Reality Check India

2G spectrum scam : Daddy’s got a sweet tooth

Posted in Uncategorized by realitycheck on November 20, 2010

The governments strategy has been pretty consistent all along.

“Nobody stopped us from perpetrating what you people are now calling as the ‘scam of the century’.”

 

Shorn of technicalities the scam can be summarized as below :

Before Picture :

1. Country (including minorities, dalits, tribals) had 4.4 Mhz of spectrum

After Picture :

1. Country has 0  Mhz of spectrum

2. Country got 10,000 Cr extra cash in pocket

3. Telenor, Docomo, Etisalat, Bahrain Telecom – the companies offering services – have 40,000 Cr less

4. Dozens of Indians gatecrash Forbes India Rich list ( a few even make it to the Billionaires list)

We can debate all we want about investment vs buyout, presumptive vs substantive loss, paper money vs cash money.  Even ignoring the 3G spectrum price discovery, simply based on what foreign companies have paid to Indian real estate middlemen – the value of the loss is 60,000 Cr.

All the arguments about low cost spectrum enabling low cost services and rural coverage is bogus. From the service providers point of view, they paid 6000 – 10,000 Cr. Period. They could care less about what their Indian partners paid.  Thats right, Etisalat who is giving you services does not care if Swan got the waves for free. For them, they paid 6-7,000 Cr and that investment would determine the pricing of their service.

Absence of bonafides is the new normal

Which brings us to this : Nobody stopped us from doing what we did

Mr Kapil Sibal who is the new Telecom Minister has decided to pursue the “Somebody stop me” line of defence. This is not only deplorable but insulting to the intelligence of those who have been following this scam.  Separatists will use these as yet another reason not to put up with the shenanigans of the state.

The premise :

1. We (the UPA & ally DMK) will operate in a malafide manner unless someone stops us.

2. If we get caught – we are guiltless because no body stopped us. You should be asking why the systems that ought to have stopped us failed. We just did what we do best.

All the back and forth by the government pinning saying, “But TRAI didnt say anything” / “PMO didnt say anything” squares off perfectly with the “somebody stop me” strategy.

The absurdity of this line is :

1. TRAI is not a superior power to the government. If the government wanted to it can ask TRAI to explain. Change its malicious positions. As it is doing now.

2. Besides, the TRAI has repeatedly refuted standing behind the 2001 price level.

From the CAG :

The TRAI, in its report, observed that the entry fee, as it existed in 2001, was not a realistic price for obtaining a licence in the changed situation considering the dynamism and growth of telecom sector… It also observed that the value of spectrum was not correctly reflected in the extant pricing model, and recommended again for de-linking of spectrum from licence.”

But, if you push this line of offense you are falling into their trap. They will trap you in technicalities and word play. This is what Sibal is doing.  The intent will be relegated to the corner and something absurd like a technicality or misinterpretation or word play will take centre stage.

Dont believe me.

Try arguing with the following statement.

“But that report was never discussed by us because GoM and Finance Ministry were not saying they ought to be discussed in reply to our Nov 31 letter to them”.

 

 

Somebody stop me video from The Mask

On the United Voters of India and Free Agents

Posted in Uncategorized by realitycheck on November 2, 2010

Atanu Dey has a really thought provoking post over at his blog called A bit on Democracy in India.

The central problem according to him and shared by all of us is :

How do we get men of better quality into elected office ?

The man is an accused, lodged in jail, more than likely guilty of a heinous crime — and wins an election. I can confidently assert that had I contested that election, I would have lost to that man. I am not a paragon of virtue but it is hard to imagine that I am less than a man who is suspected of being a viciously violent person.

I don’t know you, dear reader, but I can bet my bottom dollar that you are not as ethically challenged as that minister of telecommunications accused of a spectrum scam that has probably cost the country billions of dollars. I bet that you have more integrity than the prime minister who shields corrupt politicians from being brought to justice. I wager that you are not so greedy as to siphon off thousands of millions from funds allocated for organizing a games event. Yet you, and thousands like you, don’t have a snowball’s chance in hell of ever being elected to any political office. Indeed it is your scruples, your sense of decency, your moral values, your integrity and intelligence which will be your handicap in getting you to any political office.

Source : A bit on Indian Democracy (emphasis mine)

 

He proposes a new voting bloc called “The United Voters of India”. This is how it would work.

Who decides whom should one vote for? I guess the voter decides. In the UVI context, the group collectively decides. Membership to UVI is voluntary but the condition is that the member adhere to the sworn duty of voting, and voting only for the candidate chosen by the association. The members choose whom to vote for through “primary” elections in which all members are eligible to vote — but it is neither compulsory nor mandatory. The only compulsory bit is that the member eventually vote at the real elections for the candidate chosen by the group.

This is a subject that fascinates me because it contains a call to action.   Like many of you I have spent countless hours dreaming about ways to break this gridlock – How do we get into this ecosystem as a mutant – where everyone already thriving in it stands to lose by allowing us in ?   Atanu comes tantalizingly close with his theory of  “endowment effect” – but I think we are actually in a far worse state.  We are in a loop of exclusive benefits leading to political power. This has been iterated over and over again to a point where entry of a mutant can only be tolerated as a court jester.

