Gobind Thukral

EVERY one- common or not so common Indian confronts corruption in some form or other every day. It is a harsh reality of our public life. Even those who take bribe in one way, bribe others to make things work. All walks of public life are vitiated. We learn quite early in life. A child is told do home work and in reward is offered an ice cream. But that is not always at the roots of corruption. Our system has been systemically and thoroughly corrupted over the years that sometime we feel that if work is done without greasing the palm, there must be something fishy about it. Higher one goes; the greater is level of corruption. That is why Transparency International rates India poorly on the yardstick of honesty, almost at the bottom.

These days we are treated to scams of sorts. All juicy stuff. There is a gentleman, former chief minister of Jharkhand Madhu Koda who is charged with amassing Rs 2,000 crore of illegal wealth. On October 9, the Enforcement Directorate charged Koda and his former Cabinet colleagues under the Prevention of Money Laundering Act (PMLA) for allegedly amassing assets worth several hundred crores. Koda, an independent member of Lok Sabha and a UPA supporter, has business interests of diverse kinds - cement, steel, auto, power, agro and tourism. His investments are alleged to be spread from Singapore to Thailand and Dubai to Liberia. He was a lone independent member when the Congress and other parties supported him to become chief minister of the trouble torn Jharkhand where he is said to have made huge money and established big business. Remember Jharkhand now partly under the control of Naxalites is to go in for polls later this month and there was political necessity to nab this politician as he was not cooperating with the Congress. Whatever be the reasons, we can know how in just 19 months as chief minister Koda enriched himself and his friends.

Take another case where lakh of crores are involved. Here the Central Bureau of Investigation has raided the offices of the ministry of telecommunications under the charge of union minister of telecommunications, A. Raja. He belongs to DMK, a constituent part of UPA from Tamil Nadu. It is perhaps for the first time an agency of Government of India is raiding and sealing the offices of a ministry of government. The minister still is member of the union cabinet is charged with make hundreds of crores of rupees. Why he is still there, no one knows. We should ask about this our honest prime minister, Dr Manmohan Singh.

A. Raja ruled out resignation in the wake of CBI searches in his ministry. "The question of my resignation does not arise. All decisions on spectrum licensing have been taken in accordance with procedures laid down by Telecom Regulatory Authority of India (Trai) and in consultations with the Prime Minister".

The CBI FIR says, "The licenses were awarded to these companies by putting a cap on the number of applicants against the recommendations of the Trai. The licences to these private companies were given on a first-come-first-served basis at the rates of 2001 - which were very low - without any competitive bidding." CBI has acted within days of the Central Vigilance Commission (CVC) asking for a comprehensive CBI probe. "The CVC findings show the spectrum was not allocated at the present market- driven price, no auction process was followed and no bids were invited. We will now quiz senior DoT officials, including an IAS officer," a senior CBI official said. "The scam could run up to Rs 22,000 crore.

Firms which got the licences at throwaway prices later sold their stake to foreign operators at huge prices. CBI probe will now focus on specific aspects like why DoT did not go for the auction process in accordance with Trai guidelines and instead opted for first come- first- served approach. It will also examine why licences were not issued at current prices and why no time cap was fixed for those who were given the licences. CBI will further analyse documents to ascertain if the DoT had cabinet approval for going ahead with its idea of not inviting global bids for such a big project," according to sources. Two companies that got these licences in 2008 - Swan Telecom and Unitech - are allegedly under CBI investigation. Swan Telecom got the license for a mere Rs 1,537 crore. It then sold its stake to a foreign operator at nearly three times the amount within a few months. Unitech got the spectrum licence for Rs 1,650 crore from the DoT, which too, sold its stake to a Norwegian company for over four times this amount. The end loser was the government, which could have earned thousands of crores more. In 2008, the government had issued new licences bundled with start- up 4.4 MHz spectrum at a fee of Rs 1,651 crore.

Now our A. Raja has countered the BJP's charge against him on corruption in spectrum allocation and charged the Vajpayee-led National Democratic Alliance (NDA) regime with causing Rs.1.6-lakh crore loss to the exchequer by allocating radio waves free to private telecom operators. he says “Allegations that the country has suffered a loss of thousands of crores under my tenure are totally baseless. In fact, what happened under the BJP-led government is the biggest scam ever' the country has seen.”

Instead he alleges that “The BJP-led NDA government gave scare spectrum for free to the then existing operators sans any approval of the Cabinet or from the Telecom Regulatory Authority of India [TRAI]. It favoured certain companies by allocating them more spectrums, causing monopoly of the then existing players in the market and hampering competition. Almost 230 MHz of spectrum was illegally doled out in this manner under the NDA government.” Raja also alleged that both his predecessors in the NDA government — Pramod Mahajan and Arun Shourie — violated all norms and guidelines to favour private operators and caused loss of thousands of crores to the exchequer.

