Vivek Kaul
Innovation is a weird word. It means different things to different people. For people working in the marketing department of a newspaper it sometimes means an advertisement which makes it difficult for the readers to read the newspaper.
It could mean a sidebar before the front page which makes holding the newspaper difficult. Or it could mean a newspaper smelling in a particular way on a particular day. It could also mean an advertisement as the front page of the newspaper, something that can really get the regular reader irritated.
And at times it could mean an advertisement being splashed across different stories that appear on the front page of the newspaper. Most editions of The Times of India, for example,have one such advertisement of Britannia Good Day biscuits.
When money becomes the be all and end all of all decisions in life market values tend to crowd out non market values.
The advertisement comes with a tagline har ghante ek tola sona khanke. Five gold biscuits with Good Day printed in their middle are spread through the front page of the newspaper.
One such Britannia gold biscuit in the Mumbai edition of the newspaper appears bang in the middle of a story about a twin murder, where a father strangled his two kids and tried to kill himself.
Surely, the marketing department that places the ads would not have known that a gruesome story would be wrapping the biscuits. Nor could the advertiser have known that his ad may appear at an inappropriate place.
The issue does not relate just to print advertising. Ads placed on internet sites – including possibly this publication – may sometimes send the reading public that money can buy everything. This is how mishaps occur. Also are brands as big as Britannia is okay with advertising themselves in such a way? Bang in the middle of the story of a father strangulating his kids and then trying to kill himself. Is this the association that they want to build for themselves? Or has it all become about hit and run where you can just put an advertisement one day and forget about it the next day?
The question is can money buy everything now? This clearly seems to be the issue in this case.
I recently spoke to Michael Sandel, the foremost political philosopher of our times, who is a professor at Harvard University. A part of this interview appeared in the Daily News and Analysis. Sandel has most recently written What Money Can’t Buy: The Moral Limits of Markets.
As Sandel put it, “The last three decades have been a period of market triumphalism…We have drifted from having a market economy to becoming a market society. And the difference is this. A market economy is a valuable and effective tool for organising productie activity. And market economy has brought prosperity and affluence to countries around the world. A market society is different. A market society is a place where almost everything is up for sale. It’s a way of life in which society uses markets to allocate health, education, public safety, national security, environmental protection, recreation, procreation, and other social goods.”
The Britannia gold biscuit advertisement is a part of this larger phenomenon. Even a story of a father killing his two daughters and then trying to kill himself is – inadvertently – up for sale. As long as some money can be made, nothing else really matters.
And this is a phenomenon visible at other places as well, even temples. You don’t want to stand in the long queue at the Siddhivinayak temple in Mumbai; you can just pay a few hundred rupees extra and beat the queue. Other temples across the country allow you specialdarshan if you can pay a little extra. Religion and god have been turned into a perfect business model which never goes out of fashion. Ask those who paid Rs 2,000 to get darshan of Nirmal Baba.
Sandel gave me an interesting example of Pope Benedict XVI on his first visit to the United States. “When Pope Benedict XVI made his first visit to the United States, free tickets were distributed through local parishes. But the demand for tickets far exceeded the supply of seats. And soon a market for those tickets started to develop and one ticket sold online for more than $200. Church officials condemned this on the grounds that you cannot pay to celebrate a sacrament. Turning what are essentially sacred goods into what are essentially instruments of profits values them in the wrong way.”
This phenomenon has even been visible everywhere from war to even medicines. “In Iraq and Afghanistan there were more paid military private contractors on the ground than US military troops. We never had a public debate whether we wanted to outsource war to private companies,” said Sandel. “Or consider the aggressive marketing of prescription drugs by pharmaceutical companies in rich countries. The funny thing is if you have ever seen the television commercials that accompany the evening news in the United States, you might come around to believing that the greatest health crisis in the world is not malaria or river blindness or sleeping sickness, but erectile dysfunction,” he added.
When money becomes the be-all and end-all of all decisions in life, market values tend to crowd out non-market values. Let me explain this through an example narrated to me by Sandel. “Some years ago in Switzerland they were trying to decide where to locate a nuclear waste site….There was a small town that seemed to be the likely place for the nuclear place site. The residents of the town were asked to, in a survey carried out by economists…if they would vote to accept a nuclear waste site in their community, if the Swiss Parliament decided to build it there. Around 51 percent, or a little over half of the respondents, said they would accept it.”
