Govt sweeps its muck at SC’s doorstep

The Presidential Reference in the matter of the 2G Supreme Court
judgment, cancelling 123 licenses, after being opposed by the Deputy
Chairman of the Planning Commission, Montek Singh Ahluwalia was
finally cleared by the Cabinet and then filed before the Supreme
Court. A reading of the Presidential Reference shows that it is
nothing but an angry expression from the government that has been
besieged with bad publicity after all its defence starting in 2008
about the 2G scam being a policy decision in the interest of the
common man fell flat on its face with the 2G judgment.

Further, the government’s defence such as the ‘zero loss’ theory
floated by Telecom Minister Kapil Sibal was taken apart when the
judgment cancelling the licenses clearly upheld the fact that spectrum
was indeed a scarce resource, and further, that the beneficiary
companies had offloaded their stakes for a huge profit.

Throughout 2010 and 2011, government spokespersons such as Manish
Tewari, Jayanti Natarajan (now Minister of Environment), and later,
Salman Khurshid made valiant attempts to defend A. Raja by taking a
stance that no wrongdoing had occurred on his account. This too was
trashed as the Supreme Court held that Raja and officials of the DoT
had acted in an unconstitutional and capricious manner and further,
that their action was against public interest as well as the
principles of equity.

With nowhere to hide, and threats of bilateral and international
litigation pending at their doorstep from companies such as Telenor,
Sistema, and possibly Etisalat and Bahrain Telecom, the government has
decided to sweep its garbage in front of the Supreme Court’s door.

The Reference, which seems to be lazily and unthoughtfully worded,
makes assertions which could not have been further from the truth. For
example, it makes bizarre claims such as that spectrum was allocated
to eight cellular mobile licenses in 1994 and 34 cellular mobile
licenses in 1995 on a first come, first served (FCFS) basis. This
flies in the face of the fact that the Reference itself claims in the
opening paragraphs that the eight CMTS (cellular mobile telephone
service) licenses in 1994 were selected based on rankings received by
them on a technical criterion and were required to pay a fixed license
fee determined by the government. Similarly, in case of 1995, the
selection was based on an auction across 18 circles for 10 year
licenses. Clearly, there is no occasion for determining the FCFS
allocation of spectrum, leave alone implementing such a disastrous
scheme when only 2 licenses existed in each circle.

In another part of the Reference, a comparison is made between
licenses of the pre-2001 era with the ones awarded in 2001 (17
licenses in the fourth cellular mobile multi-stage bidding and 22
licenses awarded for limited mobility) along the lines that a
one-time, non-refundable entry fee was payable in both cases. This
belies the basic understanding of the telecom sector wherein licenses
awarded in 1995 and 1997 were required to pay annual instalments and
not a one-time, non-refundable fee arising out of the bid that had
been placed. It is only in case of the 2001 licenses that a one-time,
non-refundable entry fee was to be paid.


The Reference also makes a desperate attempt to convince the Court
that spectrum has never been paid for upfront. It hopes to portray
that the Court’s order of February 2, 2012, cancelling 123 licenses on
account of first come, first served (FCFS) is no different from what
was occurring before 2008. In its desperation, the Reference claims
that upfront payment for spectrum has never been made till 2001.
Surely, the authors must then be able to explain why the fourth
cellular mobile operators made the upfront payment of Rs. 1,658
crores, or why is it that on migration from limited mobility to
Unified Access Service Licence, the basic service licensees of 2001
had to pay an additional amount which allowed them to provide full
mobility and acquire CDMA spectrum of a corresponding amount.

The Presidential Reference thrown open a Pandora’s Box. Pandora’s Box
in Greek mythology contained all the evil of the world, although at
the same time, it had one other item – strangely called Hope which was
not released to the world, even as all the evil was. The Reference
puts at stake the entire India investment of Maxis Aircel, which owns
22 licenses across the country. Tatas get hit twice – 17 of their
licenses fall under suspicion since they were awarded between 2001 and
2004, but all of the 19 licenses again need to dodge the legal bullet
since they are beneficiaries of dual technology spectrum in 2008.
Similarly, in case of Reliance, whose licenses are under the legal
scanner now both due to their vintage of 2001 till 2003, and later
because they also received dual technology spectrum.

The companies that are least affected are Vodafone, 12 of whose
licenses are going to require a clean chit from the Supreme Court, and
Bharti, whose 8 licenses out of the 22 are in serious trouble.

This move by the government is expected to plunge the sector into the
kind of uncertainty that it has never seen before.

If, perchance, the Supreme Court decides to hear the matter, the
government will be in no position to defend any of these licenses
since it is the one that has sought the opinion. As a result, it will
be up to the private parties’ lawyers to provide defence against the
Court’s enquiries and legal attacks from those who have initiated the
original PIL. With the government out of the defence ring, the legal
balance could seriously tilt against these companies in the coming
days.


Experts believe that the dual technology licenses are the most
vulnerable if the review occurs since those were not only given by
former Telecom Minister A. Raja, but in fact have already been in the
eye of suspicion. In fact, the Cellular Operators Association of India
(COAI) has filed a petition, questioning the legality of such dual
technology licenses, which is already pending in the Court.


All in all, the situation in the telecom sector could get much worse.
The government inexplicably at one level seeks to protect its rights
to executive decision and policy making but through this Reference has
placed the most fundamental issues at the Supreme Court’s doorstep.
All eyes now towards the President’s Office and the Supreme Court.

COMMISSIONER ON THE RUN

Even as yet another IPL is upon us much reminiscent of the Invasion of
the Body Snatchers, one wonders on the efficacy of the League its spin
off benefits and value in terms of deliverables. Fatigue seems to be
the operative word for the bulge bracket cricket league. But in all
this din, hype and hoopla of a new season getting underway, the
loneliness of the progenitor of the league is not lost. Now living in
exile in London, sought by various Indian agencies, a red corner
notice against his name; the scion of the KK Modi business family has
seen fame, adulation and now the depths of anonymity – all in the
space of a couple of years. Modi assiduously worked to create from
ground zero a global cricket league on the lines of the English
Premier League, NBA, NFL and perhaps the F1. And he did good, his ego
rubbing people the wrong way along the route.

Over the last few days, one touched base with Modi, now declared
bankrupt by a London Court for not being able to pay Rs 53 lakh to a
security agency. Adding to his woes is the case against former Kiwi
cricketer Chris Cairns where once again he has been trumped. One tried
to peep into his mind, understand how someone like him used to the
spotlight lives in the shadows of London. The brashness has dulled,
his answers are more cryptic and measured. Sample his take on the
creation of IPL, “There seems to be wide misconception that the IPL
was the direct result of the ICL's launch This is completely untrue. I
had begun my own work on a League way back in 1996 and actually
announced and launched a 50/50 format. Initially, we had the approval
of the BCCI but they then had a change of heart so for over 11 years I
worked behind the scenes to fine tune the idea.
So when I and my colleagues moved onto the Board late in 2005, we
already had a decent plan. But our first task was to get the BCCI
finances and Marketing in order and then I followed with the league
concept. “ He believes that initially there were many naysayers, but
as head of marketing for the BCCI and someone who had raised a billion
dollars for the organization, they finally green lighted the project.