“They allowed the operators to use more efficient bandwidth, without taking any policy decision or proper approvals, to help them reduce their capital expenditure; but in turn, the government got no revenue from them. Similarly, they reduced the licence fee by 2 per cent in terms of AGR for all the operators and by further 2 per cent for the first and second operators, resulting in conservatively estimated loss of Rs. 900 crore.”

All this makes one thing clear- in matter of allotment of spectrum and mobile telephone systems, both the NDA and the UPA are deeply involved in scams. The public wait impatiently for the truth to come out.

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Alarming fiscal deficit

Vinod Anand

FISCAL Deficit (FD) is the sum total of the budget deficit, borrowings, and other liabilities of the Government. Budget deficit is the difference between the revenue receipts (tax revenue and non-tax revenue) and the capital receipts (borrowing from the market, disinvestments proceeds etc.) on the one hand, and the total expenditure (both plan and non-plan, and revenue and capital), on the other.

There has always been a difference between the ex-ante fiscal deficit (that is announced in the budget) and ex-post fiscal deficit (that shows in the following months).

It is really surprising that India’s FD has touched a 45.5 per cent mark of the full-year estimate in the first five months of the current fiscal year (2009-10), though it is slightly lower than what it was during the first five months of the last fiscal year 2008-09. The Government had projected a FD of 6.8 per cent of the GDP for this fiscal year (2009-10), but the FD has recently touched 45.5 per cent of this estimate, i.e. it has reached to about 10 per cent of the GDP. This is too high. If one extrapolates this trend, it appears that it will go much beyond the 10 per cent level by March 2010. The optimal FD has to be around 3 per cent so that it does work against growth prospects.

Many reasons can be given to explain as to why this happens? If we remember The Kelkar Task Force (KTF) under the Fiscal Responsibility and Budget Management Act, 2003, had given two basic reasons for the lack of fiscal discipline in the country. These are: the declining tax-GDP ratio, and the increasing non-plan expenditure.

The Government must strongly focus on revenue mobilization to bridge the deficit. It must
• overhaul personal and corporate taxation;
• impose the doctrine of proportionality;
• compact the tax slabs and remove exemptions in a phased manner;
• simplify tax procedures; and
• lay special emphasis on service tax mobilization, which has great growth potential.

It is a highly welcome proposition, but there are many pertinent questions that can be raised. These are briefly mentioned below:

1. The ruling party is normally indifferent to all such suitable suggestions because the issue is highly delicate ‘politically’, and the Government does not want to take the risk of annoying its factions.

2. How exactly the Government will improve the weak governance, inefficient government machinery, and poor law and order situation, the ultimate objective of raising tax revenue to eliminate revenue deficit, and lowering the fiscal deficit?

3. We know that the rate of economic growth gets accelerated through fiscal discipline. Suppose it happens, then will the benefits of high growth rate ever trickle down to the people?

4. There is no doubt that the proposed suggestions will surely lead to higher prices and higher taxes, and will be instrumental to a large extent in diluting the process of the ‘trickle-down’ effect, which is basic to all the equity issues in the country.

5. One may also ask another basic question: If the Government has so far failed to impose any kind of public discipline in the country, how will it impose fiscal discipline and that too within the given time-frame?

6. In terms of the recent statement of the International Monetary Organization (IMF) Asia is pulling far ahead for the rest from the deepest recession that started about a year back. Amongst the Asian countries, India and China are on the top. According to IMF the recovery has already started, and financial markets are healing. The basic reason for this upsurge, especially in the context of India, is the policy stimuli in terms of tax and interest rate concessions given to the industry and individuals to spur consumption and investment. But the basic fact is that IMF’s forecasts may not be right because of the various queries that have been raised above. Unless the Government goes into the depth of the matter, nothing mush should be expected.

[The writer is well known professor and poet. He is former professor of economics, Allahabad University]

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Preserving the open Internet

WITH the way the Internet is structured right now, it is just as easy for Americans to visit a tiny website about knitting run by a young mother in Ohio as it is to visit a site run by the federal government or a major corporation. This feature is part of the reason that in 1999, John Chambers, president and CEO of networking giant Cisco, called the Internet the great "equalizer between people, companies, and countries." But powerful interests in the telecom and cable industries, along with their conservative allies on Capitol Hill and in the media, are trying to create a pay-for-play system where companies able to shell out large amounts of money would have the power to make their sites run faster. If they succeed, they will change the lives of 40 million Americans who use the Internet as their primary source of news and information. (Here's what that could look like.) Craig Newmark, founder of Craigslist, has explained what would happen if U.S. communications served the interests of broadband providers, rather than the public: "Imagine if you tried to order a pizza and the phone company said AT&T's preferred pizza vendor is Domino's. Press one to connect to Domino's now. If you would still like to order from your neighborhood pizzeria, please hold for three minutes while Domino's guaranteed orders are placed." The solution to preserving the openness of the Internet is net neutrality, supported by the Federal Communications Commission (FCC), prominent federal lawmakers, consumer groups, and the "geeks" who helped build the Internet. The coalition has even attracted unlikely allies such as the Christian Coalition and Gun Owners of America. But Sen. John McCain (R-AZ) is trying to help telecoms and the cable industry make their destructive dream a reality. He recently introduced the inaptly-named "Internet Freedom Act," arguing that rules preserving net neutrality would be a "government takeover of the Internet." Join the tens of thousands of people who have spoken out in favor of a free and open Internet by taking action here.