The economists then asked a second question. “They asked the residents of the community that suppose the parliament proposed building the nuclear waste facility in their community and at the same time offered to compensate them with an annual monetary payment, would they still favour it? You might sense that the number would have gone up to 80 or 90 percent but in fact the opposite happened. The support went down and not up. Adding the financial inducement to the offer reduced the rate of acceptance to 25 percent from the earlier 51 percent. Even when the economists upped the monetary incentive further the decision of the people did not change. The residents stood firm even when they were offered yearly cash payments of $8,700, which was more than the median monthly income of the area.”
So what is the moral of the story? “This is an illustration in which a cash payment can crowd out a non market value. When the people were asked to make a sacrifice for a common good without paying them the majority said yes out of a sense of civic responsibility. But when they were asked to change their mind (with money) many of them said we didn’t want to be bribed. The offer of money changed the character of the offer.”
A similar thing could be happening with the sale of advertising space in newspapers to the highest bidder. If Goliath sets a trend, the Davids are more than likely to follow.
And in this case it isn’t really a good trend. Do you want newspaper readers reading the story of a father killing his daughters and feeling disturbed by it or do you want them looking at the Britannia Gold biscuit ad which appears bang in the middle of the story and thinking maybe even I can win them? Do we want to build a society that is sensitive to what is happening around it? Or do we want to build a society which thinks of winning gold biscuits all the time?
As Sandel put it, “Most people would agree that there is a difference between prostitution, which is paid sex, and non-instrumental and non-monetised sexual intimacy… So do we want a society where everything is up for sale? Or are there certain moral and civic goods that markets do not honour and money cannot buy?”
And that is something worth thinking about.
The article originally appeared on November 23, 2012 on www.firstpost.com
Vivek Kaul is a writer. He can be reached at [email protected]. He has worked for the Times Group in the past.
Month: November 2012
Games companies play: Why you pay more while he pays less for the same product
Vivek Kaul
Indian Railways can even spring up positive surprises, now and then.
Recently while travelling from Delhi to Mumbai I was pleasantly surprised to have been upgraded from third AC to second AC. And this of course meant traveling more comfortably.
On entering the coupe in the second AC bogie I found an elderly lady already sitting there who somehow figured out that I had been upgraded.
“How can they upgrade you? You haven’t paid as much as I have!” she said.
And she was right about it. I was travelling second AC while having paid for a third AC fare.
Nevertheless, this sort of “price-discrimination” has now become a quintessential part of our lives. Airlines are an obvious example. You could have paid many times more than the guy sitting next to you because you booked the ticket two hours before takeoff and he had it all planned out three months back. Yours might be a business trip wherein you need to be a particular place on a particular day at a particular point of time. The person sitting next to you might be simply travelling for pleasure and could have thus planned it all in advance.
When books are first launched they are typically launched in the hardback form. A few months later a cheaper paperback is launched. The hardback is targeted at an avid book reader who just can’t wait to have his hands on the book, and so is ready to pay more. When the bestselling Shantaram first came out in India it retailed for around Rs 1200 in hardback form. Prices finally fell to around Rs 400 for the paperback, which was 66% lower.
But these as I said a little earlier are the obvious examples. Companies have also started using the discriminatory pricing strategy when it comes to electronic products. This has started to happen primarily because being spotted with the latest cell phone (be it an Apple iPhone 5 or a Samsung Galaxy G3) or a tablet (the Apple iPad) gives so much meaning to the lives of people these days. Till a decade back a man’s worth was decided by what he wore. Now it’s decided by the brand of cell-phone that he carries.
What was once a luxury became a comfort and is now almost a necessity for a large number of individuals. When such products are first launched they are targeted at the “geeks” or early adopters who find a lot of meaning in their lives by being the first ones to use the latest i-Pad/i-Phone and hence are willing to pay more for it.
Companies tend to exploit this human need by charging more for freshly launched electronic products. Of course, once companies have skimmed higher prices off these early adopters, they cut prices so that you, I and everybody else, can start buying the product.
