Tag: Sharad Pawar | Vivek Kaul

16 September, 2014

Vinod Rai has had the last laugh on Coalgate. Here’s why

Vivek Kaul

In an interview with the Business Standard in September 2013, Jairam Ramesh was asked why the Congress party was losing ground so badly in urban India. “Because of the bhumihar from Ghazipur,” Ramesh replied. He was referring to the former Comptroller and Auditor General (CAG) of India, Vinod Rai, who had retired from his post in May 2013. The CAG in a series of reports had exposed the wrongdoings of the government.
As Rai writes in Not Just an Accountant—The Diary of the Nation’s Conscience Keeper “Jairam Ramesh was a regular visitor to the CAG headquarters for discussions on the audit of the national rural employment guarantee programme. His discussions did indeed lend value. In one of the conversations with me, he asked why N.K.Singh, the Rajya Sabha MP representing the Janata Dal(United), used to refer to me not only as a bhumihar but as a ‘bhumihar from Ghazipur’. I told him I did know what it meant.” Rai further writes that even his caste was brought into prominence, “and this after sixty-seven years of independence.”
Ramesh’s quip against Rai was a part of a series of statements made by leaders of the Congress party to discredit him. This after, the CAG had meticulously gone about exposing wrongdoings of the government in the telecom, coal, sports and aviation sectors.
Manish Tewari, the Congress leader who can speak on just about anything, said that the “R-virus has infected the Indian growth story. The R-virus stands for a phenomenon were responsible individuals decide to become loose cannons.” On another occasion Tewari said “When individuals decide to go rogue, institutions suffer. That possibly has the most detrimental effect on the India growth story.” Sharad Pawar, who is a part of the UPA, and was the food and agriculture minister in the UPA government said “CAG has taken certain decisions that have created a different atmosphere in the country… I haven’t seen anything like this in the forty-five years of my career as a politician.” Montek Singh Ahluwalia, the deputy chairman of the Planning Commission, went on to claim that “untrained staff [is] auditing CAG reports.” The business lobby ASSOCHAM even went to the extent of releasing advertisements which said that CAG reports were sending wrong messages. The advertisement went on to state “The CAG’s conclusions over the 57 coal block allotment appear to have been arrived at without taking all facts into consideration. Only one of the 57 blocks has gone into production.”
The then finance minister P Chidambaram even went to the extent of saying that the government had faced no loss from giving away coal blocks free to private and public sector companies. “If coal is not mined, where is the loss? The loss will only occur if coal is sold at a certain price or undervalued,”Chidambaram had said.
In order to understand this statement we need to go back to the early 1990s. The government at that point of time realized that enough coal was not being produced. The Coal Mines(Nationalisation) Act was amended with effect from June 9, 1993. This was done largely on account of the inability of Coal India Ltd (CIL), which produces most of India’s coal, to produce enough coal.
The coal production in 1993-94 was 246.04 million tonnes, up by 3.3% from the previous year. This rate was not going to increase any time soon as newer projects had been hit by delays and cost over-runs, as still often happens in India. As the Economic Survey of 1994-95 pointed out “As on December 31, 1994, out of 71 projects under implementation in the coal sector, 22 projects are bedevilled by time and cost over-runs. On an average, the time over-run per project is about 38 months. There is urgent need to improve project implementation in the coal sector.”
The idea, as the Economic Survey of 1994-1995 pointed out, was to “encourage private sector investment in the coal sector, the Coal Mines (Nationalisation) Act, 1973, was amended with effect from June 9, 1993, for operation of captive coal mines by companies engaged in the production of iron and steel, power generation and washing of coal in the private sector.”
The amendment to the Coal Mines (Nationalisation) Act 1973 allowed companies which were in the business of producing power and iron and steel, to own coal mines for their captive use. Hence, the coal that these companies produced in these mines was to be used to feed into the production of power and iron and steel. Any excess coal was to be handed over to the local subsidiary of the Coal India Ltd.
Between 1993 and 2011, 195 coal blocks were given away for free to public and private sector companies for captive use. Most of these free coal blocks were given away between 2004 and 2011. Nevertheless even by 2011-2012, these coal blocks produced only 36.9 million tonnes of coal. This amounted to around 6.8% of the total production of 539.94 million tonnes during the course of that year.
And because very little coal was being produced in these captive mines, this led Chidambaram and the industry lobby Assocham to put forward the argument that since coal was not being mined how did the government face any losses? This was a really stupid argument to make. The government handed over a natural asset free to private and public sector players. They, in turn, were not able to mine coal from it quickly enough. How does that mean that the government did not face any losses? It does not change the fact that coal blocks were essentially handed over for free.
As Rai puts it in his book: “I thought any prudent and concerned industry body would have questioned the urgency to allot when the allottees had not even commenced mining. But then, since every person who wanted to display his loyalty to the government was hastening to take potshots at the CAG, why not an industry body?”