PRINCIPLES FOR AN OPEN INTERNET: Last week, the bipartisan group of FCC commissioners unanimously voted to design regulations to preserve the open architecture of the Internet. Currently, the FCC follows four principles that guide its "case-by-case enforcement of the communications laws." Chairman Julius Genachowski has summarized them as: "Network operators cannot prevent users from accessing the lawful Internet content, applications, and services of their choice, nor can they prohibit users from attaching non-harmful devices to the network." He is now urging the Commission to make these principles official rules, in addition to two new ones essential to preserving the open Internet: 1) Broadband providers "cannot discriminate against particular Internet content or applications," and 2) Broadband providers "must be transparent about their network management practices." In July, Reps. Ed Markey (D-MA) and Anna Eshoo (D-CA) introduced H.R. 3458, the Internet Freedom Preservation Act, which currently has seven co-sponsors and would establish an "overarching national broadband policy and ensures an open and consumer oriented Internet." "This bill will ensure that the non-discriminatory framework that allows the Internet to thrive and competition on the Web to flourish is preserved at a time when our economy needs it the most," said Markey.

THE KEY TO INTERNET GROWTH AND CREATIVITY: Internet giants like Google, eBay, Amazon, and Facebook would not have succeeded without net neutrality, which is why they support regulations preserving this non-discriminatory system. On Oct. 19, 24 leaders of major Internet companies sent a letter to the FCC stating, "Entrepreneurs, technologists, and venture capitalists have previously been able to develop new online products and services with the guarantee of neutral, nondiscriminatory access by users, which has fueled an unprecedented era of economic growth and creativity." Internet pioneers such as Vinton Cerf have advocated preserving the system of "permissionless innovation" that fosters entrepreneurship. Craig Aaron and Derek Turner at Free Press have found that despite "frenzied" claims by opponents of net neutrality, such regulations would not be "catastrophic for investment." They point out that in 2006, AT&T had to "respect Net Neutrality as a condition of its merger with BellSouth. In the next two years under Net Neutrality, the company's overall gross investment increased by $1.8 billion -- more than any other [Internet service provider's] in America." While net neutrality wasn't "solely responsible for AT&T's increased investment, it also did not dampen growth. The Christian Coalition has raised civil liberties concerns, saying that "free speech should not stop when you turn on your computer or pick up your cell phone." People should be able to use the Internet "without a phone or cable company snooping in...and deciding whether to allow a particular communication to proceed, slow it down, or offer to speed it up if the author pays extra to be on the 'fast lane,'" testified Michele Combs, the Coalition's vice president of communications, in March 2008.

THE OPPONENTS: Net neutrality's biggest opponents are the telecom and cable industries, which want to profit off of Internet discrimination. AT&T and Verizon have both said that they are willing to accept some net neutrality regulation, which is a step in the right direction. But they still oppose Genachowski's new principle prohibiting discrimination against certain content or applications. Some of these companies have already launched astroturf campaigns. AT&T chief lobbyist James Cicconi has "asked" his employees to "use their personal e-mail accounts to warn the FCC that Net Neutrality would 'halt private investment in broadband infrastructure'" and requested that they flood FCC's Open Internet site with anti net-neutrality comments. The FCC has also been receiving fishy letters that appear to be templates from unknown organizations purporting to be against net neutrality. The telecoms have now enlisted McCain, one of their longest-standing allies on Capitol Hill, to fight their fight. McCain argues that killing regulations preserving net neutrality is key to "innovation and job growth," pointing to the success of Google and Yahoo (even though both companies support an open Internet). The Arizona senator was the top recipient of campaign contributions from this industry over the past two years, taking in $894,379. Even as chairman of the Senate Commerce Committee from 1997 to 2001 and again from 2003 to 2005, McCain made sure to craft technology rules that benefited his campaign donors. (Ironically, he is also someone who has been described as a "technological troglodyte" by former FCC chairman Reed Hundt, for the senator making comments about how he has "never felt the particular need to e-mail" and is a computer "illiterate.") The telecoms and their allies have also successfully co-opted pundits like Glenn Beck, who is arguing that the FCC is key to President Obama "trying to take over the media." [Courtesy thinkprogress.org]

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