And it sure did capture the imagination of the cricketing and
marketing world. Brendon McCullum’s roaring megaton replete with power
hitting ignited the inaugural tourney. Well, the League was on its
way. But the best laid plans of mice and men often go awry. Owner’s
pride became neighbour’s envy. Being brash has a price. One has to pay
for rubbing people the wrong side. This is the genesis of the fissures
between Modi and another powerful board satrap N Srinivasan, a
successful businessman himself. As long as Sharad Pawar was a fixture
in the board, Modi could walk on water. Pawar out meant Modi out. The
equation was simple. Modi himself will tell you, “As for what changed,
well the plan I put together and the way we executed it - became the
talk of the world and I guess some people wanted to embrace it as
their own.” So, next stop Srinivasan in, Modi out. In the murky world
of cricket board politics, it doesn’t take long for a star to be
jettisoned. Jagmohan Dalmiya knows that better than anyone else.

Does he miss his million dollar baby? After all, he can’t remain
unaffected by all the accompanying acrimony, the long laundry list of
cases against him and generally how the whole ball of wax has
unfolded. The cookie crumbling rather badly for him. Modi is
diplomatic when he says, “The IPL was - and is - a tremendous
tournament and there is an immense sense of pride at what I was a part
of. So of course I miss the event but the accompanying issues are
something anyone in my position could have done without - and I'm no
different.” Which brings us to the next question, what happened in
those last few days and hours with Srinivasan? Why did things get so
out of hand that he had to sack him as IPL commissioner over e mail?
Modi’s response is muted, “That's pretty much a question you would
need to ask others. Since my departure, the BCCI, largely through the
activities of Mr. Srinivasan, has thrown countless, false and
unsubstantiated allegations in my direction, without any level of
accountability. All of them, have been strenuously refuted by me with
support from substantiated and irrefutable evidence to qualify my
position.” Accepting his karma, Modi says that although it all came
to an abrupt and totally unjustified end, he would rather focus on
what he achieved by bringing the tournament to life in the first
place.

Actually in retrospect if one evaluates the war against Modi and
tabulates the milestones as it were, the real trigger would be Modi
being bested by Sanjay Joshi in the Rajasthan Cricket Association
elections. Board politics runs on votes, just as politics runs
anywhere else in the world. Once Modi was ousted from RCA, and he
didn’t have a formal position in the board, a massive erosion in his
equity took place. That was the catalyst that accentuated his decline
and demise as it were. Again Modi displays candor when he says, “I
suppose that was an issue, yes. The IPL was successful and I was in
the public eye, which some people didn’t seem to like. We had created
a successful product and they wanted a piece of the front-line action.
There were definitely certain people using their status within the
Indian game to make life difficult when, instead, they should have
been enjoying the moment.”

Ironic that Modi who was the toast at cricket grounds for bringing
cricket and entertainment together in a spanking new format is now the
outsider, externed from his own country. Powerful vested interests
within the board seizing the palace and overthrowing the crown prince
in a putsch. Modi, however, maintains that he is a patriotic Indian
and he misses his country very much. He looks forward to the day when
he can return and ‘hopefully that moment won't be too far away.’ Is
something cooking then, is there back channel diplomacy at work to
call off the hounds and allow him to return? He is not willing to
answer any of those queries, in fact, he is being extremely careful
about what he says these days. Modi had many powerful friends
including those among the franchise owners who can play interlocutors
on his behalf. His father K K Modi is a well known industrialist.
Between all of them, there could be a sweetheart deal in the offing
paving the way for Modi’s return.

It is clear that the IPL is struggling, the board and the broadcaster
trying hard to breathe life into the afflicted entity. Season 4 was an
unmitigated disaster. Controversy over Modi’s ouster and subsequently
have left a bad taste in the mouths of the hoi polloi. Many reckon
that IPL was being run like a secret society, one which thrived on a
peculiar type of crony capitalism. Modi was obviously the lynchpin of
the operation, his own larger than life persona domineering. Learnings
for Modi from the debacle: “It would be that we live in a society
where performance and success doesn't always work for you. And neither
does it guarantee you the chance to continue performing or
succeeding! Vested interest sometimes took precedent over the good of
the product and I was simply not ready to accept that. “

Quotes

‘I simply did what was right for the IPL. The success of the
tournament in South Africa was the result of relentless work from a
world class team of people. We had to keep the IPL afloat after the
first year and all the owners supported me. But they only have so much
say and like most sporting federations - a few people who were feeling
left out, ganged up together and they found a natural ally within the
Government. But we kept the IPL alive under near impossible
circumstances.’

‘Srinivasan certainly wanted things done his own way. I pushed back on
some important issues because Mr. Srinivasan was - and still is - the
owner of the Chennai Super Kings and I considered that certain demands
such as trying to hand pick the umpires list in 2010, was a conflict
of interest and not in the interests of the league as a whole. ‘

‘I can only comment on how we approached the format and one of the
strongest elements of the whole IPL concept was to make it innovative
and therefore appealing to the fans, broadcasters and sponsors on an
ongoing basis. But you can only be innovative if you innovate! So we
set out to constantly monitor our product, and analyse how we could
improve and move things along. We weren't trying to re-invent the
wheel with every move, but we did try to keep things fresh. We made
sure we worked with all of our franchisees and partners and I'm sure
the recent issues with Kochi and Sahara haven't helped the preparation
process.’

‘I am in touch with all of the franchise owners. They were and have
always been, good friends and I shall be glued to the TV to see how
their teams fare.’

-MAIL TODAY,8TH APRIL 2012

Whiplash

Indian Paisa League, Indian Performance League, Indian Fatigued
League, call it what you want, the annual cricketing tamasha is back.
A whirligig devised by impresario Lalit Modi who was used by the
cricket board to break the back of Subhash Chandra’s Indian Cricket
League and then dumped to the rubbish heap of history by a conniving N
Srinivasan is trying desperately to breathe. Cricket fatigue stems not
just from the players themselves, but from the entire eco system that
Modi built around the bulge bracket league. Dang, it is now beginning
to hurt. Hurting advertisers, sponsors, viewers, spectators, franchise
owners who try desperately to keep their chins up, the entire ball of
wax.

One can argue that even at the cost of playing too much cricket, the
league has thrown up exciting talent. Talent like R Ashwin, Maneesh
Pandey, Umesh Yadav, Paul Valthaty and so many more, but it has in the
process turned Indian cricket stars into a bunch of tired, weary and
exhausted players. Yes, the money is good. After all Vijay Mallya who
doesn’t have money to pay his pilots and cabin crew forked out in
excess of $2 million for power hitter Chris Gayle.

