Of scams, corruption and policies

Yesterday, when I was listening to the speech by the new Prime Minister of India in the parliament, I caught this phrase used by him - "We must change the image of India from 'Scam India' to 'Skilled India'." I started wondering what exactly triggered this image of "Scam India" in people's minds? The CAG reports?

The earliest such instance of a CAG report being used to brand something as a scam extensively by the media was the 2G scam. The number 1760000000000 became the buzz word. The CAG reported that this was the loss to the exchequer based on some assumptions and extrapolations from the 3G spectrum which was auctioned a few months after the 2G spectrum was given away. Since then many such "scams" and the accompanying multi-zero figures became the latest fad in the media and dinner table discussion topics of the disgruntled Indian household. Similarly many SEZ policies like the Adani land deal and the controversy surrounding the soft loan given to Tata in Gujarat have made headlines and have been heavily criticized of late. The question is, is it so simple to just measure such policies on mere face value? Let me tell you a story. 

In a forgotten land, far far away there is a kingdom, which has a benevolent king. There are 500 families living in that kingdom and all are agriculturists, owning on an average, one acre of land. The agriculture there is monsoon based, and the land is also not all that fertile. The families can feed themselves and lead a decent life only if the monsoons are alright. If the monsoons fail, the families would have to live in hunger, in poverty. Unfortunately, for the past 3 years, the monsoons have failed and there is abject penury in the kingdom. The families are finding it hard to arrange even one square meal a day for themselves. 

In such a desperate time, along comes an industrialist with a proposal to the king. He says, "I want to start a toothpaste factory. I have studied the market and I feel it would be quite a profitable business. But, the problem is I do not have enough money to start a factory. I have talked to the banks and they have told me they would provide me some loans. But the loan money would at best be enough to bring in the infrastructure and build a factory. I do not have the money to buy land at the current price here in your kingdom. For the 300 acres of land I need, I can offer only 30 lakhs per acre, as against the market price of 1 crore. Look, if you could somehow arrange the land for starting my factory, I shall make sure that I shall employ 250 odd people from your kingdom, pay them enough so that they and their families can have three meals a day comfortably. As and when my profits go up I shall accordingly increase their salaries too. Instead of people living in fear of monsoon failures and famines, this could be a steady source of income for them. Only if you could somehow arrange for the land..."

The king ponders over it. He thinks about his people living a life in despair, living with the hope that atleast the next year, the monsoon gods would smile at them. But what if the monsoon fails again? One can never be sure of the monsoons, can he? The industrialist here is making an offer where atleast some of his people would be guaranteed of a decent, if not luxurious, life. And the cost of it would be the Government bearing the loss of 70 lakhs per acre for 300 acres - the deficit which it would have to pay the families to get their land. 

What do you think the king should do? Ask the industrialist to come back only when he has enough money to buy the land? Or should he go ahead and grant the industrialist the land he requires, suffering a loss to the treasury and incur the wrath of the CAG?

Let us for one instant assume that the 2G spectrum was in fact auctioned for that high amount which CAG predicted. Do you think the telecom companies are charity organisations to let go of the extra ₹1760000000000? The real payment of this money would have been from us, the customers. And if we had failed to cough up that money the telecom industry would have gone on a downward spiral. People would have lost jobs. Government would have lost revenues, from both the income taxes from the people who lost jobs, and the tax on revenues from the telecom companies itself. Not a pretty scenario, right?

The price wars which were started by Uninor and MTS immediately after they got licenses are a thing of past. Now we have telecom companies retrench prices, under the attractive garb of 1 paisa per second calls. The ultimate losers of this are us, customers. And as it turns out, the CAG was a little too overboard in its estimation, and the auctioning of 2G wasn't very successful. 3G too hasn't taken off particularly well in India because of the steep pricing which is a direct result of the high prices paid by the telecom companies to obtain the 3G spectrum.

The point I'm trying to make is, one must stop wishing that the Government should be run like a profit making organisation, where in it extracts every last ounce of price from the properties it possesses. Government must always look at whether its policies and decisions benefit the people and the country short term and/or long term. Any "scam" like the 2G one, the Adani land deal, the Tata loan etc must be looked through this prism, and not just at face value which the CAG tends to do. We must avoid jumping into the bandwagon of the irresponsible trumpeting of media and start thinking and finding out things by ourselves before forming an opinion.