Time for some transparency
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Time for some transparency

It’s one thing for an industrialist to pay off a politician to build a factory; quite another for him to corner our gas, our coal, our spectrum, our iron ore or whatever. Allow industrialists to do this and you will end up with a new league of super-businessmen, not unlike Russia’s oligarchs who nobody can ever touch, writes Vir Sanghvi.

india Updated: Jun 21, 2009 09:55 IST
Vir Sanghvi
Vir Sanghvi
Hindustan Times

On the grounds that there’s not a lot happening this week, I’m going to focus on something that seems slightly obscure and out of the headlines but is actually crucial to the future of India.

If you look at the way the election campaign was conducted, two sets of economic issues kept cropping up again and again.

The first was the debate between those who wanted more reforms and those who wanted more inclusive growth. The second — and this actually really dominated the headlines during cabinet formation — was the view that crooked ministers should be kept out of money-making ministries.

No matter how much we respect Manmohan Singh for his personal integrity, there’s little doubt that over the last five years, thousands of crores were made by crooked ministers in his government.

Both concerns stemmed from the same basic fear. Most of us support liberalisation, we see the need for more investment in key sectors and we recognise that as younger people enter the job market we must create more employment.

Our fear is that under the fig-leaf of liberalisation, corrupt ministers and civil servants will conspire to sell off our resources for the benefit of a tiny minority of corporate fat cats.

Already, I have a growing sense that the middle class is beginning to wonder about whether corporate concerns take precedence over the interests of the rest of us. It is only a matter of time before this feeling filters down to the poor.

Let’s take the war between the Ambani brothers. I’ve known both for a long time and have consciously refrained from taking sides in their battle. But now, even I am beginning to wonder just what the hell is going on.

Few of us laypeople understand what the recent court battle — which ended in a victory for Anil — is about but from what I can tell it relates to the purchase of gas from the government. Mukesh had paid for the gas and Anil argued that he deserved to also get it at a lower price because of some agreement with his brother.

I have great respect for the courts and little understanding of the law but as far as I can tell, the judge basically said that the MoU between the two Ambani brothers had precedence over everything else because this was a special case. They should go back to Mummy who would decide how to divide our gas between her two children.

Here’s what I don’t understand: why is this a special case? And why should an Indian natural resource like gas be sold at prices fixed according to an MoU between two brothers? I’m sure they love their mother and that she loves them but is this how gas is allocated? The Ambanis are welcome to their fight but do we have to pay the price?

I would like to believe that much of the other stuff that is being whispered in industrial circles about how India’s resources are being allocated is untrue. But nobody can deny that many businessmen gossip about the way in which Reliance was allowed to transfer excess coal allocated to it for its Sasan project to other ventures.

The UPA government had earlier said that this could not be done. Then at the first meeting of the ministerial group on August 14, 2008, after the trust vote on July 22, 2008, the government changed its mind.

Sceptics suggested that this was either one of the conditions for Samajwadi support or at the very least, Manmohan Singh’s way of saying thank you to the SP.

Amar Singh insists that there was no deal to this effect and so, I imagine, do Anil Ambani’s people. I am happy to accept their denials but it does this government’s reputation no good for people to feel that the price it paid for survival was crony capitalism.

But why single out the SP? Throughout the life of the last government, it was an open secret in Delhi that the Telecom Ministry was being run on a cash and carry basis. The figures being flung around for the bribes (thousands of crores) are so massive that I find it hard to believe them. But nobody in the know — not even the Prime Minister, in private, I would imagine — disputes that the Telecom ministry was not run on the basis of integrity and fairplay.

Once again, it is a natural resource that is being frittered away. Spectrum is in short supply and telecom tycoons plot and scheme to get their hands on it.

But anybody who knew how to pay off the DMK had no difficulty in cornering spectrum.

I could go on. There’s very little doubt that in such mineral-rich states as Jharkhand, iron ore is being allotted on the basis of bribes paid to key figures. Nor is this true only of Jharkhand. It’s happening in other states as well.

It is corruption of this nature that worries those of us who support liberalisation. We worry that even as we are naively singing the reform song, crooked industrialists and politicians are milking the system dry. Honest business houses — the Tatas, for instance — struggle to get their projects off the ground while the more unscrupulous ones thrive. Last week, I interviewed L.N. Mittal, who is ready to invest billions in India but who has faced needless delays and obstacles in every single project so that the investment is still to reach India.

Most of us do not get too self-righteous about corruption; we have been brutalised by decades of it. But I think we feel differently about attempts to sell off our scarce resources.

It’s one thing for an industrialist to pay off a politician to build a factory; quite another for him to corner our gas, our coal, our spectrum, our iron ore or whatever. Allow industrialists to do this and you will end up with a new league of super-businessmen, not unlike Russia’s oligarchs who nobody can ever touch and who become laws unto themselves.

And yet, as long as allocations are done by corrupt ministers, bent regulators, dishonest chief ministers and on the basis of family agreements, this is exactly the direction in which we are heading.

Along with most of India, I have enormous respect for the Prime Minister. Not only is he an honest man, but he is also a brilliant economist. Plus, he has worked in government for long enough to understand the nuances of the system.

He must recognise the danger to our scarce resources. He must know that we cannot afford to become a land of oligarchs. And I’m sure he realises that this goes beyond corruption — it touches the core of the kind of India we want to create.

Surely, he can come up with some transparent system which allocates resources fairly and without corruption? Anything would be better than the present system.

During the last government, we said that the Congress was not in a position to prevent the allies from making money. That’s no longer true. The distinguishing feature of this government is that the Congress is strong and the allies are weak.

Manmohan Singh is better placed to crack down on corruption than ever before.

My hope is that he will do so, that he will end the cosy family cartels, will prevent the oligarchs from emerging and will give up the sordid deals by which trust votes are won on the basis of business arrangements.

What’s at stake is not just the future of his government or the liberalisation process.

It is the future of our children that is at stake.

First Published: Jun 20, 2009 21:29 IST