At the core of Indian Jaded League’s problems is scheduling. With the
ICC giving no clear window for the tourney and the brash and imperious
BCCI sticking to its guns of playing in the abnormal heat of April and
May, half the ‘firang’ players are not available for the first half.
Last year was a sure shot recipe for disaster, a sublime World Cup
fell headlong into the drudgery of the League leading to boredom all
around. In many ways, this is the make or break season for a tiring
IPL, even B Town has decided that it is no longer afraid of the
cougar. Sajid Khan’s Houseful 2 is going to be released on Friday
itself going eyeball to eyeball with what was unthinkable a couple of
seasons back – IPL.

I may still be proved wrong, one power hitting exhibition may well
ignite this season. Yawn, but if the ratings don’t zoom, it will be
zzzzzzzzzzzzzzzzz.
So sorry, I fell asleep…

INTERVIEW - CHRISTINE LAGARDE

What strikes you about the 56 year old International Monetary Fund
managing director Christine Lagarde is her singular poise and bearing.
Speaking softly in her accented English, she will tell you that she
may be the first woman to helm the Fund, but what matters to her is
that she is not the last one. She displays complete candor when she
says, “I suppose it gives you added responsibility. And you have to
grit your teeth a little harder, because you want to demonstrate that
yes, we can do it and other women can do it after me. It’s demanding.
But it’s also a great challenge, a great task and a great job.” A
former synchronized swim champ who is keen on scuba diving and power
yoga, her athletic frame belies her age. After cutting her teeth as
chairperson of Chicago based law firm Baker & McKenzie, she is known
to be called an Americane, her powers of persuasion backed by a lack
of pretension make her a powerful negotiator in the world of high
street finance. In an extensive conversation with SANDEEP BAMZAI, she
reckons that capitalism will survive repeated stress tests that it is
being subjected to.



*You have been saying since late last year that the global economy has
entered a new "dangerous phase". On the face of it, markets seem to
have calmed down in the last couple of months and there has been some
movement from policy makers in Europe to ease the immediate crisis.
Are you any more comfortable with the global scenario today than you
were, say three months ago?
We are not out of the danger zone, but we have avoided the worst. Just
a few months ago, the recovery was in danger of being derailed. Things
have improved—Thanks to strong policy measures—in particular by the
ECB and European countries. Recent economic indicators suggest an
uptick in activity, mostly in the US. But let us not get ahead of
ourselves. Gains could easily be reversed. Major economic and
financial vulnerabilities remain. We need to use this breathing space
to build on what has been done.

*As far as Europe is concerned - a fresh rescue fund for Greece has
been put in place. However the rescue comes with such stringent
austerity conditions that it could push Greece into an even deeper
recession and perhaps even a deeper debt trap. Do you think the
measures being taken with regard to Greece can turn counterproductive?
The Greek government’s new program is explicitly designed to bring
forward Greece’s projected recovery. What are the overall objectives:
it’s growth, competitiveness obviously, and jobs, alongside
sustainable public finances and stable banks. What is crucial is to
increase employment. Unemployment remains high at 18% with youth
unemployment at almost 45%. Fiscal adjustment is essential but it
needs to be smart so it does not snuff out recovery and it must be
done in a way that is fair—for example the rich paying their taxes.
Still, we need to also recognize that the Greek economy is set to
contract further in the short run. The strategy aims at minimizing the
impact on the poorest and most vulnerable. A social spending review
will identify core social programs that should be strengthened to
better support individuals in need. Fiscal adjustment should be done
in a way that protects the poor and most vulnerable, and shares the
burden fairly across the population.

*Are elevated oil prices adding to the problems of the global economy?
And given that the reason for oil price spike seems to be tensions
with Iran - what is the IMF’s view?
The possibility of sharply higher oil prices, driven by
geopolitical-related supply concerns, is a certainly a key risk for
the global economy. The impact on oil prices would be quite large if a
potential or actual disruption in oil supplies involving Iran—the
world’s third largest exporter of crude oil—were not compensated by
increased supply by other oil producers. A halt of Iran’s exports to
OECD economies without offset from other sources would likely trigger
an initial oil price increase of around 20-30 percent, with other
producers or emergency stock releases likely providing some offset
over time.
The IMF is seeking more funds for itself ($500 billion) and s also
asking Europe to increase the size of its firewall. What is the
objective behind this? Are you fearing that other nations may need a
bailout?
The IMF is there to help all its members and we take this very
seriously. We estimate a global potential financing need of $1
trillion in coming years in an adverse scenario. To play its part, the
IMF would aim to raise up to $500 billion in additional lending
resources. Right now, we are consulting the membership. Our financing
is for all members, Euro area or otherwise. Boosting the Fund’s
lending capacity is about two things: Supplementing the resources
Europe will be putting on the table, but also to meet the needs of
“innocent bystanders” affected by contagion, anywhere in the world. A
global world needs global firewalls.
*You have asked other nations in the world including perhaps emerging
economies like China and India to lend more support towards Europe.
How successful has that pitch been?
We are discussing with all our members options for increasing Fund
resources. Emerging markets such as China and India are very important
members and part of these discussions. These resources would be to
help all our member countries, not just Europe.
Emerging market economies will play a bigger role going forward. This
is obvious, and cannot be ignored. Look at the IMF high table – for
the first time ever, there is a deputy managing director from China
and now the secretary of the our executive board is from China. The
proportion of Indian economists at the IMF is double of the Indian
quota. The human and managerial talent from emerging economies will
play a significant part. In fact, the head of the Asia and Pacific
Department at IMF is also an Indian. Asia’s share of capital and
voting rights is going up. The shift of power is taking place as I
look at the quotas. I think advanced economies need to learn from the
way India and China have handled the pressures lately.
*Are you disappointed with India’s economic performance? A lot is
being made domestically of the policy inaction that has pushed growth
rate and particularly investment rates lower…
Indian authorities have said on several occasions and in several
documents, India has the potential to grow at 9 percent, but reaching
those growth rates will require substantial reforms in several areas.
The 12th Plan Approach Paper has identified the right areas for
reforms. I agree that infrastructure especially power and investing in
education and health care, are key. Together with enhanced social
programs, raising agricultural productivity is also very important to
make growth more inclusive. We think also labour market and financial
reforms would boost growth and help create more formal sector jobs and
allow India to capitalize on its demographic dividend. India has
generally pursued a very inclusive reform process, seeking broad
consensus on reforms, which takes time to build, but usually pays off
by reducing the probability of backtracking.
*India seems to be stuck with a persistent problem of inflation. Even
today, after 13 interest rate hikes, we can’t say that inflation
concerns are over. Does that worry you?
The RBI has done the right thing by tightening monetary policy to
fight inflation and we support the resolve at combating inflation that
they have shown over the past couple of years. We also agree that
pausing is currently appropriate as growth has also slowed. Because
inflation has been elevated for some time, it may take some time to
bring it down to the historical averages prevailing in the mid-2000s.
Fiscal consolidation will also help reduce demand pressures. And
finally, easing some bottlenecks, for example in the food supply,
could help deal with the structural pressures on food prices that we
have seen in recent years. The 12th Plan is expected to deal with the
latter. So, the Indian authorities are rightly fighting inflation on
several fronts.

*What can the government do to revive growth and investment?

