Arun Shouries article on IE. Must Read

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The Centre and the Centaur, Part-III

One of the ‘conditions of employment’


All procedures and practices have been thrown to the winds by a government determined at all costs to score political points against the NDA

Arun Shourie
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Reacting to the Government’s announcement that there will be an inquiry, Yashwant Sinha made three important points.
• He drew attention to the disdain with which, earlier the very same day, the Government had thrown out the report of Justice Phukan. He pointed to the way the disproportionate assets case against Laloo Yadav was killed by this very Government through the procured ruling of an officer specially brought from elsewhere for the purpose, and what strictures the Supreme Court had then passed. He pointed to the way the Nanavati Commission has been brushed aside, and what has been ‘‘found’’ by a specially selected judge on Godhra. He pointed to the strange spectacle that had been enacted the previous day in Parliament: Mayawati’s followers had held up the proceedings; she had berated the Government in characteristic language—and said in so many words that, unless the CBI was stopped from pursuing the case of disproportionate assets against her, she would withdraw support from this Government; after consulting colleagues, the Government representative had then stated that, as she is a supporter of the Government, the Government will review what can be done about the case! Sinha had drawn attention to what is being done to kill the case against Satish Sharma. A Government which every other day proceeds in this manner, Sinha said, has ordered an inquiry.

• The second point he made has important implications in law, and for parliamentary practice. Every second day, in the House we are harangued—by no one more than the Communists—about the authority of Parliament, about how it cannot be bypassed, etc. It so happens that there is a settled procedure for reports of the CAG. His reports are reports to Parliament. They are to be considered by the Public Accounts Committee. Once the PAC submits its report, Parliament is to discuss the matter, and the Government is to indicate what it is going to do. Time without number, members have insisted that there must be no departure from this procedure. ‘‘Authority of Parliament is involved,’’ they have declaimed, ‘‘Sanctity of Parliament is involved. We will not allow a mockery to be made of a Committee of Parliament.’’

There are three circumstances in which alone Parliament need not wait for the report of the PAC. If the CAG has found that there has been serious fraud; if he has found that there has been defalcation; if he has found that there has been misappropriation of funds—in these cases, while the prescribed procedure must still be followed and the report sent to the PAC, Parliament may take up the matter without waiting for the PAC to finalise its report. Sinha pointed out that, in regard to the disinvestment of hotels, the CAG has not alleged in the slightest that there has been any corruption, misappropriation, defalcation, or anything of the kind. He has talked of concepts and procedures—matters on which experts can, and do differ; matters that were carefully considered within the Government at various levels, and on which the Government took a particular view. But the well-settled procedure has been thrown to the winds. An inquiry! What happened to all those proclamations? Parliament is supreme. We will not allow a mockery to be made of a Committee of Parliament. What happened? The Communists gave what they said is an ultimatum. Hence, bourgeois procedures be damned!

• The third point Sinha made goes to the marrow of the Cabinet system of Government. Every step of every decision on disinvestment, he pointed out, was taken not by one officer or one minister on his own, but by two committees of officials—a committee of Joint Secretaries, and another one of Secretaries headed by the Cabinet Secretary—and by the Cabinet Committee on Disinvestment headed by the Prime Minister. If there is going to be an inquiry, let it be an inquiry into all of them, Sinha said.

Of course, we should expect no answer. ‘‘The moving finger having writ, moves on’’! Specially when it is being yanked and pulled to demonstrate that they are the ones who have power.

There was one feature that always put obstacles in giving effect to decisions like disinvestment of an enterprise. To that has now been added another one. The original feature reflected the nature of our business class, though it is, of course, not confined to that class. The moment a strong bidder entered the race, we would be bombarded with all sorts of allegations about him. About the TATAs in Air-India, VSNL, CMC; about Sterlite in BALCO, Hindustan Zinc; about Reliance in IPCL, VSNL; about Ruias in Jessops; about the Birlas in Paradeep Phosphates. Stories in papers, writs in courts, letters upon letters from legislators. The barrage would be so intense that a normal officer would hesitate to proceed with the process—‘‘Why walk in this minefield?’’

