Fact #1 Idea of nuanced ethics
The published annual accounts of major political parties, as
Gurucharan Das writing in TOI recently explained, reveal that official receipts
of funds were less than 10% of the estimated funds required for only fighting
the central government and state government elections by the number of candidates
the respective parties typically field. By his calculations, Congress (biggest
party) declared less than Rs.500 crores annual receipts leaving Rs.4500 crores
to be raised by other means. BJP’s respective figures are about 25% lower, not
because they are cleverer or more honest but because they field fewer
candidates.
Everyone knows that better part of political party’s fund
requirements must be met from quid pro quos or cuts built into large deals –
based either on patronage (benign form in which the beneficiary is complicit)
or arm twisting (malevolent form in which victim must cough up cash under
threat of prosecution for violation of laws which are designed to be difficult
or impossible to comply or denial of a contract or permission which in normal
course ought to be granted).
That there may be spill overs from collections meant for
party’s account into the personal accounts of fund raisers is obvious from the
rate of growth of declared assets of many politicians during the period they
wield power. It is hard to follow or define an ethics framework which permits
beating the rules for the party but not for self-enrichment. Therefore, if
there are indeed such people who when put in a position to raise funds for the
political party have proved to be successful in discharging their
responsibility without enriching themselves, then these people should be rated
as having ethical standards far higher than those who just benefit from party’s
or other people’s efforts and do not themselves contribute any sums for running
of the party or an enterprise that needs to survive in a “corrupt eco system” – this should include majority of the
population which does nothing about supporting political processes except wailing
that all politicians and all businessmen are corrupt.
Therefore, when a politician is caught in the act of taking
money under the table, it becomes doubly important to ascertain if the funds
were meant to go into his/her party’s coffers or the recipient’s personal
account? Intent is not all that difficult to establish in such transactions –
one has to dig into prior transactions, if any, and check known sources of
income to reliably settle the question of illicit gains. Until evidence of
intent is at hand one should desist from running down the person caught in the act
because that person may be one having far higher ethical standards than those
of the accusers :)
FACT #2 Benchmarking
execution efficiency or “Standards” of corruption
Government processes and machinery may be rated as excellent for the purpose the British designed them for, decades and centuries ago. After independence, politicians and bureaucrats have knowingly or unknowingly taken the place of colonialist rulers and vastly reinforced the methods of exploitation of the masses. Various government schemes of distributing subsidies or largesse are like ATM machines for the politicians and government staff who siphon off a large proportion (according to late Rajiv Gandhi, "administrative" costs sometimes equalled 85% when you consider government’s money collection costs and spending costs). There is no reason to believe the trend of "administrative cum leakage" costs would have reversed, chances are these costs have climbed up over the years.
Reality check - The question of Justice and Standards – case of A Raja, ex-Telecom Minister
If we have a minister who works a miracle of a scheme in which hundreds of millions at the base of the pyramid benefit through affordable mobile phone connectivity because of multiple Telcos competing with each other in introducing low-cost phones in urban as well as rural areas, and in the bargain, makes an alleged quid pro quo of a mere Rs. 200 crores, should we reward him or jail him?
The telecom companies in India now generate billings of lacs of crores of rupees p.a. (Rs.1.67 lac last year) so Rs.200 crores is a fraction of one percent when compared with the value of benefit delivered to masses of India. With this high standard of performance, the telecom regime should be cited as a shining example of successful policy that served the needs of the masses and moved India’s GDP forward faster1 and not a “scam”.
The judiciary, auditors, members of the public and opposition leaders who are shouting “scam” will find it hard to compare their own standards of honesty with that of UPA-II, while assessing its telecom policy execution, that has delivered such fantastic results at near zero cost – government recovered the stipulated fee consistent with the FCFS policy. Following table is taken from TRAI's annual report of 2010-11.
CAG’s (Comptroller & Auditor General) contention is that the policy should have been modified in a way that Telco would have paid lacs of crores (up to ~ Rs.1.76 lac crores) to the Government for license and spectrum usage – Did the CAG say that this is a call that was of the government of the day to take? [This call had to be made on an assessment of several factors. According to an Economic Times editorial of 23rd Sep 2011 cited below, CAG did not estimate the taxes and share of revenue that accrued to the government from Telcos' billings nor did it estimate the impact on GDP and quality of life improvements due to affordable and higher levels of mobile penetration and connectivity provisions to the people of India. It is also necessary to calculate the price elasticity of demand, income segment wise - at the base of the pyramid the sensitivity is bound to be highest and when the telecom prices rise, it is the segment of the poorest who need the mobile connectivity most (because they don't have land lines and they don't work in offices having phone lines), that will shrink first. Did CAG do this calculation also? It is doubtful that auditors are trained to do this sort of anlaysis.] As Kapil Sibal tried to explain – government’s policy was NOT revenue maximization from licenses or spectrum but to encourage investment in making a key infrastructure more accessible – so as per the existing rules, A Raja caused zero loss to the government – if at all there is an offense committed, Raja could be prosecuted for subverting the FCFS policy (First Come First Served policy was a formulation of NDA govt.). So far there is no evidence of anyone in the government making any money apart from A. Raja’s alleged quid pro quo of Rs.200 crore that Unitech advanced to DMK’s TV channel (which DMK Boss’s daughter Kanimozhi, a co-accused, has returned).
Assuming that Rs.200 crore advance to DMK's TV channel was the result of A Raja favouring Unitech which was not a qualified Telco, the aggrieved party is not the people of India but some qualified Telco which was not granted the license and which had to fork out a larger sum of money to buy equity offered by Unitech (alleged to be few thousand crore rupees).