India is a supply-constrained economy. Bringing back high growth will
require removing those constraints. Reforms that can address this
include those needed to improve infrastructure (e.g. mining, land
acquisition, and energy pricing), the Goods and Services Tax, and
further advancing financial reforms (especially boosting the
development of the corporate bond market). Fiscal and financial
reforms should also be implemented to increase resiliency and make
growth more inclusive. More than anything else, addressing problems in
the power and coal sectors are the immediate priority given the
linkages across all sectors in the economy.
*How do you see the 2012/13 Budget?

I welcome the increase in capital spending and indirect taxes and
initiatives to improve spending efficiency—e.g. pilots on the use of
the Aadhaar (UID) to transfer LPG and kerosene subsidies directly. We
look forward to seeing the fruits of these changes in reorienting
spending from indiscriminatory fuel and fertilizer subsidies toward
capital and social spending, both needed to boost growth and make it
more inclusive. Consolidation remains crucial to rebuild space in case
the global situation should worsen, to reduce inflation pressures, and
to free savings to support growth.
*Is the consolidation in the 2012/13 Budget sufficient?
The important thing is to move India back toward a credible
medium-term path of fiscal consolidation. But delivering such targets
will be the real challenge. Actions taken to broaden the base of
services taxation and reverse excise rate cuts taken during the crisis
are important, and so are measures to reduce the subsidy burden. And
improved targeting may take some time to produce real savings in a
country as large as India. Keeping spending under control,
liberalizing diesel prices, and securing the passage of the DTC and
GST are crucial.
*What is the long-term prospect for India?
India is a bright star with many strengths that will serve it well,
including India’s great entrepreneurial spirit and talent. I welcome
the initiatives to scale up the use of the Aadhaar—India’s Unique
Identification system—which should ensure maximum impact of government
money on the lives of people who need it the most. India also has an
important role as an important voice to the world on behalf of
emerging and developing economies.
As I said earlier, reform is difficult in any country, and in a large
and heterogeneous place such as India achieving consensus can take a
long time. The Budget reiterated the government’s commitment to many
important reforms to taxation and the financial sector and the Fund
strongly supports those. We hope the government can build on those and
move forward with other structural reforms, such as to facilitate
infrastructure investment and liberalize the labor market.

HONEY, THE RATINGS ARE SHRINKING

Arre, yeh kahin ghate ka sauda toh nahin (hope this is not a losing
proposition) is the hot button whisper that one can hear increasingly
in IPL circles. Away from the hype and hoopla of the big cricket
whirligig, a deep undertone of cynicism dogs the bulge bracket Indian
Paisa League. Bottom line is that if you reside in India, you can run,
but cannot hide from the clutches of IPL. For team owners, sponsors,
advertisers, broadcasters, viewers, spectators and all those who form
the IPL eco system; the cricket economy has a buzz about it. Many
reckon that it is the early birds who actually got the worm. For
instance, Emerging Media (Rajasthan Royals) coughed up $67 million
for 10 years.. Let me do the math for you. At $67 million, the
franchise is a steal, for it works out to $6.7 million per year. If
you adjust that for today's exchange rate, it is Rs 34.17 crore. Shah
Rukh Khan also paid a relatively small sum of money in Season 1 -
$75.09 million. Have these franchise owners and others of their ilk
made money over the last four years? At $370 million, this is the way
it breaks down for late entrant Sahara. As a latecomer even after
getting a haircut by putting the board’s knickers in a twist, it has
to basically fork out $30 million or thereabouts per year. Now that is
a lot more than $6.7 million per annum.
Fatigue across this eco system is the single biggest threat percept to
this whirligig. Cricket fatigue impacts players, it hurts ratings and
consequently singes sponsors and advertisers. It also hurts gate
receipts because Bharat Army constituents don’t turn up at the stadia.
The linkages are too strong and fortunes inter-twined and inter
linked. For the franchises, it could well be like Sisyphus as he
attempts to roll the boulder up the mountain. Sisyphus, King of
Corinth, was given an assignment to roll a great boulder to the top of
a hill. Only, every time Sisyphus, by the greatest of exertion and
toil, attained the summit, the darn thing rolled back down again.
Ratings in season 4 were 25 per cent down from the previous year. The
World Cup that preceded the tourney responsible for the slip. This
season may well be worse, for India’s cricketing fortunes have taken a
massive dive, several top of the line foreign players will join in the
second half and a general ennui seems to have gripped the cricket
economy, grappling as it is with a perceptible economic downturn.
Chins may be up across the IPL, but look at the reality. The opening
ceremony ratings were a meager 1.1 which is a shocker, though I must
confess I was astonished at the enthusiasm shown by the Kolkata crowd
at the Eden on Thursday night when they stayed through the
thundershower to watch Irfantastic, one pull shot made the match as he
flat batted De Lange over mid wicket. At another level, Vijay Mallya
is a classic example of being hit squarely in the eye by the slowdown,
his airline Kingfisher needs immediate resuscitation. Yet the lure of
the game made him bid an excessive $2 million plus for Chris Gayle.
Despite not being able to pay his pilots and cabin crew.
How do the franchises make money is then the million dollar question. Simple.
The franchise owners are subsidised by the Cricket Board and its
extension IPL. This is the way it works: Broadcast revenues for one
were subsidising the franchises till the end of Season 2, but in
Season 3, Lalit Modi showed his worth as a marketer. He worked his
numbers in such a way that by clinching a panoply of new deals, he
managed to double the central revenue pool. Each franchise owner was
given Rs 67.5 crore from this pool in year 2. But with the catalogue
of new deals - YouTube, Colors, Karbonn, Maxx, MRF, vRock, et al; Modi
managed to make this particular revenue stream closer to Rs 130 crore
for each team owner. Now, believe me that was a God sent. So, if
Rajasthan Royals has to pay a fixed cost of $6.7 million only and in
turn is getting Rs 130 crore from the central revenue pool, then that
was a positive start. There were other revenue streams that opened up
when the tourney came back to India.. Of course, there is the
operating expenses part, which is equally heavy, but if you are smart
and some of these franchises are, then there is no way you can lose
money. Entry cost is critical, the lower the better. That way the
arithmetic is in the black and not in the red. People who bought the
franchises earlier and cheap stand to benefit. But even Mukesh Ambani,
who paid the most – $111.9 million or approximately Rs 447 crore –
forks out only Rs 44.7 crore as franchise fee annually to BCCI.
What are the major heads that one needs to look at? Revenues and
expenses obviously. Under revenues there is - broadcasting rights now
read central revenue pool, team sponsors, other income which is gate
receipts, in stadia advertising, merchandising sales, media tie-ups
and prize money. Under expenses there is - franchise fee, stadia fees,
team eco-system expenses, which include sales and marketing employee
cost as well as players and support staff payments, team promotion,
travel and hospitality cost and other variable expenses. Team
sponsorship also improved over time and the general average was
closer to Rs 40 crore for each team with Mumbai Indians and KKR
leading the way with Rs 50 crore or thereabouts. This was up from an
average of Rs 24 crore in the first couple of years. Even when the
league shifted to South Africa, logic suggested that the team owners
lost money. I must add that several clubs were given additional
handouts by IPL reimbursing them for hospitality and travel expenses
incurred in South Africa. While some of these figures are in public
domain, others have not been quantified.
The broadcasting revenues were directed to a central pool, 40 per cent
of which went to IPL itself, 54 per cent to franchisees and 6 per cent
as prize money. The money will be distributed in these proportions
until 2017, after which the share of IPL will be 50 per cent,
franchisees 45 per cent and prize money 5 per cent. IPL signed up
Kingfisher Airlines as the official umpire partner for the series in a
Rs 1o6 crore deal. Wonder whether he is still in a position to
continue given Kingfisher’s present financial health. DLF coughed up
Rs 200 crore as title sponsor for five years, and they too are not
keen on continuing after their contract runs out this year. Pepsi paid
$12.5 million to become the beverage partner. Of this, $2.5 million
went to the eight franchise owners every year. In 2008, it is believed
that teams like Kolkata Knight Riders, Mumbai Indians and Delhi
Daredevils earned around Rs 20 crore from ticket sales alone as the
capacity of their home stadia was larger. With ticket prices going up,
KKR (Eden Gardens), MI (DY Patil stadium), DD (Ferozshah Kotla) are
expected to earn in excess of Rs 25-30 crore this year from gate
receipts. All this if the crowds come in droves.