Interestingly, Manmohan Singh explained the inability of the private coal producers to start producing coal quickly enough by saying “it is true that the private parties that were allocated captive coal blocks could not achieve their production targets. This could be partly due to the cumbersome processes involved in getting statutory clearances.”
This Rai says is a defeatist argument. As he writes “This does appear to be a defeatist argument; if the government is aware that the processes are cumbersome and accords the process urgency, it is incumbent on the government to take steps to ensure speedy clearances.”
The CAG came in for heavy criticism for coming up with a loss figure of Rs 1,86,000 crore for these coal blocks being given away free by the government. In his book, Rai explains with great clarity how this number was arrived at. The CAG worked with most conservative estimates while coming up with this number. While calculating the loss the CAG did not take into account the coal blocks given to the public sector companies. Only blocks given to private sector companies were taken into account.
The total geological reserves of the coal blocks given away for free amounted to around 44.8 billion tonnes. The total amount of coal in a block is referred to as geological reserve. But not all of it can be extracted. Open cast mining of coal typically goes to a depth of around 250 metres below the ground whereas underground mining goes to a depth of around 600-700 metres. Beyond this, it is difficult to extract coal.
The portion of the geological reserves that can be extracted are referred to as extractable reserves. The CAG worked with fairly conservative estimates on this front as well. Typically extractable reserves are around 80-95% of geological reserves. As Rai writes “Audit based its computation on [the] conservative estimate of 73 million tonnes for every 100 million tonnes given in the GR [geological reserve]…Can audit be faulted if its computation was based on a conservative estimate of 73 per cent?…The extractable reserves…based on the aforementioned method, was found by the CAG to be 6282.5 million tonnes, which is mentioned in the report.”
So only 6282.5 million tonnes of the 44.8 billion tonnes of geological reserves was assumed as extractable reserves while calculating the losses of the government due to giving away coal blocks for free.
After establishing the extractable reserves the CAG needed to establish the price at which this coal could be sold as well as the cost of production of this coal. For establishing the price at which the coal cold be cold, the CAG considered three possible options.
“The first was by imports. The average import price of non-coking coal sourced from Indonesia during 2010-2011 was Rs 3,678 per tonne (Indonesia supplied most of our non-coking coal imports). The second source was the coal sold in e-auction by Northern Coalfields Limited, a subsidiary of CIL [Coal India Ltd] based in Singrauli. The third and major source of coal supply in the country was that which was mined and supplied by CIL. Audit utilized the only creditable data available in the public domain—that of CIL. CIL is regularly audited by the CAG, so its accounts and other details can be taken as authentic. From the audited accounts of 2010-2011, the average sales price of all grades of coal sold by CIL was taken as Rs 1,028 per tonne. This was the most conservative price too,” writes Rai.
After this, the cost of production of coal needed to be established. For this, the CAG again went back to CIL, which produces most of the coal in the country. As Rai writes “The average cost of coal mined by CIL was found to be Rs 583 per tonne. The MoC has indicated, after due verification, that the financing cost ranged from Rs 100 to Rs 150 per tonne. To be on the safe and conservative side, audit assumed it to be at Rs 150. Thus, while the average sale price was Rs 1,028, the average cost was Rs 583 plus Rs 150, namely Rs 733,” writes Rai.
Manmohan Singh later criticized this calculation by saying “the cost of production of coal varies significantly from mine to mine even for CIL due to varying geo-mining conditions, method of extraction, surface features, number of settlements, availability of infrastructure etc.”
By taking the average cost of production these are exactly the factors that CAG was taking into account. And this left Rs 295 per tonne (Rs 1028 minus Rs 733) as the financial benefit. So Rs 295 of financial benefit per tonne was multiplied with 6282.5 million tonnes of extractable reserves and a loss figure of close to Rs 1,86,000 crore was arrived at.
As you can clearly see the most conservative estimates had been used to arrive at a loss number. If the CAG had not used these conservative estimates it could have easily put out a much bigger number for these losses.
Another criticism that the CAG came in for was that the loss calculation did not take the concept of net present value(NPV) into account. “Even if discounting had been done to arrive at the NPV, we would have possibly projected an annual increase of 10 per cent in cost/sale price, and we would then have discounted, at, say, a discount factor of 10 per cent. We would have got to an NPV of financial gain of Rs 2.40 lakh crore, at 11 per cent of Rs 1.86 lakh crore and at 12 per cent of Rs 1.49 lakh crore. There is no substantial difference. Hence, why all the ire?”
In the end, Vinod Rai has had the last laugh. The Supreme Court in a recent decision deemed the allocation of coal blocks to be illegal. And for those who are still not convinced about the way Rai operated as the CAG, it is time they read his book.
The article appeared on www.FirstBiz.com on Sep 16, 2014

(Vivek Kaul is the author of Easy Money. He tweets @kaul_vivek)