To this has now being added the prospect of inquiries. For me the inquiry is an opportunity to nail lies. But for officers, it is a warning—do your job honestly, with dispatch, and motives will be pasted; the next government will order an inquiry. Administration is not going to be improved by using checklists in annual evaluations, but by giving confidence to officers that they will not suffer for doing the right thing. Keep track of this disinvestment inquiry as it proceeds, and assess what inferences officials are liable to draw from each turn in it.

Nor will the lesson be lost on investors, especially on the foreign investors whom this Government is trying to convince, as it keeps chanting, that ‘‘Reforms are on track.’’


Three impressions about India are deeply etched among foreign investors, and also among foreign governments who have been trying to speed up economic cooperation between their countries and ours. The first is corruption. At first blush, you may think that by ordering an inquiry—even if there is no apparent wrong-doing, even if this Government is doing so under duress—governments are conveying the signal that India is determined to nail the corrupt. But investors and foreign governments are not fools. They will see the pattern as clearly as anyone else. Perhaps even quicker. They constitute a small community—information about ‘‘Who is who’’, ‘‘Who is whose’’ is being exchanged incessantly in this community. Each of them—investors as well as governments—has dealt with a range of governments and civil servants. They know who falls in which category—and when they see cases being killed against one kind, and fabricated against another, they know what the events spell for the corruption they have to face.

The second impression about India is that every step will take forever. And the third that in the end, something or the other will happen, and India will not be able to carry through on its announcements and assurances. What has happened on labour law reform; the scandal that we are not able to decide on what we should do to get the Dabhol power plant working; what has happened on privatisation; the years and years for which we have not been able to improve our airports. The pettifogging observations, and the ‘‘ultimatum’’ in response to which the Government has decided to hold an inquiry such as the present one—these reinforce both these impressions. From all this, in the specific context of privatisation, some sages, for instance those in The Economic Times, conclude that the strategic sales route should be given up—it leads to controversies of this kind—and we should only do IPOs.

But IPOs are what were being done between 1991 and 1998. Government holdings worth Rs 18,000 crore were sold. The response was so abysmally poor—even for shares of an enterprise like GAIL—that the Government had to direct financial institutions like UTI to buy the shares. This, in turn, inflicted severe losses on the institutions, and contributed to the crises into which they were eventually plunged. But the more important point is that, in spite of disinvestment of that kind, the nature of each of those enterprises remained exactly as it had been—governmental. Neither the management culture nor the work culture improved. It was because of this costly experience—spread over seven years—that the strategic route was adopted. Moreover, when so few are prepared to examine facts, allegations can be flung at IPOs too. ‘‘The offer price has been fixed low to strip the State, and benefit the rich’’; ‘‘The allotment to high net worth individuals should have been lower—this is clearly an attempt to benefit a few selected individuals and companies at the expense of the country’’. At what decision in India are allegations not hurled?

Should one do the wrong thing to escape charges, and, as seems to be the case, inquiries?

Quite the contrary, and I would address this specially to the sterling civil servants who worked with me:

• We should look upon allegations and inquiries as one of the ‘‘conditions of employment,’’ so to say; as one of the things we will have to put up with—like transfers to out-of-the-way places—as the price of doing good work in the India of today.

• Allegations and inquiries give us the opportunity to get facts across to much larger numbers than we could have without them.

• In the end, the good and honest bear witness to the state to which affairs have fallen by what is done to them.

And there are incidental, immediate advantages too. Last year I had written up almost 250 pages of a book on the public sector—with the working title, ‘‘The truly private sector.’’ I lost interest—switched to a book on national security, which is being published this month. The CAG’s observations, and the decision of the Government to institute an inquiry have got my adrenaline flowing again! I’ll resume work on that book about the public sector. Not just that, my task has been, to use the words of the CAG, facilitated! The CAG’s observations have already provided me material for ten-odd pages. The inquiry will provide material for a full chapter. And it will be the easiest one to write.

All I have to do is to keep a record of each question, and a sketch-in-words of each interrogator!


Concluded
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