Assuming that A Raja would personally have benefitted to the
extent of Rs. 200 crores for which there is no evidence at all, it would still
make him a super “economical” functionary when we calculate the leakage
incidence [compare Rs.200 crores quid pro quo with Rs.1,66,752 crore which is one
year billings of all Telcos – in a non-corrupt situation the annual billing
would have been less by Rs.200 crore (or less by a few thousand crores if we load the additional costs incurred by a qualified Telco which could have been awarded license with proper administration of FCFS policy) as this benefit would have gone to the
consumer or the bottom line of the Telco].
To summarise the situation -
Our governments (central, state and local) have given us a set of rules that are many times impossible to follow or extremely difficult to comply with. One of them is about election funding and expenditure: "no MLA may spend more than Rs.16 lacs and no MP may spend more than Rs.25 lacs." Because of this rule, every political party without exception is forced to raise and spend funds illegally - since the actual requirement is ten times higher than the allowed limits, 90 % of funds the parties handle has to stay unaccounted. A Raja was DMK's man in the government and he was doing his job. He also had the guts to continue FCFS policy and get on with the task of spreading the benefits of Telecom to the masses without falling for the temptation of making money from selling the spectrum through an auction. Therefore, DMK should declare A Raja a hero and build a statue to commemorate his actions of tightening leakages and setting a new bench-mark – he took it to less than 0.1% of revenues arising from a government contract. Mayawati built statues of elephants costing hundreds of crores and we may have many more expensive statues being sanctioned by CMs.So what is the big deal in building one 5'6" statue?
To summarise the situation -
Our governments (central, state and local) have given us a set of rules that are many times impossible to follow or extremely difficult to comply with. One of them is about election funding and expenditure: "no MLA may spend more than Rs.16 lacs and no MP may spend more than Rs.25 lacs." Because of this rule, every political party without exception is forced to raise and spend funds illegally - since the actual requirement is ten times higher than the allowed limits, 90 % of funds the parties handle has to stay unaccounted. A Raja was DMK's man in the government and he was doing his job. He also had the guts to continue FCFS policy and get on with the task of spreading the benefits of Telecom to the masses without falling for the temptation of making money from selling the spectrum through an auction. Therefore, DMK should declare A Raja a hero and build a statue to commemorate his actions of tightening leakages and setting a new bench-mark – he took it to less than 0.1% of revenues arising from a government contract. Mayawati built statues of elephants costing hundreds of crores and we may have many more expensive statues being sanctioned by CMs.So what is the big deal in building one 5'6" statue?
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1 Revenue maximization of telecom licenses or spectrum auction is a bad idea
A recent World Bank study (graphic in citations below) reveals that developing countries
benefit more than developed countries with the penetration and accessibility of
telecom services, particularly mobile phone, internet and broadband services. Countries
that auctioned spectrum failed to achieve the penetration and accessibility
that India has achieved. In fact India is the champion in this
regard. Few states have exceeded 100% penetration and accessibility
is there for everyone to see – fishermen, farmers, street vendors and hawkers
have all benefited by realizing better revenues and margins – consumers have
benefited with lowered costs and less idle time in calling for required
manpower and getting work done quickly. All of these benefits would not have
accrued to the extent they did, had India opted for revenue maximising of
telecom licenses and spectrum.
Ironically, now the courts and the government bureaucracy
are all set to change the telecom regime that will set the country back,
particularly the people at the base of the pyramid for whom the marginal
utility of mobile phone connectivity is the highest. I remember in the 70s Dr
Homi Bhabha and Dr. Vikram Sarabhai’s forecast of growth of electronics was
subverted by protectionist zealots who had a free reign after these two
enlightened scientists died. The government (Department of Electronics) imposed
500% import duty on electronic items, including computers and put onerous
export obligations on those who wanted to import. This ridiculous policy was
reversed by Rajiv Gandhi but by that time India was left far behind, its
electronics output was less than that of Taiwan – we missed the forecast of
Bhabha and Sarabhai by 95%.
Telecom spectrum revenue maximization policy, advocated by
the courts (and unthinkingly adopted by over enthusiastic TRAI bureaucrats)
will be somewhat like a repeat of the DOE’s policies of 80s. It seems the
stellar results we achieved in the last decade in Telecom were fortuitous or a sheer
accident and not as a result of a consciously reasoned policy. Sometimes we do
good things unknowingly or may be if we have achieved something good, it must
necessarily have been by fluke :)
More info about:
Election funds, candidate’s declaration after election of expenses incurred and party accounts:
http://sabhlokcity.com/2011/04/accounting-of-political-party-funds-and-election-expenditure/
Less than 2% of funds of political parties are accounted by donations of corporates:
http://articles.economictimes.indiatimes.com/2012-01-10/news/30611967_1_parties-anil-bairwal-aditya-birla-group
http://www.somethingaboutthelaw.com/2012/01/12/electoral-reforms-and-corruption-in-india/
http://realityviews.blogspot.in/2011/09/indian-political-parties-collect-crores.html
How to or how not to manage spectrum:
Impact of telecom on economy:
http://www.itu.int/ITU-D/ict/wtim11/documents/inf/006INF-E.pdf [9th World Telecommunications /
ICT Indicators Meeting (WTIM-11)]
What sort of connectivity other countries are providing to its citizens:
http://www.telegraph.co.uk/technology/broadband/6337698/Finland-makes-fast-broadband-a-legal-right.html
Charges against A Raja:
http://articles.economictimes.indiatimes.com/2011-10-23/news/30310760_1_realty-md-vinod-goenka-swan-telecom-siddarth-behura
http://articles.economictimes.indiatimes.com/2011-09-23/news/30194140_1_auction-2g-spectrum-telecom-policy-telecom-ministry