26 June, 2014

It’s the politics, stupid. Why onion prices will continue to cross Rs 100 per kg

Vivek Kaul

A recent report in The Economic Times said that onion prices may touch Rs 100 per kg by October 2014. The report pointed out that “hailstorms and unseasonal rain in the past, along with the weak start of the monsoon season has created scarcity and strong inflationary pressures.” For the week between June 12-18, 2014, the rainfall had been 45% below the normal.
If this trend continues, chances are that vegetable prices in general and onion prices in particular may rise in the months to come because a lack of sufficient rainfall will lead to a fall in production. Nevertheless, vegetable prices have risen over the last few years, despite a steady increase in production.
A standard explanation for the inflation in vegetable prices over the last few years has been that the demand for vegetables has far exceeded their supply. Data provided by the National Horticultural Board tells us that India produced 129.07 million tonnes of vegetables in 2008-2009. This number had gone up to 170.2 million tonnes in 2013-2014.
This meant an absolute increase in production of around 32% over a period of five years or an increase at the rate of 4.67% per year. This is a reasonable rate of increase though not a fantastic one. During the same period the vegetable prices more than doubled. Given this, there might be some truth in the argument that demand for vegetables might have outstripped their supply.
But this is clearly not true at least in the case of onions. The onion production in the country has gone up at a rapid rate over the last few years. In 2007-2008, it stood at 9.14 million tonnes. This more than doubled to 19.3 million tonnes in 2013-2014.
Hence, Indian farmers are clearly producing enough onions. Also, it is safe to assume that demand for onions couldn’t have suddenly doubled over a period of five years. So, what explains the fact that onion prices have crossed Rs 100 per kg several times over the last few years and in the months to come the same scenario might play out again? The simple answer is hoarding. While most vegetables cannot be hoarded given that they rot quickly, onions last easily up to six months. This leads to their hoarding by traders in Nashik, Navi Mumbai and the Azadpur (in New Delhi) mandis.
As the report titled Competitive Assessment of Onion Markets in Indiawhich was commissioned by the Competition Commission of India points out “A few big traders having well connected networks with market intermediaries in other markets seem to play a major role in hoarding for expected high prices.”
These traders typically start hoarding onion in the post harvest season. By doing this they manage to tighten supply in the lean season. “The lean season also happens to coincide with start of major festivals and ceremonies like marriages in India. This clearly manifests itself during months of September to January, in which the supply from onion producing regions is minimal and festivals like Dasera, Dipawali, Eid, Chrismas and marriages and other ceremonies put higher pressure on the demand of onion,” the report points out.
It is not difficult for the government of the day to identify who these traders are. But most of these traders are close to political parties. Take the case of the traders operating at out Nasik and Navi Mumbai. These traders are known to be close to Sharad Pawar’s Nationalist Congress Party. Given this, it was not surprising that when Pawar was the agriculture minister he regularly made statements that drove up onion prices. (You can sample a couple of statements here and here)
Economist Devinder Sharma in a blog written in December 2013 points out “The Azadpur mandi traders association in Delhi is aligned to the ruling Congress party. In Punjab, on the other hand the traders associations predominantly back the ruling SAD-BJP combine.”
This explains to a large extent why politicians tend to look the other way when onion prices are rising, and they even go ahead and make insensitive statements. Take the case of Kapil Sibal, who when asked about the rise in onion price in September, 2013 had said “Ask the traders this? The government does not sell onions.”
Given this, it is not difficult for the government to control the price of onion, if it wants to. All it needs is a few basic steps. As the report commissioned by the Competition Commission of India points out “For these, measures such as cancelling license for a temporary period; putting fines and penalties, and monitoring closely the behaviours of traders for any intentional hoarding, could be taken.” Of these measures, monitoring the behaviour of traders for any intentional hoarding is the most important.
Having said that, the onion production may have seasonal variations and that may drive up the price of onion. But that still does not explain the astonishing rise to Rs 100 per kg several times over the last few years. As Shreekant Sambrani writes in the Business Standard “ A five per cent reduction in its supply supposedly causes a 50 per cent increase in its price. While its per capita availability trebled in the last decade (faster than the per capita income, which doubled), its price rose fourfold in the same period.” Hoarding is the only possible explanation.
Potato, is another vegetable, which like onions, doesn’t rot immediately, and hence can be hoarded. Potato production has grown at the rate of 6.2% per year between 2008-2009 to 2013-2014 to 46.4 million tonnes. Between 2012-2013 and 2013-2014, the production grew by only 2.3% but the prices over the last one year have shot up by more than 30%. Hoarding is a major reason for the same.
Given this, the government needs to ensure that the prices of onion and potato are decided on true market demand and supply, and not because of hoarding. The inflation that the people faced during the second term of the Congress led UPA government was a major reason why the Narendra Modi led BJP was elected to power.
Hence, it is important for Modi and his government to do all that they can do on the inflation front. If they don’t, there will be trouble ahead. As Sambrani puts it “Inflation is a two-edged sword. Hurt in the pocketbook, the aam aurat could start venting her wrath on the new government. Onions don’t respect ideology while bringing tears.”
The article originally appeared on www.firstbiz.com on June 26, 2014.