In the apparel industry, fresh stocks go for higher rates towards the beginning of a season, whereas as the season ends the same set of clothes is sold at a discount.
The logic behind price discrimination is to divide consumers into various categories and get them to pay what they are willing to pay. As Seth Godin points out in All Marketers are Liars “Ralph Lauren generates a huge portion of its sales from seconds… There are so many of these stores that many of the items aren’t seconds at all.”
So those who are price sensitive buy the “so-called” seconds, those who are not buy the “so-called” originals. Companies try and cash in on this price sensitivity of consumers through price discrimination. Anyone living in Mumbai can go to Parel and buy all kinds of things from the so called seconds shops that swarm the area and get a good discount doing so.
As Jagmohan Raju a professor at Wharton Business School says in an article published by Knowledge@Wharton “Companies…charge people different prices depending on the buyer’s desire or ability to pay…They reap wide profit margins from those willing to pay a premium price. In addition, they benefit from high volume, even at a lower per unit price, by building a wider customer base for the product later.”
But this logic doesn’t always work. Consumers may not mind discounts for senior citizens or lower prices for early morning cinema shows, but they can be touchy about discriminatory pricing.
In the late 1990s Coca Cola developed a vending machine which charged the consumer a higher price on warm days. As Eduardo Porter writes in The Price of Everything “When Coke chief executive Doug Ivester revealed the project in an interview…a storm of protest erupted.” Coca Cola had to ultimately drop the idea.
In September 2000, it was revealed that www.Amazon.com was charging different prices for the same DVDs to different customers. The company denied segregating customers on the basis of their ability to pay, something they could easily figure out from their shopping histories.
The early adopters of Appne iPhone were an unhappy lot when in 2007, the company decided to cut prices of the 8GB model from $599 to $399 within two months of launching it. The company had to placate this lot of customers by offering them a $100 store credit.
However, there are no easy ways of ensuring that your customers do not feel cheated. One way is to differentiate the offering in some way. “Companies have to sell products that are at least slightly different from each other,” writes Tim Harford in The Undercover Economist. ”So they offer products in different quantities (a large cappuccino instead of a small one, or an offer of three for the price of two) or with different features (with whipped cream or white chocolate),” he adds. The products are marginally different, but it gives the company a reliable excuse to charge “significantly” higher prices. The next time you go to a coffee shop try this little experiment by just try saying no to everything extra that the barista tries to offer you and see by what proportion your bill comes down.
Book publishers tend to launch a book in a hardback form. The cost of production of a hardback is slightly higher, but the price difference between a hardback and a paperback is significantly different (as we saw in the case of Shantaram earlier). The hardback is just a way of telling the early buyer that the book firm is offering him something more.
Frequent flyer programmes work in a similar way where the frequent flyer may get a cheaper rate because he is a frequent flyer and thus other flyers do not feel cheated.
Companies practice price discrimination in the hope of raising their average price per unit of sale. This of course works if the core business model of the industry is strong. But even price discrimination cannot rescue a flawed business model.
A great example is the newspaper/magazine industry worldwide. It started putting news and analysis free online while expecting those buying the newspaper/magazine in their physical form to pay a price for it. Of course consumers will take what is free and shun what they have to pay for, especially if it’s the same product. No wonder, worldwide the industry is in trouble. While it was easy to put news/analysis free online and get the so called “eyeballs”, nobody bothered to figure out how would they go about earning money doing the same?
The other example of an industry which has been disaster despite all the price discrimination is the airline industry. As Porter points out “For all their efforts at price management, competition has pushed airfares down by about half since 1978, to about 4.16 cents per passenger mile, before taxes…In terms of operating profits, the industry as a whole spent half the decade from 2000 to 2009 in the red.”
At times companies end up in trouble because of price discrimination practiced by someone else. A spate of websites which sell books at a discount of as high as 40% have been launched in India over the last few years and this has led to bookstores getting into serious trouble. People now use bookstores to browse and check out what are the latest titles to have come out and then go home and order the books online at a discount.
Price discrimination is a new game in town and impacts consumers and companies in both good and bad ways. Hence it’s important, at least, for consumers to be aware when and where are they being price discriminated. Or else, they are likely to react like the old lady who travelled with me from Delhi to Mumbai.
