<p>The UPA coalition has witnessed many more scandals mainly of stealing government funds, especially by the Congress party’s coalition partners, than the NDA coalition before it. The Telugu Desam did get funds from the Centre ostensibly for development expenditures.<br /><br />Under the UPA, bribes for environment and forest clearances by the DMK minister, the notorious bribery for allocating telecom spectrum again to a DMK minister, the emerging scandals about the surrender of valuable Air India and Indian Airlines routes to private airlines, clearance of fake qualifications of pilots, etc, under a NCP minister, the frequent changes of the NHAI’s chairmen so as to enable the DMK minister to grant road projects to private investors, the theft of public funds for the Commonwealth Games and the supporting Delhi infrastructure, the mafia that has developed for milking the important rural employment guarantee scheme and other social schemes, are some of the examples. By contrast the NDA apparently had its own smaller telecom spectrum scams, some allegations on disinvestments, but nothing on the scale of the last seven years.<br /><br />The prime minister and his officials are rhetorically focused on economic growth. They will tolerate double-digit food inflation, damage the environment, ruin the lives of poor tribal peoples, encourage large-scale land acquisition in the name of creating SEZs for stimulating exports and industrialisation. At the same time, this government has also not honoured its word on treating its signed contracts as sacred.<br /><br />The latest example is that of the Cairn-ONGC dispute on royalties. Government wanted foreign investment in oil and gas exploration and accepted that ONGC would pay 100 per cent royalty even with only 30 per cent of the shareholding. Now government wants to renege on this obviously unfair burden on ONGC, which should be a government burden. India is yet to clarify its position on many issues. One of them is the treatment of Indian assets of foreign companies when the holding company is sold to another foreign company. There are instances other than the Vodafone purchase of Hutchison’s overseas holdings.<br /><br />There appears to be no clarity in thinking in our governments. The views change with different ministers and bureaucrats. This cannot remain so. We are hoping to attract large foreign direct investment. Instead, last year it fell by over 25 per cent. If investors cannot expect our governments to keep their words on signed contracts, or to introduce new rules afterwards, foreign investment is going to be frightened away.<br /><br />Real beneficiaries<br /><br />The stench of corruption that is beginning to pervade this central government is another factor that is beginning to deter foreign investment. The large illegal foreign and domestic holdings of Indians include, it is said, many politicians and bureaucrats, not merely the Dawood and other gangs, and businessmen. The way in which there is no attempt to close the Mauritius route for foreign funds inflows to India because of the exemption from short-term capital gains taxes there, and the use of anonymous participatory notes through registered foreign institutional investment firms by anonymous investors abroad, are recognised as routes for laundering Indian money, sending it abroad and bringing it back cleaned. Nothing is done to close these large holes in our financial system. Why should it be when many of the decision-makers are probably its beneficiaries?<br /><br />It is widely suspected that the reason why the physical public distribution of foodgrains, cheap kerosene, etc, are not replaced by either cash transfers or a universal cheap grains policy, is that there are too many people in government who benefit from these schemes as they are. Now there is a suggestion to use the CAG to monitor the national employment guarantee scheme than build capacity for social audits at the village levels. Many suspect that this is because the CAG is not an instant reporter — it will take time. In any case it will have to fan our over thousands of villages. The local villager is better placed, with help from a few bureaucrats, to do it faster and well. But the beneficiary mafia that has developed around all social schemes is unlikely to want a superior, faster, and local, monitoring system.<br /><br />We must rethink our paradigms of economic development. Should we tolerate double-digit inflation, or large current account deficits, or volatile inflows of largely illegal moneys, or allow the worse-off in India, namely the forest dwellers, tribal people, and the poorest among the rural population, (perhaps about 300 million people), to be exploited so that inequalities that have boomed since 1991 grow further?<br /><br />We must thank the intrusive and aggressive television media, the courts and the RTI Act, along with a few ministers like Jairam Ramesh who want to implement the laws in the books, for trying to reach out the economic development in India to benefit the poorest of the poor people and not just the few who already control the economy and society through sheer might.</p>
