Sep 182014

My column for DNA last week

Land Scam. Gas Scam. Spectrum Scam. Water Scam. Coal Scam. Forest Scam. Stamp Paper scam. CWG scam.

Whatever the scam be, at the centre of it, is the ownership, control and distribution of scarce resources and scarcity. And this should hardly be surprising, because most of history has been the quest to conquer and control these scarce resources. Those who control them dominate history; those who fail to control them do not even make it to the footnotes. The more scarce the resource, and the more key it is to the future of a land or an economy, the more likely are people to use tactics that are neither legal nor honourable to usurp that resource and keep everyone away from its bounty. In a different era, might is right would have been the way of establishing control on scarce resources – wars over land, cattle, slaves, cotton, spices, colonies have been fought for less.

However, the 21st century is, allegedly, a more civilised era than centuries past, and humanity has evolved less bloody methods of allocating resources:
a) It could be individual entities that control the resource and therefore control its exploitation and distribution
b) It could be groups or cartels bidding for a resource to exploit and distribute it at a price decided by it
c) It could be the State controlling the resource, its exploitation and distribution
d) It could be a combination of these.

There are four primary reasons why there is scarcity:

  • If there is very little natural occurrence of a resource – for example gold or diamonds are scarce because they don’t occur naturally in great quantities – then optimum allocation is achieved via pricing;
  • If a naturally occurring resource is very tightly controlled – for example marijuana and opium, grow freely in nature but are heavily controlled by most governments – in such a case you use the law to ensure scarcity – because the system believes that it is for ‘greater good’ of humanity;
  • If manmade products, like stamp paper or guns, are very tightly controlled, the former from the perspective of who is the supplier, and the latter form the point of view of both who makes them and who buys them
  • There are too many people consuming that resource – oil would not be a scarce resource if very few people owned vehicles or needed energy.

In each of these cases, scarcity impacts price and availability. There is a premium to be made in bucking the system and creating an underground, illegal, or not so legal route in dealing with these things. if you looked at the 2G scam, it was companies who tried to change the rules so that they were one of the few who took control over a scarce rescource – spectrum; if you look at the Adarsh scam, it was that land is at a premium, especially in South Mumbai, and flats are scarce; and so on. In each case it may be a good idea to understand what is the scarce resource to understand the direction of greed.

At the core of all the scams that we have been witnessing are three very critical, and interlinked, issues:
* Who owns these scarce resources? The ownership of these resources is somewhat ambiguous. Although theoretically, the citizens of India should own all the natural resources that exist within her boundaries, the practise is quite different; the people have very little to say on the allocation of resources or the priority of its use. The Government of India leases out the right to exploit these resources to various corporations – either public holdings or private enterprises – who are supposed to use their expertise to harness these resources for the greater good of society, while still making a profit. The enterprises more or less run these licenses as though they were owners.

* How do you allocate scarce resources? The resources in question – be it land or spectrum, be it drinking water or forest land, be it oil or gas are scarce. Its use by one set of people means less is available for other sets of people. Most of these are not renewable – you can no more grow more spectrum than you can create more petroleum deposits. Are these resources that are nature’s bounty to be split up equally and equitably amongst the people, or do you wait for the market to allocate. And, if the market allocates, how much does the state charge; and finally

* Who benefits the most from the exploitation of the resources – is it, we the people? Is it the corporations? Is it the government?

* And, how do you define profits or measure benefit? Will there be more equitable distribution of resources, so that more people benefit from it? Or should it be measured in terms of the extraordinary profits earned by select few from exploiting scarcity?

It is in this context that we need to look at two of the most important decisions on natural resources that will be taken this month. The first will be the Supreme Court’s decision on the coal scam, and later in the month will be the Government’s decision on the KG basin gas pricing issue. Both are vital in their own way, because both will impact the right of Indians to have affordable energy.

At the core of both lie two simple questions – who owns the natural resources of the nation, and who decides how they should be allocated. Is it the Government who decides what is ‘greater good’ of the nation at large and do all other agendas, including the corporate agenda, get subsumed by this greater good?; or does the government get out of the business of allocation and allow business to choose the most optimum path – even if this optimum path means price fixing cartels, that maximise profits for a few, and a highly improbable trickledown for the rest?

If we assume that the Government needs to act on behalf of the people of the country, and this includes ensuring that the economically and socially marginalised have equitable access to scarce resources; then the decision before the Government is simple. It is also the single most honourable thing to in a situation like this. Cancel all the licenses and start afresh. Let the Supreme Court judgement be the start of a new, transparent and people friendly era of resource allocation that puts the interests of India and Indians above all other interests.

The Supreme Court has declared all the coal licenses to be illegal. There were 218 such licenses allocated of which only 40 are operational, and 6 more are expected to be operational in the near future. While the media and lawyers can debate whether this is judicial overreach or not, the fact remains that the verdict is the best thing that happened to the people of India and its government.