Most readers are probably going, “Here he goes again with his free agent theory“.  I do feel dirty for taking on an idea promoted by a man of such high intellect with such a mundane counter as “people vote for their benefit protectors”.

Getting elected

Consider this : Does Atanu Dey who has shown such a passion with concrete ideas for improving India really have no chance of getting elected ?

Dont lose hope yet. All he has to do is join an existing party such as the Congress, the Left, the Trinamool, etc – and get a ticket. There are many ways to go about that including just purchasing a ticket. Lo and behold, we have a new MLA or MP.  Hundreds of people including our prime minister and home minister make it to politics that way. Many more such as Kiran Bedi, Narayan Murthy, are waiting in the wings. So it cant be that hard to get in line. That is not what he is really asking.

So me try to rephrase.

Can a person like Atanu Dey contest on the basis of his own big picture issues and win ?

We are getting closer. Almost impossible – but the degree of impossibility depends on how many ‘free agents’ are in his constituency. I can confidently say that south of the Vindhyas there are very few places where such a miracle can happen. I suspect this is true even in the north – but I leave it to better informed people from that area. You may wonder, what about the dozens of independents who make it past the polls.  Those are really local satraps who protect this or that tailored benefit in that area and have little to articulate by way of “big picture” issues. This could be a route to a landlord, a sugar factory owner, a former politician or someone who has a disproportionate influence in his area.

Endowment vs Ad hoc benefits

What we have in India are not endowments or entitlements – it is in fact something far worse.  We have ad hoc benefits to groups purely at the pleasure of the politicians protecting them. In fact, the politicians are themselves selected for advancing new benefits or protecting existing benefits from examination. Allow  me to explain.

From Atanu’s blog an excellent description of the “endowment effect” –

once you give people something, you cannot say, “oops, that was a mistake, so give it back to me” and expect them to give it up.

It is easy to gloss over the all important “you” and “them” in the above sentence.  In this context,  you refers to the state – represented solely by the humans elected and sitting in the parliament and legislatures.  Them refers to the beneficiaries of the said endowment.

Now imagine a system, where there is a feedback loop between you and them. If the nature of the endowment is such that it directly impacts who gets elected and thus gets put in a position to command the future of the endowment – we have an adhoc benefit.  We expect these humans (ie the Indian state) to scrutinize the very endowment which put them there in the first place.  This would be high treason to the beneficiary group and indeed this is the worst mistake a political party can do today in India. If this feedback loop between you and them is iterated over multiple electoral cycles, the gaps get filled up and it becomes a formidable well oiled machine.

To be sure this machine can also accommodate a sprinkling of harmless court jesters – like Tharoor or Aiyar – who pose no danger to the link of endowments.  It must also accommodate a few fixers such as Pranab and PC. The primary purpose of this machine is however benefit protection, big ticket issues are treated as nuisances that need minimum effort patching. However, this machine has one fatal vulnerability – which I shall address later.

The UVI voting block

I think this sounds very similar to the frequent appeals to “the middle class” to vote for governance. Popular bloggers like Offstumped (formerly of INI)  still seem to believe in this.  I claim the middle class is hopelessly divided into free agents and locked in voters. The middle class is least likely to rebel/defect against their protectors.

A true test of the UVI voting block would be : Can you get Christians to join it ? Even the cool rocker types ? You can extend this to Muslims, caste groups like Gounders, Vellalas, other flexible but numerically tiny beneficiaries like public works contractors, government employees just coming off a 50% hike in DA.

Let me further put across the weakness of the UVI in another way.

Consider this duty of a UVI member :

The only compulsory bit is that the member eventually vote at the real elections for the candidate chosen by the group.

Now lets us consider the dilemma of a UVI member with ad hoc benefits, say an OBC or  Minority. What you are essentially asking him to do is “Sacrifice your benefit protector – who is very much on the ballot – and vote for a larger interest”.  The UVI charter would then seek to extract a sacrifice from him while the free agents have to make no such sacrifice.  Very few will resolve this dilemma the way we want it. Indeed over a period of time, the UVI will end up being a free agent voting block. Which is not a bad thing, but then it has little use as a compulsory voting group. Free agents are all ears for debate.  The UVI might then become a platform to inspire debate. A short distance from there is an outfit to relentlessly challenge conventional wisdom advanced by the big media.  This I think is extremely effective because it has the potential to exploit the fatal vulnerability of the “well oiled” machine I mentioned earlier.

More on this vulnerability later. Let us just say the necessary condition for this adhoc-benefits regime to thrive is darkness and ignorance.

This post should not be interpreted as a cynical view at the UVI. I would be the first person to join such an outfit, but you already got me and others like me at “Hi, I am UVI..”. It is about breaking the logjam and releasing a population of free agent voters – none of whom might be like me or you.

A big thanks to Atanu Dey. We owe him for producing such thought provoking pieces day after day. These exercise a part of the brain which has been numbed by our education system.