(Vivek Kaul is a writer. He tweets @kaul_vivek)

23 October, 2013

With onion touching Rs 100 per kg, food security is a joke

Vivek Kaul
Rahul Gandhi, aspiring politician and vice-president of the Congress Party, recently said that his mother cried when she couldn’t cast her vote on the Food Security Bill. Of course, the tears of a mother are precious to any son. But what about the tears in the eyes of the aam aadmi as onion prices touch Rs 100 per kg, in some parts of the country?
As per the recently released wholesale price inflation numbers, the price of onion has risen by 323% in the last one year. Vegetable prices during the same period went up by 89.37%. Fruits were up at 13.54%. And all in all food prices were up by 18.4% in comparison to the same period last year.
So why have onion prices been rising at such a rapid rate? Research Analysts Neelkanth Mishra and Ravi Shankar have some sort of an answer in a report titled Agri 101: Fruits & vegetables—Cost inflation dated October 7, 2013. A few states dominate the production of vegetables. “In particular, Maharashtra dominates the onion trade (45% of national production by value), while West Bengal produces 38% of India’s potatoes, 49% of India’s cauliflower and 27% of India’s aubergines (brinjals),” write Mishra and Shankar.
And it is this concentration that creates problems. As the Credit Suisse analysts point out “This concentration creates problems in generating a nationwide supply response in case a particular geography sees bad weather or any other disruption (e.g., onions in Maharashtra). This also drives significant variation in prices across the country.” Rains had damaged the rabi crop of onions, which is produced between March and May. The kharif crop of onions has also been damaged by unseasonal rains. This crop starts coming into the market by the end of September.
But has this led to a shortage of onions in the country? R P Gupta, director of National Horticulture Research & Development Foundation told the Week magazine recently that “I have been saying since July that there is no shortage of onion in the country..Official figures show that 27.5 lakh metric tonnes of onion were stored during February and May. Monthly consumption of the country is only 7-8 lakh tonnes per month…. So, where was was the problem of shortage?”
The only possible explanation is hoarding by traders in the key onion producing state of Maharashtra. As is well known the Agricultural Produce Marketing Committee (APMC), which runs the onion trade in Maharashtra, is largely said to be controlled by Sharad Pawar’s Nationalist Congress Party.
As the Week article points out in the context of the Lasalgaon mandi in Nashik, Asia’s largest wholesale market for onions “Powerful traders…manipulate the market. They book stocks from farmers at low prices, much in advance. Thousands of tonnes of onions are hoarded to create a short-supply. And as the prices spiral up, the hoarded stocks are released. It was such an artificial scarcity that allegedly spiked onion prices to record highs. “Traders in Lasalgaon Agricultural Produce Market Committee alone earned more than Rs.150 crore in just four days (August 12-15) this year,” says Dr Giridhar Patil, a farmer-activist.” This explains to a large extent why onion prices have been high all through the year.
The supply chain for the onion to move from the farmer to the end consumer remains very weak. As a recent Wall Street Journal article pointed out “A cultivated crop by a farmer in a far-flung village goes through as many as four intermediaries before reaching the local vegetable market in a semi-urban or urban area. These middlemen, wholesalers, traders and commission agents, usually charge fees and analysts estimate that by the time the vegetables make it to the stands in a retail market, their price has increased by almost six times.” This explains to a large extent why at times there is no link between the wholesale price of onions and the final price at which you and me buy it at. s
The Times of India reports that on October 22, 2013, the average wholesale price of the new onion crop at Lasalgaon was Rs 3,900 a quintal. This was 37% cheaper than in the summer. Despite this, prices at the retail level have not dropped.
NCP boss Sharad Pawar, who also happens to be Union Minister of Agriculture, had said on September 17, 2013 that “There is a lot of talk about the rise in onion prices; however, when prices fall no one shows any concern for the farmers. When farmers are getting more money for their produce we should not complain.”
Now if onion is coming in at Lasalgoan mandi in Nashik at Rs 3900 per quintal or Rs 39 per kg, and selling in Delhi at Rs 100 per kg, how is the farmer gaining? As explained above, it is the middlemen who are making the bulk of the money.
In fact, a study commissioned by the Competition Commission of India(CCI) in 2012, came to a similar result. The study titled Competitive Assessment of Onion Markets in India found that “onion trade is unilaterally dictated by the traders and not farmers for the reasons: (i) Average farm size of onion growers is quite low. Unfavorable weather conditions and price risk for these small farmers resulted for a minimal role in price formation; (ii) Traders buy small lots from the market yards and pool the produce for sorting or grading at their packing houses and market different grades to different markets all over India. Lack of trading expertise, market knowledge and risk bearing capacity has prevented most of the farmers to make any dent in onion trading. Therefore, most of the trading is in private hands; (iii) Farmers generally take reference of the local markets‟ rates, while traders compare rates of all markets, including major distant and export market and then decide where to send their produce of a particular grades. This brings greater profits to them…(vi) Lack of capacity to conduct multiple roles (wholesaler and commission agent) prevents farmers and their organizations to compete with traders.”
Also, most farmers, unlike traders do not have storage facilities. So they end up selling onions as soon as they produce it. The Week report cited earlier points out “This year, however, almost 80 per cent of the rabi crop was bought by traders (in the Lasalgaon mandi) at Rs.800 to Rs.1,200 a quintal by February-March. So, only a maximum of 20 per cent of the total crop was left with farmers who had storage facility.”
In fact, these traders even collude to drive up prices. As the CCI study found out “Collusion was observed among traders in selected markets in Maharashtra and Karnataka, For instance, a visit to Ahmednagar APMC revealed that there was collusion amongst traders. While bidding on certain lots was taking place, traders started with about Rs 300 per quintal and kept bidding higher prices till one trader quoted Rs 400 per quintal and another bid at Rs 405 per quintal. The commission agent stopped the auction and produce was shared between two wholesalers. It should also be pointed out that in Vashi market about 60 per cent of farmers reported that sales were undertaken through secret bidding.” The APMC markets referred to above are controlled by the NCP.
So farmers are not the ones benefiting from an increase in onion price, even if Pawar wants us to believe that is the case. Also, even if one believes that the farmers in Maharashtra are benefiting what about farmers in other states of India? Aren’t they paying a significantly higher price for onions? The last that I checked Sharad Pawar was the agriculture minister of India and not Western Maharashtra.
The reaction of the government to this rise in onion prices has been very high handed. The telecom minister Kapil Sibal, when he was asked on September 17, if onion prices will rise further, had said “Why don’t you ask the traders this? The government is not the one selling onions,”.
This was the last thing one expected a senior minister in the UPA government, which has been very committed to the idea of food security, to say. Onion is an essential ingredient in almost all curry that Indians make, whether it is to cook vegetables or meat. And given that, it is an important part of food security.
Onion prices have rise at the rate of 323% per year. The vegetable prices have risen at the rate of 89% per year. The food security of the aam aadmi is in danger as the government sits around doing nothing as usual. Half of the expenditure of an average household in India is on food. In case of the poor it is 60% (NSSO 2011).
Rahul Gandhi in a recent speech in Madhya Pradesh had said “They don’t understand that one can’t talk of development when the stomach is empty.” He had also said that “we understand your hunger.” Does he?
Or does the government want to supply rice at Rs 3 per kg and wheat at Rs 2 per kg, to two thirds of the country, so that people can buy onions at Rs 100 per kg? The joke as usual is on us.
The article originally appeared on www.firstpost.com on October 23, 2013
(Vivek Kaul is a writer. He tweets @kaul_vivek)