The article originally appeared on www.firstpost.com on November 22,2012.
(Vivek Kaul is a writer. He can be reached at [email protected])
Govt will use your LIC money to offload PSU shares – again
Vivek Kaul
When the going gets tough, the government gets desperate.
The recent auction of the 2G telecom spectrum was supposed to raise Rs 40,000 crore. It hardly raised anything close to that amount.
The disinvestment process which is supposed to raise Rs 30,000 crore during the course of the year has not raised a single rupee nearly eight months into the year.
Also what does not help is the fact that the amount of tax collected seems to be slowing down. As economist Shankar Acharya recently wrote in the Business Standard:“By end September the government’s tax receipts amounted to less than 40 percent of the year’s Budget target.”
During the first half of the financial year (i.e. between April 1 and September 30) the fiscal deficit was at Rs 3,36,000 crore or 65.6% of the targeted fiscal deficit of Rs 5,13,590 crore. Fiscal deficit is essentially the difference between what the government earns and what it spends.
What all this tells us is that the government of India is spending more and more money and is not earning enough of it. Also it is not in a position to control it expenditure.
And that has made it desperate enough to bend its own rules. The Economic Times reports that the finance ministry has allowed Life Insurance Corporation of India to own upto 25% of a listed company. The Insurance Regulatory and Development Authority(Irda) of India, the insurance regulator, allows insurance companies to own up to 10% stake in a listed company.
Irda has blasted the government for going ahead with this decision. As The Economic Times reports “The Insurance Regulatory & Developmental Authority, which had in 2008 amended investment norms to prohibit an insurer from holding more than a 10% stake in a company, openly criticised the government’s decision, with Chairman J Hari Narayan saying it was against prudence. “It is against the (Irda) Act and against any prudence,” he said.”
And for once I agree with Irda. There are multiple reasons for the same. As George Orwell wrote in Animal Farm “All animals are equal, but some animals are more equal than others.” The government is working on this principle by allowing LIC of India to own up to 25% of a listed company when the other insurance companies can own only up to 10% of a listed company. There can’t be two separate rules for companies in the same line of business, which is insurance in this case.
Also what happens in a situation when LIC ends up investing in a company which turns out to be a dud? Imagine what would happen when LIC decides to get out of the shares of such a company. The stock price of the company will fall impacting returns of investors who have bought insurance plans from LIC. As the old saying goes “putting all eggs in one basket” is a pretty risky proposition and goes against the basic principles of investing.
So the question is why is the government going ahead with a move which is fundamentally so wrong? As Hari Narayan toldThe Economic Times “They have to understand the gravity of the issue and the potential danger…I do not agree with the government.”
But the thing is that the government is desperate to raise money one way or another. Its attempts at selling the 2G telecom spectrum have flopped miserably. It also knows that with all the scams its credibility is at an all time low. And if it tries to sell shares of public sector companies in the open market, the process might flop in the same way that the recent 2G spectrum auction did.
Hence, in this scenario the biggest hope for the government is LIC. The trouble of course is that in some of the companies that the government wants to sell shares of, LIC may already have a stake which is close to the mandated 10%. So to get around this the government has raised it to 25%.
As The Economic Times put it “The enhanced limit could herald good news for the struggling disinvestment programme as the finance ministry could lean on state-run LIC, the largest insurer, to deploy its funds to buy hefty stakes in public sector companies that the government may find hard to sell in the open market.”
So the government is getting ready to dump its stake in various public sector units to LIC. Money is being moved from one arm of the government (LIC) to another(the central government’s annual budget).
As I had written in another piece recently when it comes to LIC it is best placed to carry out such operations in the last three months of the financial year (i.e. between January and March). At that point of the year people start seriously thinking about their tax saving investments and in large parts of the country that means buying a new LIC policy or paying the premium for the existing ones. And that’s when the insurance behemoth has a lot of cash which can be used to rescue the government by picking up shares of companies that it decides to disinvest. Given this, the change from 10% to 25% has been made just at the right time.
The only loser in the process is the individual who puts up his hard earned money into insurance plans of LIC and ends up financing the fiscal deficit of the government. This is nothing but another form of “financial repression” where the premium that Indians pay towards their LIC insurance policies will end up financing the fiscal deficit of the government.