A research firm IIFL had prognosticated that BCCI would make revenues
of Rs 1,000 crore from IPL 2011.According to them the bulk was to come
through franchisee fees of Rs 656 crore. An estimated Rs 198.5 crore
was to come to BCCI from broadcaster SET Max. Central sponsorships
account for close to Rs 53 crore flowing into BCCI's coffers, while
the online rights for this edition will account for Rs 65 crore, said
the report. For broadcaster SET Max, the report suggested that
advertising revenues will touch Rs 939 crore, largely because of
pre-selling 80 per cent of the inventory on the basis of client
expectations from the property's previous edition. IIFL noted that 80
per cent of the inventory was pre-sold at Rs 5 lakh per 10-second
spot. It further estimated that the remaining inventory is likely to
sell at Rs 3.5 lakh per 10-second spot, thanks to a 20 per cent y-o-y
drop in ratings. Each IPL match allows 45 minutes of ad air time.
According to the report, the drop in ratings was attributable to
‘viewer fatigue following the euphoria of the World Cup, and also
large-scale personnel changes in the teams which has diluted some of
the loyalty built up over previous seasons. In any case, this fatigue
factor ensured that SET Max made a lot less than Rs 939 crore, in the
vicinity of Rs 700 crore only. According to data from TAM Sports, a
unit of TAM Media Research Pvt. Ltd, the average rating for the first
37 matches of IPL’s first three seasons was 4.81, and in season 4 this
dropped to 3.26. From the ratings perspective, IPL as a property was a
disaster.

The clarion call for battle has been given by B Town this time. Sajid
Nadiadwala is going head to head with IPL by releasing comedy caper
Housefull 2. I remember producer Vashu Bhagnani once telling me that
‘cricket is all hype, log kitna cricket dekhenge (how much cricket
will people watch), they need a break from it.’ While other B grade
releases dot April, Priyadarshan’s multi starrer Tezz is being
released on April 27 followed by Kunal Deshmukh’s Jannat 2 on May 4.
Ramu’s Department starring Amitabh Bachchan and Sanjay Dutt hits
theatres near you on May 18 when the IPL ‘fever’ will be peaking.

This is the year of reckoning for the floundering league. Buzz that
Rajasthan Royals is going to change hands and SRK’s KKR is looking for
a strategic investor is already doing the rounds. The defining moment
for Indian Paisa League has arrived. Make or Break time.

Vested interests take precedence over the product – Lalit Modi

The larger than life persona of IPL impresario Lalit Kumar Modi now
lives in the anonymity of London. With the possibility of returning
home remote in the short term, one could argue that in the murky world
of cricket politics, present BCCI president N Srinivasan seems to have
‘fixed’ him. The man who gave us a well defined new concept called
cricentertainment recently lost a celebrated case against former Kiwi
star Chris Cairns. In an extensive and rare interview with SANDEEP
BAMZAI, Modi, scion of the KK Modi business empire says that he is
‘patriotic India who misses his country.’ But a string of cases and
look out notices prevents him from coming back. Excerpts from a
conversation where Modi covers ground from his battle royal with
Srinivasan and how vested interests got him:

*When the BCCI had its back to the wall with the threat percept from
Subhash Chandra's ICL, they roped you in to create a counter product
which was bigger, better and had their official backing; then they
dropped you like a hot potato, what changed within the board? Was it
the entry of N Srinivasan and the departure of Sharad Pawar?

There seems to be wide misconception that the IPL was the direct
result of the ICL's launch. This is completely untrue.
I had begun my own work on a League way back in 1996 and actually
announced and launched a 50/50 format. Initially, we had the approval
of the BCCI but they then had a change of heart so for over 11 years I
worked behind the scenes to fine tune the idea.

So when I and my colleagues moved onto the Board late in 2005, we
already had a decent plan. But our first task was to get the BCCI
finances and marketing in order and then I followed with the league
concept. Zee, and other broadcasters had heard about the idea and they
wanted us to work with them but we decided that we would work alone on
the set up and then invite them to contest the Media Rights Tender
when we were ready.
As vice president of BCCI and Head of the Marketing cell, I presented
it to the BCCI members and suggested we should launch. There were a
few who believed in it and there were many who didn't. But as I had,
by that time already helped raise over a billion dollars for the
organisation, they decided to approve it. And that led to creation of
the IPL. It had nothing to do with the presence of the ICL.

As for what changed, well the plan I put together and the way we
executed it - became the talk of the world and I guess some people
wanted to embrace it as their own.


*You nursed the IPL as a product, even took on the Govt and relocated
the tourney in South Africa, why is it that the franchise owners did
not support you when push came to shove?

I simply did what was right for the IPL. The success of the tournament
in South Africa was the result of relentless work from a world class
team of people. We had to keep the IPL afloat after the first year and
all the owners supported me. But they only have so much say and like
most sporting federations - a few people who were feeling left out,
ganged up together and they found a natural ally within the
Government. But we kept the IPL alive under near impossible
circumstances.

*Do you miss the million dollar baby and you cannot be unaffected by
all the accompanying acrimony, your thoughts on the whole ball of wax
as it unfolded?

The IPL was - and is - a tremendous tournament and there is an immense
sense of pride at what I was a part of. So of course I miss the event
but the accompanying issues are something anyone in my position could
have done without - and I'm no different.

*What happened in those last few days and hours with Srinivasan, why
did things get so out of hand that he had to sack you as IPL
commissioner over e mail?

That's pretty much a question you would need to ask others. Since my
departure, the BCCI, largely through the activities of Mr. Srinivasan,
has thrown countless, false and unsubstantiated allegations in my
direction, without any level of accountability. All of them, have been
strenuously refuted by me with support from substantiated and
irrefutable evidence to qualify my position.