30 May, 2013

Why Pritish Nandy is thoroughly wrong about the IPL

Vivek Kaul
Pritish Nandy has a major grouse against those who seem to be spending a lot of time in unearthing the rot that has set into the Indian Premier League (IPL). Or so he points out in a blog titled Three idiots and a scam that won’t die.
He feels that this attention to the cricket’s biggest money spinner is undue and is taking away attention from other important issues that plague the country. He also feels that at the end of the day, it doesn’t really matter because Indians will still watch cricket, match fixing or not.
As he writes “The day news channels were chasing Gurunath Meiyappan all the way from Kodaikanal to Madurai to Mumbai to the Crime Branch at midnight, millions were happily sitting in front of their TVs watching Mumbai Indians battling Rajasthan Royals at the Eden Gardens, proving yet again that there are two Indias with their own sets of concerns and priorities. I confess I was among those watching the game, rooting for Rahul Dravid whose team lost with a ball to spare.”
This is a rather specious argument to make. A lot of people watched the match Nandy is talking about (including this writer). And among those who watched a significant portion must have been rooting for Rahul Dravid and Rajasthan Royals(including this writer). Now that does not mean that people are not bothered about the rot that has set into the IPL and wouldn’t want the dirt to come out. In fact, I can make a similar generalisation and say that a lot of people that I know stopped watching IPL after the spot fixing allegations came out. Also, people were interested in the match to see how Dravid and Rajasthan Royals perform after three of their cricketers were arrested for spot fixing. Truth, as is always the case, is mutli-layered.
Nandy feels that N Srinivasan should be allowed to continue as the President of the the Board for Control of Cricket in India (BCCI). Srinivasan is also the Vice Chairman of India Cements, the company which owns Chennai Super Kings (CSK), the best performing team in the IPL. The logic that Nandy offers is that “a father-in-law is the last person to know what his son-in-law is up to. Allowing him to stay in his holiday home in Kodaikanal is not the same as endorsing his petty vices or (as yet unsubstantiated) attempts to fix IPL matches.” That is a fair point when viewed in isolation.
But how does Nandy explain the zeal with which Srinivasan has gone about disassociating himself and CSK from his son in law Gurunath Meiyappan? The people of this country have even been told that Meiyappan was just an enthusiastic supporter of CSK and nothing more. This despite the fact that there is a lot of evidence in the public domain to the contrary. Gurunath Meiyappan’s Twitter account clearly said he was the Team Principal of the CSK. So did his visiting cards.
As the old adage goes Caesar’s wife should be above suspicion which is clearly not the case here. At least till the various investigations into spot fixing are over, Srinivasan should stay away from the BCCI. And anyway there is a huge conflict of interest with Srinivasan being the BCCI president as well as the Vice Chairman of the company which owns CSK.
As the India Today points out “Srinivasan’s team (CSK) is under the jurisdiction of the tournament’s governing council, which in turn is under his own jurisdiction as the board’s all powerful boss.”
Nandy gives further reasons in support of Srinivasan and calls for the status quo to be maintained. As he writes “But I really think we are all playing into the hands of those who have much more to hide than these dolts. Srinivasan’s enemies (and heaven knows, he has far too many of them) are having a field day. But ask yourself, do you really care whether he heads the BCCI or Sharad Pawar. Or Rajiv Shukla.”
This is a statement which has fallen victim to the fallacy of relevance “two wrongs make a right”. What Nandy is basically saying here is that I know Srinivisan is the wrong man for the job, but then so are Sharad Pawar and Rajeev Shukla, and given that Srinivasan should continue. But since when have two wrongs started to make a right?
Nandy also rues the fact that so much attention has been given to the spot fixing in IPL that the retirement of Vinod Rai, India’s bravest Comptroller and Auditor General has gone unnoticed. As he writes “What bothers me is the carpet bombing scam coverage that ensured there were no goodbyes for the man who with evangelical zeal exposed the sleazy underbelly of Indian politics over the past 5 years, and did his best to set it right. Worse, there was no debate over who his successor ought to be. So the Government sneaked in its own nominee, clearly to undo some of the outstanding work Vinod Rai, India’s bravest Comptroller and Auditor General did in his own low key style.”