Hence, don’t be surprised if you LIC agents aggressively marketing unit linked insurance plans (Ulips) which invest in stocks very aggressively for the remaining part of the year. They will have no other option. The instructions will come from right at the top.
Also what this does not do anything about the basic problem which is that the Indian government is spending much more than what it can write cheques for.
The article originally appeared on www.firstpost.com on November 21, 2012.
(Vivek Kaul is a writer. He can be reached at [email protected])
A Himesh Reshamiya fan comes out of the closet
Vivek Kaul
It’s one am in the morning. And I have had the same song playing on loop on my laptop for the last three hours. It’s been written, composed and sung by Himesh Reshamiya.
The song is Tera Pyar Pyar Pyar Hookah Bar from the Akshay Kumar starrer Khiladi 786. There is something very infectious about the song. I can’t really figure out why I am hooked onto it. I guess in this day and age of complex multilayered songs this is a simple tune which one can hum.
With the music of Khiladi 786 Reshamiya is well and truly back. The album has the music director who for a brief period became more famous for his hair weaving, crooning songs in his famous (or should we say infamous) nasal twang.
If you thought Aashiq Banaya Aapne was too much then try listening to Lonely Lonely Tere Bin and you might find yourself shouting O Banwariya by the end of it. The song has Yo Yo Honey Singh rapping along with Reshamiya.
For those who are the old fashioned kind and prefer people singing through their mouth and not through their nose will appreciate Saari Saari Raat Soye Na Hum. Okay, I have to admit that there is a slight nasal twang in Himesh’s voice even in this song. But then the nasal twang is to Himesh what yoddling was to Kishore Kumar.
Himesh Reshamiya burst onto the scene as a singer with the big hit Aashiq Banaya Aapne. The nasal twang in his voice reminded me of the Pakistani singer Hasan Jehangir who sang the hit song Hawa Hawain the late 1980s (The video of the song that I have uploaded is from this movie called Don 2 and try spotting the rather dilapidated Shah Rukh Khan’s Mannat in the background).
Hawa Hawa achieved cult status and rose to as high as the second position on the Cibaca Sangeet Mala (or was it Cibaca Geet Mala, I really don’t remember). Back then it was the only countdown show and used to be on air every Monday at eight o’ clock on Vividh Bharti (It had moved from Radio Ceylon by then). Years later I was devastated to know that the song was not an original had been copied from the song Havar Havarsung by the Iranian singer Kourosh Yaghmaei.
Okay, Okay, I am deviating, but that’s the trouble with writing on movies and music. So we were talking about Reshamiya and I thought his voice had a nasal twang which was similar to that of Hasan Jehangir but the twang was much more pronounced in this case
And I also thought that like Jehangir before him he would be a one song wonder. But I, like a lot of others, was hopelessly wrong on this one. He belted out one hit after another as a singer as well as a music director. The irony of course was that even though everyone was listening to his songs no one would admit to the same. I realised this on a random day in Ranchi while visiting my parents in 2007 and humming a song called Jummeratfrom Phir Hera Pheri all day long.
But I wasn’t supposed to like Himesh Bhai. Okay, I told myself, this is a temporary phenomenon, I will soon get over it. But the fact of the matter was I liked what I heard.
It was fashionable to listen to non hummable songs of A R Rahman but Himesh’s music was for the auto-rickshaw drivers. As a columnist in the Daily News and Analysis asked in July 2007 “Only autowallahs and taxi-drivers listen to his kind of music,” I was told. “We who sit in the passenger seat don’t.” Oh! This raised more fundamental questions in my mind. So, apparently, when Himess(Himesh Reshamiya i.e.) became the first Indian to perform at the Wembley, all of India’s auto, taxi and truck drivers must have flown to London to attend his concert? Or perhaps it was attended only by London’s taxi-drivers?”
“And what about the savvy lot who run our FM channels? They all know that their target audience is the young, cool, hip, urban, intelligent, upwardly mobile (or Ipod/Iphone),” the column went onto ask.
In between all this Reshamiya decided to become a hero. And at the same time decided to give music only in those movies in which he starred.
