project is a continuing one, salaries and wages of the staff working on it can be paid out of plan funds; once it is completed, these have to be paid out of the state�s own funds. Unable to pay even salary and wage bills of its employees, state after state keeps that last mile of the road incomplete...

And finances themselves are but a symptom. Entire systems have fallen apart. A former deputy comptroller and auditor general, C.B. Kumar, points out that of the 992 state government companies, the accounts of 783 companies are in arrears -- up to 10 years. In the case of many of them, accounts have not been finalised for even one year since their inception.

And the finances of states, the evaporation of control and supervision mechanisms in state owned companies -- these too are but symptoms. The malaise extends far beyond states, far beyond governments. "Non-performing assets" -- a euphemism to cover up moneys which have been given, handed out on collateral considerations -- now exceed Rs 43,000 crore: that feat has been accomplished not by state governments but by our "commercial" banks. The companies that have vanished with over Rs 20,000 crore belonging to small depositors are not government companies, they are companies floated by private entrepreneurs. Similarly, while the securities scam showed up the degree of morality and vigilance in our banks and financial institutions, could it have remained undetected if a profession wholly outside the state structure -- chartered accountants -- had been doing its job?

In a word, unless we wake up, Bihar is not just an extreme case, it is the future. And the condition to which Pakistan has sunk is a live warning of what happens when such problems are neglected.

Everything else points to the same urgency. Time does not stop just because we are preoccupied with our problems: we talk of the "21st century;" it is five weeks away. The world does not stop because we are busy battling the next caste: technologies continue to replace each other every two-three years; per capita income in China is already double that of India, but with China growing at 10-11 per cent, and us stuck at 6 per cent, the gap between us and them doubles every 14 years -- and the per capita income is just an indicator: military capability, and much else is subsumed in it.

Nor do our problems abate because we are busy sorting out our politics. In the last three-and-a-half years when our politicians were busy bringing down and installing governments, our population increased by over five crore. Even in the six months between the ouster of the Vajpayee government and the installation of the present Vajpayee government, our numbers would have increased by over 70 lakh. We must, therefore, act, as the Buddha would say, "with the urgency of a man whose hair is on fire". The allied point is just as obvious: there is no discord on these issues. Indeed, I believe there is consensus on almost all the issues which are at all within the realm of the possible. When liberalisation was launched, how the critics lampooned it. But where they were in power, those very persons and their parties were taking pride in proceeding on that route even faster than the central government. Similarly, when the critics acquired office at the Centre, they continued those very policies.

That is a large part of the problem today: on almost every practicable matter there is consensus on what should be done, everyone also sees that those steps should be taken forthwith, but when one party takes them, the other shouts and screams, and puts obstacles. So that nothing is allowed to proceed -- except by fits and starts. The same danger lurks today. The economic decisions which will be taken now are ones that carry forward the same process which successive governments have been furthering for a decade. But because this government will be announcing those policies, others will stall them.

There is a conviction -- which all parties need to outgrow -- that because one is in Opposition, one�s job is to oppose, to choke whatever whoever is in government is trying to do. Precisely because it does not have a better idea on the matter, the party out of office feels compelled to contrive differences. Often, a completely unrelated issue is made the occasion for blocking everything. Notice the minatory statements which Congress leaders have been making about Rajiv�s name in the Bofors� chargesheet.

Assume for a moment that there is ground for a genuine difference of opinion on the matter -- I do not see any ground either in law or fact, but assume that there is. How does that difference on this particular matter justify throttling legislation on, say, economic reforms? Even countries deal with each other on some issues in spite of there being sharp differences on other issues. Indeed, many who will today be arguing -- within the Congress, say -- against cooperating with the government on any issue are ones who, when it comes to Pakistan, are most energetic in arguing that we must keep identifying areas on which we can engage it in joint action in spite of what it is doing in Kashmir, and the rest. But when it comes to cooperating with the government of their own country, even when it seeks to further policies they had themselves initiated, Congressmen will think it perfectly in order that they hold back till it interferes in the judicial process and has a document which is before the courts altered in the way they specify. As all parties are in office somewhere or the other in the country, and as all of them are therefore disabled by such conceptions of what the proper role for an Opposition is, all have cause to revise their conduct. The cure liable to be more effective is for people to be alert, notice who is stalling essential legislation or policies, and for what reason, and punish him accordingly.