<p>The UPA coalition has witnessed many more scandals mainly of stealing government funds, especially by the Congress party’s coalition partners, than the NDA coalition before it. The Telugu Desam did get funds from the Centre ostensibly for development expenditures.<br /><br />Under the UPA, bribes for environment and forest clearances by the DMK minister, the notorious bribery for allocating telecom spectrum again to a DMK minister, the emerging scandals about the surrender of valuable Air India and Indian Airlines routes to private airlines, clearance of fake qualifications of pilots, etc, under a NCP minister, the frequent changes of the NHAI’s chairmen so as to enable the DMK minister to grant road projects to private investors, the theft of public funds for the Commonwealth Games and the supporting Delhi infrastructure, the mafia that has developed for milking the important rural employment guarantee scheme and other social schemes, are some of the examples. By contrast the NDA apparently had its own smaller telecom spectrum scams, some allegations on disinvestments, but nothing on the scale of the last seven years.<br /><br />The prime minister and his officials are rhetorically focused on economic growth. They will tolerate double-digit food inflation, damage the environment, ruin the lives of poor tribal peoples, encourage large-scale land acquisition in the name of creating SEZs for stimulating exports and industrialisation. At the same time, this government has also not honoured its word on treating its signed contracts as sacred.<br /><br />The latest example is that of the Cairn-ONGC dispute on royalties. Government wanted foreign investment in oil and gas exploration and accepted that ONGC would pay 100 per cent royalty even with only 30 per cent of the shareholding. Now government wants to renege on this obviously unfair burden on ONGC, which should be a government burden. India is yet to clarify its position on many issues. One of them is the treatment of Indian assets of foreign companies when the holding company is sold to another foreign company. There are instances other than the Vodafone purchase of Hutchison’s overseas holdings.<br /><br />There appears to be no clarity in thinking in our governments. The views change with different ministers and bureaucrats. This cannot remain so. We are hoping to attract large foreign direct investment. Instead, last year it fell by over 25 per cent. If investors cannot expect our governments to keep their words on signed contracts, or to introduce new rules afterwards, foreign investment is going to be frightened away.<br /><br />Real beneficiaries<br /><br />The stench of corruption that is beginning to pervade this central government is another factor that is beginning to deter foreign investment. The large illegal foreign and domestic holdings of Indians include, it is said, many politicians and bureaucrats, not merely the Dawood and other gangs, and businessmen. The way in which there is no attempt to close the Mauritius route for foreign funds inflows to India because of the exemption from short-term capital gains taxes there, and the use of anonymous participatory notes through registered foreign institutional investment firms by anonymous investors abroad, are recognised as routes for laundering Indian money, sending it abroad and bringing it back cleaned. Nothing is done to close these large holes in our financial system. Why should it be when many of the decision-makers are probably its beneficiaries?<br /><br />It is widely suspected that the reason why the physical public distribution of foodgrains, cheap kerosene, etc, are not replaced by either cash transfers or a universal cheap grains policy, is that there are too many people in government who benefit from these schemes as they are. Now there is a suggestion to use the CAG to monitor the national employment guarantee scheme than build capacity for social audits at the village levels. Many suspect that this is because the CAG is not an instant reporter — it will take time. In any case it will have to fan our over thousands of villages. The local villager is better placed, with help from a few bureaucrats, to do it faster and well. But the beneficiary mafia that has developed around all social schemes is unlikely to want a superior, faster, and local, monitoring system.<br /><br />We must rethink our paradigms of economic development. Should we tolerate double-digit inflation, or large current account deficits, or volatile inflows of largely illegal moneys, or allow the worse-off in India, namely the forest dwellers, tribal people, and the poorest among the rural population, (perhaps about 300 million people), to be exploited so that inequalities that have boomed since 1991 grow further?<br /><br />We must thank the intrusive and aggressive television media, the courts and the RTI Act, along with a few ministers like Jairam Ramesh who want to implement the laws in the books, for trying to reach out the economic development in India to benefit the poorest of the poor people and not just the few who already control the economy and society through sheer might.</p>