For the Government this is a judiciary sent opportunity to clean up energy production. For coal, they can start with a clean slate and allocate on the basis of the priorities of 2014. They will need to bite the bullet for this, because those who currently own the licenses are powerful industrialists with tremendous clout. And, once they bite the bullet and manage the fallout – maybe the government should have another look at the KG Basin Gas allocations, before they look at pricing. Or maybe the SC can.

Dec 232013

This column appeared in the DNA on the 14th of November

If Campa Cola had created so much buzz when it was a soft drink manufacturer, it would probably still be in business, selling aerated water to the consumer market. Alas, that was not to be the case. Campa Cola, for those born post the liberalization era, was one of the largest soft drink manufacturers in India. It made its mark at the time when Coca Cola departed India in the late 1970s. It was also one of the first victims of Pepsi and Coke re-entering India. The land allotted to Campa Cola was acquired by builders who constructed upscale apartments. The builders had permission to build apartment blocks of six floors each. Many of the buildings are much taller. The tallest one is 17 floors high. All this happened a long time ago, and like much else in India there was a ‘nod-nod, wink-wink among all concerned’.  Banks give loans, owners buy properties, electricity connections are given, tankers supply water, and it all proceeds as though everything is normal and legal. The modus operandi is as follows: File a plan, get municipality approvals based on the plan, begin construction, violate all that is in the plan, and then pay a small fine to regularise the construction. It happens all the time. There are posh localities in the suburbs of Mumbai that still get water via tankers, five years after residents have moved in, because the entire complex is yet to get an OC (Occupation Certificate) from the BMC. And more often than not things like this gets regularised — someone knows someone, who knows someone, and for a little compensation (for greasing palms and getting through the bureaucratic labyrinth) everything gets fixed. Except that in the case of Campa Cola houses it did not. The current fracas is over 35 floors that were constructed without permission, occupied without an Occupation Certificate, and which was ordered to be demolished by the BMC.

Naturally, the residents were shocked. They refused to move out. Upper middle class agony, expressed in fluent English and anglicized Hindi makes for great news television. It makes audiences identify with those portrayed. And, more importantly, it makes news anchors outrage in an even shriller manner. Suddenly, the residents of the Campa Cola Compound were no longer the educated, well-heeled, well-connected individuals who had access to lawyers and could check contracts and building paper work, but innocents who were duped by a corrupt system. And once the media got into the fray, so did the politicians. To give him his due, Maharashtra CM Prithviraj Chavan refused to pass an ordinance that would halt the demolition. But, the rest got onto the bandwagon, including his own party members. Suddenly, a bunch of people who should have known better while they were busy breaking the law, were portrayed as babes in the wood. The very same people who would otherwise rant when illegal slums and pavement dwellers began using the same analogies to defend their illegal constructions. ‘we have always lived here’ ‘our children grew up here’ ‘where will we go’ ‘our entire community is here’.

Any house owner in Mumbai (possibly elsewhere too) will tell you that buying a flat is fraught with tension. The chain of ownership is often vague, and very often there are situations where buildings have neither Occupation Certificates, nor No-Objection certificates. Most of us are not used to reading technical documents in archaic technical language, and most just glance at the requisite paperwork to see if it is complete before buying. But, ignorance is not a defence against breaking the law.  And when you strip the Campa Cola Compound case of all the emotion, the tears and the angst, all you are left with is one thing: The law was broken, and those who broke the law may get away with it, with the media whipping up outrage to dissuade the law from taking its course. At the time of writing this column, the Supreme Court — reacting to media reports — has stayed the demolition.

In April this year, the residents of Golibar, a slum in Mumbai, were protesting for the same reason.Their homes were being demolished to make way for buildings. They had occupied the land since the mid-1960s. Television news did not care. Demolitions are proceeding as per plan. In June this year, slums at Ejipura in Bengaluru were demolished after residents were evicted in an area they had lived in for decades. Media coverage was nowhere near as sympathetic.

It seems that the middle class likes the idea of the rule of law when it is applied to others. It is quite comfortable breaking the law, and sheds copious tears when it is caught. The sentiment is simple — the rich get away with it because they have influence with those in power. The lower middle class and poor get away with breaking the law because they are the mass, and political parties need mass votes. Given that the middle class have neither the political influence nor the numbers, it does the next best thing — use the media, made up of people like them, to amplify issues. And it has worked.  While in the occasional case like a Jessica Lal when the media got it right, the fact remains that this sort of coverage of raw emotions has repercussions in terms of the rule of law. Think back to the hijacking of IC 814 and ask if the media had not constantly broadcast and amplified the heart-rending anguish of impacted families would the Government of India have been placed in such a ridiculous position?

Two sections of India that most often talk about declining morality and increased lawlessness have in the last week gotten together to do both: The middle class and the media. It is pointless to point fingers elsewhere. If you want the rule of law, you start by following it, not by breaking it, because others do just that.

Apr 092012

Shubhashish asks some tough questions on how the tareeq pe tareeq mode of functioning in courts is eroding & corroding sectors.

This is cross posted on his blog. and it has been reposted here without a single correction of a comma, a full stop or an exclamation 😀


Near shutdown situation for Karnataka steelmakers as SC adjourns case, again

My view on the Karnataka mining, steel-makers and the SC.