In case Nandy does read India’s largest selling English newspaper, The Times of India (Nandy’s blog is published on the newspaper’s website) he would have realised that on May 20, 2013, a full page interview with Rai was published. Now when was the last time you saw a mainstream newspaper carry a full page interview with a retiring bureaucrat? Forget that, when was the last time you saw a mainstream newspaper carry a full page interview with a politician?
Rai’s retirement was well covered by other newspapers as well. Hence, holding IPL responsible for Vinod Rai not getting a proper send off from the media doesn’t really hold. And more than that the media played a huge role in publicising a lot of what was written in the CAG reports on the various scam. Rai admitted to as much in the interview when he said “The other factor that worked in our favour was you – the media, the 24×7 channels. Media has become so alert and it knows what needs to be highlighted. From our report, the media picked up only substantial issues.”
Nandy feels that all the attention that IPL has drawn is putting other issues on the backburner. “Several other crucial issues that were being debated in the public space, like China’s incursions in Ladakh, the Vadera land deals, Muslim youth arrested and held for years on trumped up terrorist charges and now being released and, above all, the Supreme Court demanding the freeing of the CBI from the Government’s unholy clutches are now on the backburner. Even the Ranbaxy issue, where intrepid whistle blower Dinesh Thakur exposed the grave misdemeanours of one of India’s leading pharma companies and the dangers implicit in those for millions of us who buy its products, have been largely ignore,” he writes.
Let’s take the Ranbaxy issue here first. The company has to pay a fine of $500 million for selling adulterated drugs in the United States. This is big news, which was covered on the front pages of most English newspapers. But is this piece of news bigger than spot fixing in the IPL? The answer is no, simply because more readers would want to read about spot fixing than Ranbaxy. And a newspaper has to cater to that basic need.
This will happen anywhere in the world. The readability of any piece of news is likely to decide how much it is played up in comparison to other news. Let me give an example here to elaborate. Lets say baseball or basketball in the United States faces fixing allegations. At the same time some big drug company (lets say Pfizer) is fined for selling adulterated drugs. Which piece of news is going to get more coverage in general American newspapers? Of course the fixing scandal. A business newspaper on the other hand may concentrate more on the drug company. Most Indian business newspapers have covered the Ranbaxy story in great detail.
Also, if any newspaper were to concentrate more on the Ranbaxy issue and not on spot fixing in the IPL, it would lose readers, given that other newspapers wouldn’t be doing the same. Nandy having been an editor in the past, should surely understand this rather basic point.
As far as the other issues like freeing the CBI from clutches of the government is concerned, a lot has been written by newspapers, magazines and websites. And as and when some new information comes out they will surely get back to it.
Nandy concludes his piece by saying “Frankly, my dear I don’t give a damn.” There are number of reasons that the spot fixing issue needs to be sorted out through and through. In the year 2000, a certain Mohammed Azharuddin was accused of match fixing. A lot of evidence was put forward. But ultimately other than a life ban nothing really happened. Azharuddin is now a Congress MP. Another accused Ajay Jadeja, is now a cricket expert on television. It is important that those responsible for the spot fixing in IPL be punished enough so as to ensure that they don’t come back to public life again.
India is a country starved of heroes. Our politicians are corrupt. Our bureaucrats are corrupt. And our businessmen are corrupt. Its the cricketers who are our roles models. And if these role models also turn out to be corrupt, who will we look up to? Given this, the mess in the IPL needs to be sorted out.
Let me conclude with the oft used cliché. Cricket is not just a sport in this country, it’s a religion. And when you mess around with religion, people are bound to be angry.
The article originally appeared on www.firstpost.com on May 30,2013
(Vivek Kaul is a writer. He tweets @kaul_vivek)