His first film as a hero was Aap Ka Suroor. The nasal twang of Reshamiya reached monstrous proportions with the song O Huzoor – Tera Tera Tera Suroor. Other than having ten songs sung by Reshamiya it also had the for the very first time in the history of Hindi cinema the hero wearing a baseball cap throughout the movie.
The next one was Karzzz. But even all the extra zzz’s and Reshamiya without the baseball cap could not save the movie at the box office. Ironically this was a remake of the earlier Karz made by Subhash Ghai. Ghai had ripped off the movie from The Reincarnation of Peter Proud and still got paid Rs 3 crore for the remake rights. Talk about having your cake and eating it too.
Himesh Reshamiya’s next film as a hero was Radio. The film had some fantastic music and I personally feel its Reshamiya’s best album till date. It includes a personal favourite Daamad Ji Angna Main Padharewhich Reshamiya has sung along with Kailash Kher. His next film Kajraare directed by the former actress Pooja Bhatt saw a fairly limited release.
And Himesh’s acting career was more or less over after this. But Reshamiya was only trying to do what a lot of other famous singers have done in the past i.e. become a hero. Mukesh stopped singing for a while in the early 50s when he wanted to become a hero and decided to sing only for himself. The dashing Talat Mehmood went through the same phase of wanting to become a hero and soon other singers were singing for superstar Dilip Kumar.
In the early 70s Shailendra Singh was Rishi Kapoor’s voice in Bobby. But he had acting aspirations as well and became neither a famous singer nor a famous actor. In the recent years Sonu Nigam has fallen into the same trap and is no longer the top male playback singer.
There are very few singers making it big as actors. One of course is the great Kishore Kumar. But his best songs came after he had more or less quit acting. The only true singing superstar that Hindi cinema has ever had is Kundan Lal Saigal who drunk himself to death at a young age of 43 because he had this thing in his head that he sang better when he was drunk. By the time he realised this mistake it was too late (Dr Rajkumar, the kannada superstar, sang a lot of his own songs. He also sang bhajans).
The moral of the story for Himesh bhai is that he should stick to what he knows best and i.e. giving music and belting out superhit songs with a nasal twang.
In the meanwhile I am waiting for his next nasal song and am also ready for the hate mail. Bring it on, women!
The article originally appeared on www.firstpost.com on November 20,2012.
Vivek Kaul is a writer. He can be reached at [email protected]
What Manish Tewari is trying to do is confuse us – like Sibal
Vivek Kaul
The urdu poet Bashir Badr once wrote “dil ki duniya purani dilli hai, job hi guzra hai usne loota hai.” (Loosely translated which means that the heart’s world is like Old Delhi, whoever has passed through has looted it).
The politicians who run the current United Progressive Alliance (UPA) operate out of New Delhi, and like the chieftains of the yore who robbed Old Delhi, they continue to rob New Delhi and in the process India.
One such robber politician is A Raja who sold 122 telecom licenses at Rs 9,200 crore in 2008, a price which was significantly lower than the price the government could have got if it had auctioned the licenses. The Comptroller and Auditor General(CAG) made four estimates of the losses on account of this. These losses worked out to Rs 57,666 crore, Rs 67,364 crore, Rs 69,626 crore and Rs 1,76,645 crore.
As is wont in such cases the media ran with the highest figure and put the losses on account of shenanigans of Raja at Rs 1,76,000 crore. But even a loss of Rs 57,666 crore was no small number.
The Supreme Court canceled these licenses. The government recently tried to auction these licenses again. Its aim was to raise Rs 40,000 crore from these auctions. It managed to raise only Rs 9,407 crore.
This prompted Manish Tewari the newly appointed minister for Information and Broadcasting to ask “Mr CAG, where is the Rs 1.76 lakh crore?”
Tewari went on to add that “I think it is time for some serious introspection. It’s time the CAG introspects on his processes and it is high time that the BJP and some of the other opposition parties, which had made this their holy-grail and swansong of politics over the last two years, should publicly apologise.”
The comment is along the lines of Kapil Sibal’s famous zero loss theory on the CAG’s estimates of the losses to the government on account of Raja’s shenanigans. “The logic underlying this estimate is completely flawed. Government policy is formulated with a view to maximising public welfare, and not merely to maximise Government revenues. The pricing of different natural resources is often done in a manner that meets this objective,” Sibal had said justifying the decision of the government to sell telecom licenses in 2008 at the same price as they had sold in 2001. “No loss at all. Zero is the loss…It (the calculation made by CAG) has embarrassed the government, it has embarrassed the nation.”” Sibal declared.