But although it all came to an abrupt and totally unjustified end, I
would rather focus on what I achieved by bringing the tournament to
life in the first place.

*Losing the Rajasthan Cricket Association elections was probably the
catalyst that compounded your problems, did you open too many fronts
in the cricket world - from Sanjay Joshi to N Srinivasan?

I suppose that was an issue, yes. The IPL was successful and I was in
the public eye, which some people didn’t seem to like. We had created
a successful product and they wanted a piece of the front-line action.
There were definitely certain people using their status within the
Indian game to make life difficult when, instead, they should have
been enjoying a the moment.

*What is N Srinivasan's animus against you? Where did the problem with
him start?

Again, you would need to ask him that, but he certainly wanted things
doing his own way. I pushed back on some important issues because Mr.
Srinivasan was - and still is - the owner of the Chennai Super Kings
and I considered that certain demands such as trying to hand pick the
umpires list in 2010, was a conflict of interest and not in the
interests of the league as a whole.

*Do you miss india, do you miss the fact that you cannot return?

I am a patriotic Indian and I miss my country very much. I look
forward to the day when I can return and hopefully that moment won't
be too far away.

*What happened in the Chris Cairns case which you lost recently?

We have lodged an appeal against the judgment in this case, so it is
not appropriate for me to comment.

*What do you make of IPL now - season 4 was a whitewash - this year
too sponsors, advertisers are fleeing, spectator and viewer fatigue
seems to have set in, what has gone wrong?

I can only comment on how we approached the format and one of the
strongest elements of the whole IPL concept was to make it innovative
and therefore appealing to the fans, broadcasters and sponsors on an
ongoing basis. But you can only be innovative if you innovate! So we
set out to constantly monitor our product, and analyse how we could
improve and move things along. We weren't trying to re-invent the
wheel with every move, but we did try to keep things fresh. We made
sure we worked with all of our franchisees and partners and I'm sure
the recent issues with Kochi and Sahara haven't helped the preparation
process.

*If there was one learning that emerged from your IPLl/BCCI
experience, what would that be?

It would be that we live in a society where performance and success
doesn't always work for you. And neither does it guarantee you the
chance to continue performing or succeeding! Vested interest sometimes
took precedent over the good of the product and I was simply not ready
to accept that.

*Are you in touch with the franchise owners who you were once the
toast of? Or do they give you a wide berth?

I am in touch with all of them. They were and have always been, good
friends and I shall be glued to the TV to see how their teams fair.

-INDIA TODAY, 5TH APRIL 2012

Disequilibrium

The continuous and consistent plan to emasculate credible and
functioning institutions like the Supreme Court, Central Vigilance
Commission, Comptroller & Auditor General, the Election Commission and
most recently the Indian Army is not just a worrying but increasingly
irksome phenomenon. Interestingly, at least two of the government’s
chief problem children currently – Vinod Rai and General V K Singh –
went to the same school and class in Pilani, Rajasthan – Birla Public
School Vidya Niketan. With the executive having failed to discharge
its duty of governance, since nature abhors a vacuum, it is
constitutional and other institutions that have stepped into the
breach to literally keep us sane and safe. Much like Hans Brinker, the
eight year old boy in a Dutch town called Haarlem who put his finger
in the dike to save his town when it was lashed by storm waters. Even
has democracy was failing, democratic institutions have burnished the
image and flame.
A growing catalogue of unseemly rows which have at times escalated
into a virtual communication gridlock between the executive and the
institutions has left a bad taste in the mouth. Regular kerfuffles
have shown that all is not kosher with this government which reacts
adversely when harangued. In many ways it is a travesty that the Army
is now being viewed with suspicion because of its chief’s actions. At
another level, the government is taking CAG Vinod Rai’s many damaging
reports bitterly and personally, forgetting that the same CAG has also
indicted Narender Modi’s Government. The auditor is merely doing its
job. It used to do its job earlier as well, but with the excessive
overhang of corruption and and in your face media, these reports have
a knack of becoming a ‘pain you know where’ for an already embattled
government.
Take CAG’s latest report on the great coal scam. Despite protestations
and a smoke a mirrors type of strategy adopted by the Govt to deride
CAG on its draft report on coal, one hears that Vinod Rai is sticking
to his guns. The tent poles of the final report are being put in place
and as soon as parliament reconvenes in the third week of April, the
CAG coal report will be tabled. And the figure remains very much the
same – Rs 10.7 lakh crore. A few things need to be made clear after
studying the facts. The so called ‘windfall gain’ is the aggregate
over the life of the mine which is 25 years and not the six year
period of 2004-09 during which allocations were made. This draft
report is based on the notified Coal India’s transfer price at the
time of allocation. Least grade quality (lowest) coal has been taken
into consideration while computing these estimates, which I believe in
coal lingua franca is ‘F’ grade coal. The audit has attempted to
estimate the so called windfall gain based on parameters like cost of
extraction and the notified price of CIL at the time of allocation and
as on March 31, 2011.
As mentioned in the files of Government ‘windfall gain’ is defined as
the difference between CIL’s notified price and the cost of extraction
of coal. It is nowhere the audit argument that the ‘windfall gain’ is
equivalent to the loss to the exchequer. The source of the ‘windfall
gain’ is the discretionary allocation of coal blocks without charging
an upfront price. Since there has been no price discovery through a
bidding process, it can only be conjectured what the upfront price
would be. Auctions would have succeeded only in capturing a
significant fraction of the ‘windfall gain’. Value on date is a
function of net cash flows and their timing which is indeterminate .
The cost of extraction would depend on stripping ratios and the
extractable reserve which could vary from 85% to 95% of the geological
reserve for an open cast mine. Extraction ratios vary significantly
within a region and so does the coal quality based on calorific
values or intrinsic energy content.
Faced with inherent uncertainties in estimation, a natural reaction
would be to just elaborate on the dimensions of the problem and avoid
giving any figures. One hears that therein lies the basic conundrum
for the professional auditor as his Reporting Standards require him to
quantify ‘……the possible effect(s), individually and in aggregate’ of
the gravity of an alleged misstatement or a transgression. In such a
scenario, the practical approach is to suggest a figure to the entity
being audited and arrived at some consensus on figures which could be
considered fair and reasonable. The responsibility for assigning a
financial figure lies on the stewards of public property and not on
the auditors who come in late in the game to provide assurance to
stakeholders. This is amply clear from the ritual opening line given
by all professional auditors in signing off an audit opinion and
should be well known to anyone minimally acquainted with corporate
balance sheets. Dismissing a figure suggested by the auditors as
ludicrous is often a ruse to divert attention from the underlying
materiality or seriousness of a transgression.
The chasm between objectivity and subjectivity can never be bridged.
For instance, I disagreed with the big number that emerged from the
CAG report on 2G. My understanding was based on simple facts – that
there were too many basis used for computation including the S Tel
offer in the courts. That there was a loss to the exchequer was well
established and that daylight robbery took place of precious national
resources on January 10, 2008 was irrefutable. The draft CAG report on
coal clearly throws into stark relief that the cut-off date for
switching from the extant Screening Committee procedure to competitive
bidding of coal blocks was decided by the Government to be 28 June
2004. What is pertinent is that CAG’s audit reports go through the
usual legislative process and do not provide any forensic evidence for
criminal prosecution.
Coming to the figure itself, it is based on an elaborate calculation
with reference to the mining costs and notified prices of Coal India
Ltd in a contiguous region, assumption of 90% extractable reserve and
uniform behavior of output (both quality and quantity), costs and
prices over the life of the mining lease of 25 years. The figure would
go up substantially by a multiple of 3 to 5 if CIL’s notified prices
(long term) for coal linkage are replaced by the spot prices in
e-auction or imports under Open General License. Amounts would
increase further on assumptions of buoyancy in rupee values over the
extended time span. Allocations to Public Sector Enterprises would be
revenue neutral only if PSEs do the mining themselves, which is
unlikely. Since fuel prices are a pass through in power tariffs, the
consumer would ultimately bear the burden of the so called ‘windfall
loot’.
The fragments of the aggregate figure are spread over different time
zones and different beneficiaries. A figure of Rs 10.7 lakh crore or
$212 billion will make the presumptive loss suffered by the Government
in 2G look like small potatoes. This Rs 10.7 lakh crore figure is now
set to rock parliament. The Rs 10.7 lakh crore report is armed and
ready in the silos. The order – FIRE – will have devastating
consequences for this Government because it once again covers a time
line of 2004-2009, even if the figures arrived are calculated on the
basis of 25 years.