17 May, 2013

Indian politics and its Lalu Prasad Yadav syndrome

Vivek Kaul
During his heydays in the 1990s and the early 2000s, Lalu Prasad Yadav never organised political rallies.
He organised Railas.
These were very big political rallies held at the Gandhi maidan in Patna. And they were deemed to be so big by Lalu that the feminine sounding word ‘rally’ proved inadequate to describe them.
Hence a new word Raila was coined.
But time passed and the world went around, and in the end the old adage ‘you can’t fool all the people all the time’, came true in case of Lalu as well.
These days Lalu is a minor player both at the state and the central level. Given this, every few months you can hear him saying nice things about Sonia Gandhi, whenever the opposition parties choose to attack her.
A couple of days earlier Lalu went back to his favourite method of political engagement. He organised a parivartan (change) rally in Patna (and not a Raila). News reports suggest that Lalu hired thirteen trains to ferry his supporters to Patna for the rally.
This is a huge change from the usual. In the Bihar, that this writer grew up in, a rally would mean an open invitation to the supporters of Lalu to board any train that they wanted to.
Also like any good father would, Lalu used the occasion of the parivartan rally to soft launch his sons Tej Pratap and Tejashwi into big-time politics. Tej Pratap is a BA drop out and Tejashwi was a budding cricketer who played one Ranji trophy match for Jharkhand in November 2009. He was also a part of the Delhi Daredevils IPL team, warming his bum on the bench for a few seasons.
It is interesting if we compare this launch with that of Lalu’s own launch into serious politics which happened in the early 1970s. Lalu had quit student politics in 1970, after he lost the election for the post of the President of the Patna University Students Union (PUSU) to a Congress candidate. Before losing this election, Lalu had been a general secretary of the PUSU for three years.
As Sankarshan Thakur writes in Subaltern Sahib: Bihar and the Making of Lalu Yadav, “On the eve of elections of Patna University Students Union (PUSU) in 1973 non-Congress student bodies had again come together, if only for their limited purpose of ousting the Congress. But they needed a credible and energetic backward candidate to head the union. Lalu Yadav was sent for.”
The trouble of course was that Lalu was no longer a student. He was an employee of the Patna Veterinary College by then. But then those were the seventies and the state was Bihar, so not being a student was a small problem that could be fixed.
As Thakur writes “Assured that the caste arithmetic was loaded against the Congress union, Lalu readily agreed to contest. He quietly buried his job at the Patna Veterinary College and got a backdated admission into the Patna Law College. He stood for elections and won. The non-Congress coalition in fact swept the polls.”
And this set up Lalu for the big league as the agitation launched by Jai Prakash Narayan, against Indira Gandhi, gathered speed. The next year i.e. 1974, the agitation against Indira Gandhi spread throughout the country. As Thakur writes, “An agitation committee was formed, the Bihar Chatra Sangharsh Samiti to co-ordinate the activities of various unions and Lalu Yadav as president of PUSU was chosen its chief.” These events catapulted Lalu Yadav into the big league from which he never looked back. He became a member of the Lok Sabha in 1977 at a very young age of 29. He became the Chief Minister of Bihar in 1990.
But the fact of the matter remains that he if he wasn’t asked to contest the 1973 PUSU elections, Lalu might have never returned to politics and probably retired by now from the Patna Veterinary College.
Lalu was lucky because he was at the right place at the right time. His sons are lucky because they are his sons. The next generation of politicians(even those who are not a part of electoral politics) is always luckier to that extent. They already have a base that has been built to work from.
But the question does the next generation respect this base because of which they get lucky? And they answer seems to be no, as a spate of recent examples show. Robert Vadra, with his land dealings in Haryana and Rajasthan, has been a huge embarrassment for Sonia Gandhi, her son Rahul and the Congress Party.
Sharad Pawar had to recently come to the rescue of his nephew Ajit, after he made insensitive comments in drought hit Maharashtra. Mamata Banerjee’s IIPM educated nephew Abhishek stands accused of running Ponzi schemes in West Bengal. News reports suggest that UP Chief Minister Akhilesh Yadav has been spending a lot of time trying to settle ‘who gets the government contract’ dispute between his step brother Prateek and his first cousins. Pawan Bansal, had to recently quit as the Union Railway Minister after the Central Bureau of Investigation (CBI) caught his nephew Vijay Singla for running a jobs for bribes racket in the Indian Railways.