Governments too would do well to change their ways. At least in five respects. All too often, they lose interest in a remedy the moment it has been enacted. Mr N. Vittal, the chief vigilance commissioner, gives a telling example. In 1988, Parliament passed the Benami Transactions (Prohibition) Act. It was acclaimed to be a decisive step in tackling corruption -- indeed, so urgent and vital were its provisions acclaimed to be that they were first introduced by way of an Ordinance. Clause 5 of the Act specified that a procedure would be prescribed for acquiring property under the Act. Eleven years have gone by, no procedure has been prescribed. Governments have forgotten all about the Act. And not just governments: the other day when I referred to the Act and its fate in the Rajya Sabha, it was evident that MPs too had not bothered to check up on what they had passed. The first point therefore is: follow through on what you get through Parliament, follow through on the schemes you launch.

The second lesson, equally elementary, is about existing institutions. Every government feels impelled to launch new schemes, to set up new institutions. But the need today is to energise existing institutions. It is good that the government will be introducing legislation to set up the Lok Pal: the bill has been in the works for 30 years, and this will be the seventh version of the bill. So, it is good that at last the law will be passed, and the institution will be set up. But just as important is to activate the Lok Ayuktas: in state after state, they have been rendered moribund. Why not call a conference of existing and past Lok Ayuktas, garner their proposals to make the institution functional, and create public opinion for those changes to be enacted? Similarly, I was astonished to learn the other day that the comptroller and auditor general has a staff of 20,000 persons. They produce over a hundred audit reports every year. These run into 15,000 to 20,000 pages. They are packed with details -- often, as we have seen in the case of Bihar, with details of the most alarming kind. But can any one recall a single consequence which has followed as a result of these prodigious labours? The cure would not be to set up yet another institution, but to get together with present and past CAGs and take steps which would make the work of this institution fruitful. The third lesson is about the new institutions we set up. Unable to improve existing institutions, we set up some new one. Unable to get existing courts to speed up, we set up special courts, unable to get states to act reasonably on sharing river waters we enact the inter-state river water disputes law. But the manner we provide for the new institution to function is exactly the manner which has paralysed the old institution. The procedural regulations that special courts must adhere by are exactly the same as the regulations which clog existing courts. The personnel who man the inter-state river dispute tribunals are just the same as the ones that man existing courts: they bring to their new task the same approach, the same fixation on legalisms, on the date of this notification as against that one which hobble our courts. For the new institution to be different, its personnel, the procedural rules that are to govern its functioning, its entire ethos have to be radically different.

Fourth, the solutions must be on an altogether different scale, they must be of an altogether different kind than the ones to which we naturally gravitate. The backlog in courts? As a great concession we agree to the setting up of a dozen courts. But the Chief Justice was mentioning the other day that the requests which are pending for additional courts already total over 4,500. Setting up a dozen more courts -- and that too after years and years of the files going up and down -- is as good as doing nothing. Similarly, to get the inter-state water disputes machinery out of the current rut, we need to man the tribunals with persons whose entire approach will be different: who will craft design solutions rather than pronounce awards that hinge on legalisms.

And when we do alight on a solution, as Montek Ahluwalia with his vast experience points out, we must not look upon it as set in stone. That is the fifth lesson. As new technology beckoned, a new telecom policy was announced in 1994. But technology changed so fast that a newer policy was required by 1998. The steps which have been taken under it have already had to be altered twice. But technology is continuing to evolve at a dizzying pace: the technology to transmit voice over Internet with distortion is almost at hand; you will soon be able, therefore, to talk to persons overseas at the cost of a local call; that will devastate the finances of existing long distance operators. And so we can be certain that an entirely new telecom policy will be required three-four years from now. If we hold up that new policy on the old supposition that the existing policy had been announced just a short while ago, or if allegation-mongering inhibits governments from attempting new formulations, we will be enlarging the gap between us and the rest of the world.

Hence: when you pass a law, when you set up an institution, look back and see how it is working; instead of setting up new institutions, where possible energize existing ones; when you set up new institutions, ensure that their personnel, their operating procedures, their entire thinking is new; think anew repeatedly, and each time at a speed which will, at the least, match the progress of technology.

The Asian Age
November 12 1999