whiplash

The coup that never took place. The coup that got lost in the fog. The
waters have been muddied to such an extent between the Army and the
Executive that a story of this magnitude was bound to pop out of the
cupboard. And it did because this rumour was doing the rounds for
close to a fortnight. A well known website ran a story as far back as
March 13 saying that India’s top para outfit 50 Paras based in Agra
ran two major exercises – one scenario was akin to the Maldives coup
and the other of the recent attempt at a Mutiny in Bangladesh. The 50
Para brigade lost its way in the fog en route to Delhi. A three hour
run between Agra and Hindon where they were to lift off in C 130s took
an estimated four and a half hours.

This has now reverberated across the length and breadth of the
country as an attempt to seize the palace. An unwanted colour and hue
has been given to these Army exercises. These manoeuvres are now being
seen as an attempted coup, given the breakdown in civil-military
dialogue due to the General’s obstinate ways. So, what is the real
story behind the attempt at a bloodless coup? It is unprecedented that
for the first time in independent India a whiff of a coup has been
felt and heard. In the continuing saga of smoke and mirrors, a brand
new dimension has been added. A sinister new dimension at that.

The C word has never cropped up in this country. The dreaded C word
may be omnipresent around the sub continent, but its shadow has
hitherto never been seen here. Media’s job is to report and tell the
truth. A leading daily may have unintentionally extrapolated on the
rediff report and sensationalized the story. Or it may have got it
right because as they tell us the event is dated January 16 this year?
But to run a story of this magnitude may well be a disservice to media
and to national interest. An alert media may have miscalculated
because now it is not just the Army chief, but the Armed Forces which
will be viewed with suspicion. Something that is unthinkable in this
country for our proud and vigilant servicemen have defended our
frontiers with selfless gallantry. A travesty?

Whiplash

The game can be so cruel sometimes is a thought process that emanated
from the little big fella Sachin Tendulkar during his media interface
on Sunday. He quickly added that he had a few posers for God after
completing his 100th hundred, “It has been a tough time for me, what
is it that I lacked, was I short on commitment?” It is clear from
these utterances that Tendulkar’s mindspace over the last one year or
so has been dominated by that elusive hundred.

It was nice of him to come out and speak to the media in the manner
that he did. However, curiousity as always killed the cat. Bah, how
dare one ask Tendya when he is going to retire? Means what, he plays
for India doesn’t he? He plays at the pleasure of Indians, yes Indian
selectors. This is the theatre of the absurd, people will always have
opinions in a democracy. We are still one, we haven’t degenerated into
a mobocracy. I might have an opinion of Tendya, so will the next man,
woman and child. Everyone is free to express it.

Nobody and I mean nobody can take his place for granted in the Indian
cricket team. Is the massive eco system that surrounds Tendya jittery
over these calls for his retirement? Dang, why are we obsessing over
Tendulkar’s retirement? The moot point here is simple – if there comes
a time when he is not good enough to represent India, he will have to
make way for a youngster. There is no permanence attached to his
position in the side. Yes, he is one of the greatest batsmen of his
generation. But the same generation also saw Rahul Dravid, Ricky
Ponting, Jacques Kallis and Virender Sehwag.

They will all have to go one day or the other. Old man river wants to
carry on, so be it, but only if his performance levels are upto speed.
Not beyond that.

Whiplash

The General, calm and composed gives two interviews – one to an
obscure Hindi outfit and the other to leading daily – saying pretty
much the same thing leveling allegations of bribery against a former
top notch officer. The executive and media run around like headless
chickens trying to get a fix on what happened. Parliament goes into a
tailspin. The General decides to leave the capitakl to visit
formations in south west sector and then J & K.

So, you are lulled into believing that at least till Friday evening,
there will be peace and quiet. Phew, you wipe your brow and have a
quiet drink. The General may have gone, but he has lobbed yet another
incendiary device. In yet another leak…yes we leak like a sieve…a
letter written to the PM dated March 12 exposes the inadequacies in
the armed forces preparedness. From air defence to tanks to elite
forces to ammo, everything is a no can do.

Complete consternation all around. Throw in the CBI which gets a note
from the Government with a cutting of the General’s interview to the
English daily, asking for the matter to be probed. Consternation now
equals unholy mess with the General running the executive ragged. Why
is the General sullying the Army’s credo but taking on the executive
in this manner? Smoke and mirrors. Oh yes, but increasingly double
jeopardy at work. It doesn’t behove the General to bring this battle
over age, dignity, prestige and honour into the public domain. It
doesn’t wash well that the most credible institution in the country
silently backs the General in this ugly joust with the executive.

As an aside, why did the PMO keep quiet about this letter from the
General for close to a fortnight? And incidentally what was the
General doing about these failings in the defence arsenal for the last
two years that he woke up to the fact at the fag end of his tenure?
Sad denouement of the times that we live in…

Whiplash

Recalibrate, regroup and reorient. The infantry man is on top of his
game. His tenure may well be remembered for the DOB issue which till
the other day was perceived to be his lasting legacy as the chief of
army staff. But once the apex court turfed out the petition, the
Infantry man reloaded and took aim. Fire, he has and boy has he done
damage. Retracing his steps and strategy, he decided that he should
don a new avatar. One of a crusader. A flurry of leaks and letters,
all more or less blasts from the past. Exposing the defence
preparedness inadequacies, the General has endeared himself to one and
all, except the political class which is at sixes and sevens.