And there are examples from the past as well. Atal Bihari Vajpayee’s spotless reputation as the Prime Minister of the country was marred by the dealings of his foster son-in-law Ranjan Bhattacharya. J Jayalalithaa’s weakness for her foster son V Sudhakaran tarred her reputation. The late Pramod Mahajan’s son Rahul was and continues to be an embarrassment.
The late Prime Minister PV Narsimha Rao’s son Prabhakar was accused of being involved in the urea scam in the 1990s. If we go back a little further, Moraji Desai, the fourth prime minister of India, had to deal with allegations of graft against his son Kanti Desai. Kanti Desai had allegedly collected Rs 80 lakh for party funds misusing his position as the PM’s son. Raj Narain a minister in Desai’s cabinet, even came up with the slogan “Hamse kya parda hai, Kantike haath mein garda hai (Why hide it from us, Kanti’s hands are muddied).”
Jagjivan Ram could have become the first dalit Prime Minister of independent India if he hadn’t been embarrassed by his son, Suresh Ram. Nude pictures of Suresh were published in a magazine called Surya, which was edited by Maneka Gandhi. The pictures showed him in a compromising position with a 21 year old student of Satyawati College, Delhi University, called Sushma Chaudhury, who he eventually married (On a slightly different note Suresh’s sister Meira Kumar is the speaker of the current Lok Sabha). “If the Kamasutra has 64 poses of making love, this one certainly had 10,” wrote Khuswant Singh in a later column, with regard to these pictures.
As veteran journalist and editor Inder Malhotra has been quoted as saying “In fact, in many ways Suresh Ram tried to emulate Sanjay Gandhi and received the same shelter from his father which Sanjay got from her mother. It was a game of one-upmanship.”
And Sanjay Gandhi, among all the sons, daughters and relatives of politicians, was the biggest embarrassment of them all. His dictatorial ways ensured that the Congress party was thrown out of power for the first time since independence in 1977 (For a detailed study on this Vinod Mehta’s The Sanjay Story is an excellent read). Indira Gandhi who was known to be very stern otherwise continued to be a mother when it came to Sanjay.
The broader point is that the politicians’ weakness and love for their progeny (or even other close relatives) puts them in embarrassing situations. At times, the progeny are acting as fronts for the shenanigans that the politicians indulge in and at times they are on their own. But in either condition there is a cost that is to be paid for.
A major reason that Lalu Prasad Yadav finally lost in Bihar was because of the shenanigans that his saalas (brothers in law) Sadhu Yadav and Subhash Yadav, indulged in. They had the political patronage of Rabri Devi, who was the Chief Minister of Bihar. News reports coming out now suggest that Lalu’s two sons are also not the best of buddies. And this can’t be good news for Lalu Yadav whose political fortunes have taken a huge beating since 2005.
All the politicians who promote their progeny in politics and allied areas, need to thank Indira Gandhi. If it wasn’t for her, politics in India would have never become a family owned business. As historian Ramachandra Guha said in a lecture titled Verdicts on Nehru: The Rise and Fall of a Reputation (Second V. K. R. V. Rao Memorial Lecture, Institute of Social and Economic Change, Bangalore, 20 January 2005) “After Nehru the Congress chose Lal Bahadur Shastri to become Prime Minister, a post on which he quickly stamped his authority. Mrs (Indira) Gandhi herself may never have become Prime Minister had not Shastri died unexpectedly. She was chosen by the Congress bosses as a compromise candidate who (they thought) would do their bidding. But once in office Mrs Gandhi converted the Indian National Congress into a family business. She first brought in her son Sanjay and, after his death, his brother Rajiv. In each case, it was made clear that the son would succeed Mrs Gandhi as head of Congress and head of Government. Thus, the ‘Nehru-Gandhi dynasty’ should properly be known as the ‘(Indira) Gandhi’ dynasty.”
India is still paying the costs of this monstrous mistake as almost all politicians now want to pass on the baton to their progeny and other relatives close to them. Professor Pulin Garg of Indian Institute of Management Ahmedabad used to say with regard to family owned businesses in India “Haweli ki umar saath saal ( a family owned business lasts for 60 years).” It will be interesting to see how long political hawelis last on an average? That will be a big determinant of which way India goes in the decades to come.
The article originally appeared on www.firstpost.com on May 17,2013
(Vivek Kaul is a writer. He tweets @kaul_vivek)