March 30 was a regular day in the Supreme Court of India with many cases heard and many deferred. One of the cases was of the steel-makers in Karnataka crying for iron ore supply in order to sustain steel production. On that day, the Supreme Court of India adjourned the hearing of the iron ore mining case for the 13th time.

Given the fact that Karnataka accounts for over 20 per cent of India’s steel production and close to half of iron ore production, you may very well imagine the impact. Also, steel sector is said to be at the core of the infrastructure development. And we know that the government is stress on infrastructure development like Bollywood heroines’ stress on developing fake bosoms/lips. That serious.

Anyway, this slow hearing process has seriously affected the viability of steel-making in the state as the quality of ore is worsening by the day.

Out of the 27 times that the case was listed in the Supreme Court, the hearing has been deferred 13 times. Means nearly every second hearing was deferred/adjourned or whatever legal jargon you want to give. (PS: Dear Supreme Court, I am in complete knowledge of your guidelines for court reporters and let me assure you that I am not a court reporter).

Out of these 13 adjournments, five have happened consecutively since February 24, the latest one being the one on March 30. On March 16, the hearing was adjourned as one of the judges wasn’t available and March 23 hearing was adjourned because the CEC panel failed to submit its report to the SC bench.  The Supreme Court, in a notice on its website on March 14, said, “Due to non-availability of Honourable Mr Justice Aftab Alam for hearing forest bench matters, special bench comprising of Honourable The Chief Justice, Honourable Mr Justice Aftab Alam and Honourable Mr Justice Swatanter Kumar for hearing the matter will not sit on Friday, the 16 March 2012.”

This case if a matter of national importance and the stakes are high. And even though nearly half of the scheduled hearings getting cancelled due to one reason or the other, companies/stakeholders/everyone who is affected by this, are keeping their mouth shut fearing a showdown by the SC.

And this is what I want to ask today. Is it wrong to disagree with the Supreme Court in India? Why is is that disagreeing with a SC order or the way its proceedings are held, in a specific case or in general, are taken as a contempt of the judiciary in India?

The companies are silent. They are scared that whatever they may say will be taken against them by the SC. So, is it that even the SC, the guardian of citizens’ rights in this country doesn’t tolerate freedom of expression/speech even when its done keeping in mind all the clauses of the constitution?

Is it that difficult to disagree with the Supreme Court or its judgement?

The steel industry in Karnataka is again staring at a near shut down situation because of these delays. Even though the SC had given a respite to the industry in the state by allowing e-auctions every month from the 25 million tonne of stockpiles and allowing NMDC to mine, the industry is unhappy as the grades of ore has been deteriorating sharply.

Steel-makers say that the CEC, in its report to the SC, recommended category ‘A’ mines to function as no illegalities were found there. ” All we are asking the SC to consider this recommendation as soon as possible so that the steel production can carry on,” they say.

Currently, with no solution in sight, only a “few” months iron ore supplies are left in the state. Over half of the sponge iron makers in Karnataka have already drawn shutters and rest are bleeding money profusely in the hope of a judgement. The mega steel plants in the state, too, are slowly cutting production.

If the SC allows these mines to function again, then 8.5 million tonne of iron ore will available for steel-making annually.

The steel-making in the state would have shut down last year itself if the SC did not allow e-auctions of the iron ore from the state stock-piles. The companies are relieved by the move, but, are again getting flustered.

They say, “Iron ore is available from the stock-piles but the low grades are affecting the blast furnaces. As a result, cost of producing steel is going up. If relief doesn’t come from the SC then the industry will face closure yet again.”

A top official from an affected steel company, said, “Out of the 25 million tonne, 17 million tonne has been e-auctioned, however, mostly it has been iron ore fines. The grades of ore has also reduced which is affecting the blast furnaces.”

Iron ore is available in two forms, lumps and fines. Lumps are the chunks of iron ore in solid form whereas fines are the ore in powdered form which remain at the mines after lumps are taken out. Ore is fed into the blast furnace with other raw material to make steel.

The total steel capacity in Karnataka is 16 million tonne, of that 3 million tonne is sponge iron. Most of this sponge iron production has been shut down and steel plants are running at low capacities.

JSW Steel, the biggest steel-maker in the state and the second largest in India,  production in the month of February fell down by 24 per cent sequentially, at 6.10 lakh tonne. The company, on March 5, said, “As the stock pile of 25 million tonne is getting exhausted, the quality of iron ore being offered in E-auction is deteriorating substantially. Further certain iron ore in E-auctions contained high Alumina, Silica, Manganese and Low Fe which led to poor Sinter quality, high slag formation and low productivity in the Blast Furnaces.”

So, I ask the question again. Till when are we going to stick our heads in the sand and ignore the stark realities that face us? The argument that Indian courts are over-worked with millions of cases pending, is valid. But, such cases where the future of our economic development depends, can’t be left to such frequent adjournments.

Also, the demons of ‘contempt of court’ if we say anything against the court or its order, has to be taken out. Else, we are not free.