But how does the government explain the fact that Unitech, a company which got the license in 2008, went around and sold 60% of its stake to Telenor for Rs 6,120 crore even before it had constructed a single tower to launch a mobile phone service. It had paid only Rs 1651 crore for the telecom licenses. Shouldn’t this money have realistically flown into government coffers?
So what can safely be said was that Sibal was essentially trying to complicate the issue in order to confuse the nation. As a recent profile on Sibal in the The Carvan magazine puts it “There was a method to Sibal’s madness. This was his opening statement before the court of public opinion, and he had unquestionably taken the strongest possible line in his client’s defence. That few seemed to believe him was beside the point. His audacity had muddied the waters just enough to introduce doubts in what had looked like an open-and-shut case, demonstrating that a sufficiently strenuous and elaborate defence of the indefensible could perhaps make it defensible after all.”
Manish Tewari is working along similar lines and trying to complicate the issue or as The Caravan puts it in Sibal’s case “muddle the water just enough”.
We need to understand a few things here to basically look through Tewari’s statement. CAG used various methods to arrive at the loss estimates that it did. For the estimate of Rs 1,76,645 crore, CAG used the prices that companies paid when the 3G licenses were auctioned in 2010. The logic being that if the telecom licenses had been auctioned in 2008 and companies had paid the same prices that they did for 3G licenses in 2010, the government could have made Rs 1,76,645 crore more than it actually did.
Similarly other ways were used to arrive at other loss estimates. Another loss estimate of Rs 69,626 crore was based on the price at which Unitech sold 60% of the stake in its telecom business to Telenor immediately after getting the telecom license in 2008.
So, yes, there was a loss to the government and the nation when A Raja sold off 122 telecom licenses for Rs 9,200 crore. There is no beating that irrespective of what Tewari now and Sibal earlier had to say.
Let’s come back to the recent telecom auction and the inability of the government to raise much money from it, something that prompted Tewari to ask “Mr CAG, where is the Rs 1.76 lakh crore?”
Just because the government couldn’t raise as much as it was expecting to from this auction does not mean that the way the government went around selling telecom licenses in 2008 was correct. Second, much has changed between 2008 and 2012. The finances of the Indian government are in a mess. Inflation and interest rates are high. And economic growth is stagnating. Hence, telecom companies are no longer in the mood to pay the high prices that they did for 3G spectrum in 2010. Also, if the government raised the kind of money that it did with the 3G auction in 2010, imagine the kind of money it could have raised had it decided to auction telecom licenses in 2008 when the financial crisis had not yet broken out, instead of giving them away on a first come first serve basis.
But Tewari is working along expected lines. He is a lawyer by qualification who was expected to muddle up things as a spokesperson for the Congress party. And he is working along similar lines after taking over as the minister for information and broadcasting, a post from which he can hope to effectively control opinion.
As Noam Chomsky, the world’s foremost living intellectual, points out in How the World Works “Ultimately, the governors, the rulers, can only rule if they control opinion…This is true of the most despotic societies and the most free… If the general population won’t accept things, the rulers are finished.”
In this day and age of the internet where it is very difficult to totally control opinion that is going around, the best a ruler can do is muddle the opinion and that is what Tewari is trying to do in this case.
Also having been in the party for too long Tewari has now tasted real power and is trying to do a Sibal. The Caravan in its recent profle of Sibal wrote “Among the country’s chattering classes, his innumerable television appearances and indefatigable zeal for defending the indefensible have made him a favourite target for mockery and derision—in which he typically appears as a caricature combining the worst qualities of lawyers, politicians and out-of-touch elites. But Sibal is well aware that his prominence within the party depends on these over-the-top performances, and it could be argued that no other politician has taken better advantage of the present age of around-the-clock television shoutfests and exaggerated sound-bites.”
This could have easily been written for Tewari as well.
The article originally appeared on www.firstpost.com on November 19, 2012.
(Vivek Kaul is a writer. He can be reached at [email protected])