In what is the first direct confrontation between the Army chief and
the Executive, the General has shown inscrutability of a sage as he
strikes at will. Finally on Friday, he issued a statement, suggesting,
perhaps coaxing all of us to believe that the entire fracas should not
be viewed as a joust between the Army and the Govt. Excellent tactics,
first strike, then retreat and come back to fight another day.

Muddying the waters all the time, old letters, older deals, even older
deficiencies – going for broke. And the General has support. Support
from servicemen, ex service men, their families who believe that they
have kept quiet for too long, suffering the indignities meted out by
the executive. It is not becoming of the army chief to indulge in this
smoke and mirrors type of gambit. Dignity, honour and prestige is
attached to his office. It is a shame and a travesty that the last
couple of months of his tenure will be remembered for subterfuge and
military tactics being used against a maladroit and inept executive.
Service before self is the motto of the institution which is deeply
revered in this country. Sadly, it is an institution which is now seen
as taking on the executive. Attention…

A brand new affliction called Socialitis

In a long chat with the International Monetary Fund managing director
Christine Lagarde the other day, the conversation veered around to
India as an investment destination. I am now going to tie this up with
a session that I was fortunate to moderate at the India Today Conclave
which had an eclectic panel lined up – opposition in the form of BJP
president Nitin Gadkari, treasury represented by petroleum minister
Jaipal Reddy, policy planner Montek Singh Ahluwalia and a top shot
industrialist Sanjiv Goenka who turned the power situation around in
Bengal. What emerged from this debate was rather simple that there is
consensus outside parliament for getting a move on. A bipartisan
approach to leave what has now become a bane for the economy –
populism – aside. The upshot being that growth in India is despite the
government. Plain and simple. It might be unpalatable for the
politician to read or hear this. But this a hard fact. It now needs to
be accepted in this country. Seven per cent growth can be achieved
with a government on auto pilot. Now nearly eight years of failed
governance is testimony to this fact.

So, what ails the country’s polity? More than that what is this
affliction that plagues the ruling dispensation? Is it called
socialitis? Nitin Gadkari told a rapt audience – We may be in
opposition but for progress, if the Government needs our cooperation,
we are always ready. Heady and impressive stuff. But mostly rhetoric.
For 10 minutes later when asked why the BJP opposed the entry of
foreign direct investment in multi brand retail, he was completely
tongue tied, all eloquence shown a while back consigned to the rubbish
heap. May 2004 is when the UPA came to power, first hemmed in by
Leftist allies and in its second avatar hamstrung by defiant Mamta and
Karunanidhi, always taking refuge behind coalition dharma. Result – a
strange ennui and lassitude – which is akin to being on death row.
Unable to exhale, a default setting takes the ruling Congress led
coalition back to its strong socialist moorings.

I am not grouching about the mega social security safety net that has
been built out in India over these last eight years, but the harsh
reality of an absence of constructive assets being readied as a
consequence belies the notion of the entire action plan. Slippages,
leakages, rampant graft eat away at the very innards of these schemes.
These microbes are all pervasive and all conquering. Battling this
rampant abuse of public exchequer monies should be the priority of a
strait jacketed government. All the economic parameters are working
against the grain – a government battling revenue deficit is trying
desperately to take shelter behind populism to garner votes. A
dangerously rising fiscal deficit has put paid to the best laid plans
of aggressive social spending. Now I bring you to Montek Singh’s
comment at the same conclave – accepting and agreeing with my
prognosis, he said – The economy will grow rapidly no matter what the
Government does, it is a private sector economy.

This is the sum and substance of what Socialitis represents today vis
a vis governance. Socialitis is thus equal to paralysis. It could even
at a pinch be a synonym for socialitis. The growth genie is out of the
bottle irrespective of what the government does or does not do. Lord
Indradev, or the rain gods determine the tipping point. How? Well, if
agriculture which now contributes a mere 18-19 per cent to GDP despite
close to 600 million people living off the agrarian economy gets a
good shower or two and manages to cross four per cent growth, then the
economy gets a jump start and it logs 8.5 per cent plus. Where does
that leave the policy mavens and our politicos who sit in judgment on
the economy? Twiddling their thumbs. This alignment of political and
economic interests is crucial if India is to get to the next level of
competence.

India can grow faster, but unfortunately it is satisfied and satiated
with whatever it is getting. Nine per cent plus can easily be achieved
on a regular basis, we have done it in the past and this is what will
create jobs. Jobless growth is a scary prospect. If India needs to
monetize its demographic dividend, then it has to get a leg up by
rapidly introducing structural reform to widen and deepen the economy.
We are nearly a two trillion dollar economy and growing at the speed
of knots. All this without the government actually doing anything to
help it chug along. Christine Lagarde had a simple comment to make on
this absence of governmental support for reform. She wants India Inc
to raise its voice. Raise its voice to a crescendo so that the
Government is forced to take notice of what it is saying. More than
that it needs to act on the basis of what the private sector is
telling it. What has been noticed over the last 18 months or so is
that a reticent and hesitant private sector is slowly but surely
telling the government to get on the reform bus. It wasn’t politically
correct to tell the government that an overhang of corruption,
bureaucratic inefficiencies and policy inaction have pretty much seen
rigor mortis set in to the main frame of governance in the land. But
private sector dismayed with the recent turn of events has decided the
time has come to put the government under the cosh and ask for an
explanation on why large swathes of government are suffering from
acute paralysis.

This voice needs to become more audible. And it now needs to be heard
by those manning government. Polite noises will not do anymore. That
doesn’t cut ice anymore. India has seen through this charade of the PM
and his office selling pulp fiction on how they are seized of the
reform deficit. Similarly, the finance ministry needs to become more
pro active, it needs to shed its socialistic inhibitions and bite the
bullet on issues of import. Moribund and maladroit, the finance
ministry mandarins are now caught in some sort of time warp with an
existensial question dominating mindspace – shall we shall we not?
Will it be acceptable for our political masters? Only last night I
heard that a top bureaucrat at the centre in a high powered position
prefers to go back to his state cadre as chief secretary because he
reckons there is no future at the centre gripped as it is by a high
degree of inertia. One can turn around and argue that the Congress
has tried but been stymied at every turn. Bhel and Neyveli Lignite
Corporation disinvestment scuppered by the Left and DMK; land
acquisition, relief and rehabilitation, multi brand retail, reform of
railway finances scuttled by an impossible Mamta. A bloating subsidy
bill, a catalogue of social security spending measures all high on
needless populism are proving to be millstones in what is now the most
turbulent phase for an under performing Indian economy.

At the core of the problem is this under performance. India has
enormous potential and head room to grow faster. It can but it does
not want to. It is satisfied with what it has. A complete travesty.
Perhaps the government doesn’t even need to give the necessary policy
push anymore, all it needs to do is put the tentpoles in place for the
right kind of investment climate. A capital starved nation requires a
push. It needs to deepen its infrastructure, energy and power sectors
because only capital chases economic development. But does anyone want
reform? No thank you. Not tonight darling, I have socialitis.