gfiles magazine

October 19, 2012


Vol. 6 | issue 7 | August 2012
Cover story
petroleum pricing
Oil & gas crisis
Controlling decontrol
Poor governance of hydrocarbon reforms and a disjointed pursuit of policy and regulatory changes have jeopardised the country’s energy security.
by Naresh Minocha
Reforms in India’s oil and gas sectors are caught in a perpetual whirlpool. The recent cut in excise duty on petrol, hike in diesel prices, rationing of LPG, the move to recast the exploration and production framework, and the proposed pooling of imported and domestic gas prices are a few pointers in that direction.
Take any segment – upstream (exploration and production), mid-stream (oil and gas infrastructure such as pipelines), or downstream (refining and petro-products marketing), each is bedevilled with uncertainty.
Big-bang ideas, such as making India a global refining hub with a chain of export-oriented refineries and radical restructuring, including mergers of national oil companies to make them globally competitive, are initially hailed but subsequently forgotten. The Government does not even have a proper regulatory framework for oil and gas in place, something that is crucial for the country’s energy, food, economic and national security.
The Ministry of Petroleum and Natural Gas continues to control exploration and production of oil and gas through its lame-duck appendage, the Directorate General of Hydrocarbons. This is despite the fact that the Cabinet had approved the setting up of a statutory regulator – Hydrocarbon Regulatory and Development Authority (HRDA) – way back in November 1997. Similarly, the ministry continues to regulate pricing, subsidisation and marketing of automobile and domestic fuels in the refining sector, which form the core of the downstream segment. This is a stand that is also evident in the case of pricing and marketing of natural gas as also of gas produced under production sharing contracts (PSCs) that were supposed to provide pricing and marketing freedom....................READ MORE

Circus of oil pricing

Vol. 6 | issue 7 | August 2012
petroleum pric
Circus of oil pricing
It makes no sense to first make the oil marketing companies sell fuel at below cost and then compensate them with a subsidy. Also, when the oil marketing companies are making such hefty profits, are the latest price hikes justifiable?
by Neeraj Mahajan
In a recent advertisement, the Ministry of Petroleum and Natural Gas claimed to have paid Rs 1,38,500 crore as subsidy to Oil Marketing Companies (OMCs) even as it collected only Rs 83,700 crore as taxes. The government’s claim that it had to reimburse the entire subsidy burden, however, seems to be an eye-wash, as it generally reimburses 60 per cent of the under-recovery to oil companies. The remaining 40 per cent comes from upstream companies like ONGC and GAIL.
Now 60 per cent of the Rs 1,38,500 crore paid as subsidy to the oil companies comes to Rs Rs 83,100 crore, which is Rs 600 crore less than the amount it collected as taxes, with the remaining burden being passed onto the upstream companies. This means that the Government simply paid the subsidy from the tax payer’s money. What is more worrisome is that the government has not been paying the subsidy amount due to the oil companies on time as a result of which they have had to borrow money and pay exorbitant interest. But, then if a financial loss is fully compensated, can it still be called a loss, and if it is so, why is it not reflected in the balance sheets of the OMCs?
According to recent disclosures under the Right to Information Act, none of the public sector companies, singly or jointly, have suffered any loss since the year 2000. Rather, as per the reply to an RTI, the oil marketing companies had collectively logged a net profit of Rs 25,000 crore in 2010-2011. A look at the financial figures of the three OMCs reveals a turnover of Rs 8,33,000 crore and a combined profit of Rs 6,177 crore in 2011-12. The individual share of profit is Rs 3,955 crore (IOC), Rs 1,311 crore (BPCL), and Rs 911 crore (HPCL)...................READ MORE

 Vol. 6 | issue 7 | August 2012
security a k verma
Reds are here to stay
The Maoists present a complex challenge, which has a mix of ideology, people’s disenchantment with the governing processes and mechanisms, and a resolute determination on their part
For some time now, Maoism or Naxalism has been the nation’s No. 1 internal security problem but an agreed strategy to combat this menace continues to evade national and state leaderships. The nation has seen the Maoist movement grow, originating from Naxalbari, a small village in West Bengal in May 1967, to an ideological campaign that today straddles 13 States. Although it started as an anti-landlord struggle, its focus has expanded well beyond. Party documents clearly spell out that the objective is seizure of State power through an armed and violent struggle, co-opting rural and urban classes, mobilising them against the State on all available issues–political, economic and social.
The strategy of the Maoists or Naxalites has evolved from an early objective of an armed agrarian revolutionary war, encircling the cities from the countryside to united front tactics. The revised aims are to establish solidarity between peasants and tribals with the working classes, develop links with the petty bourgeoisie, the semi- proletariat and the national bourgeoisie.
The movement has attracted the well-educated and the well-heeled, who find themselves intellectually at odds with the stormy tides of consumerism, materialism and exploitation, the market economy and the power of the rich. Kobad Gandhy, a Doon School alumni, who became a member of the CPI-Maoist central committee, is an example of the party striking roots among the urban milieu. The party has also successfully raised large funds through extortions and levies which are used for purchase of arms and ammunition.
There should be no doubt that the party represents a revolutionary movement, which from day one has been growing in size, strength and influence. Geographically, they are creeping into virgin territories. They have created viable infrastructures in many States. A general mood of frustration originating from poor governance and widely believed allegations of high-level corruption has led to an environment from which the Maoists derive psychological benefits............READ MORE 

Stabbing the dead, yet

Vol. 6 | issue 7 | August 2012
war m g devasahayam
1962 China War
Stabbing the dead, yet
Speaking a month before the 50th anniversary of China’s military offensives, Army Chief General Bikram Singh said: “I am assuring the nation as the Army Chief that 1962 will not be repeated... No way. We have plans in place on all borders to safeguard our country’s territorial integrity.” But, when the integrity of the Army itself has been severely eroded in recent times, is the Army Chief’s claim even tenable?
When you go home, tell them of us and say, for your tomorrow we gave our today.” Etched in stone, this soul-wringing message from ‘dead soldiers’ greets you as you enter the famed Kohima War Cemetery. As one takes a round of the cemetery, one sees hundreds of small plaques with the words ‘Known Unto God’, meaning that we do not even know the names of the valiant men who gave their lives so that we may live. Can there be a more poignant sacrifice? That was during the Second World War.
What about the Sino-Indian War of 1962, the most devastating that India fought post-Independence? Do we remember the names of the nearly 3,000 men, who caught unawares, laid down their lives in a desperate bid to save the honour of the Indian Army and the integrity of the Indian nation? Do the names of Major BK Pant, Lieutenant Subash Chander, Naib-Subedar Snehuneshu Biswas, Havildar Phani Bhushan Nayak, Naik Joybandhu Datta, Sepoy Jag Pal Singh…and many, many others ring a bell?
These are but a few random names taken from a list of the brave sons of India who died on the night of October 19-20, 1962, at Nam Ka Chu when the Chinese attacked 2nd Rajput positions at the base of the Thagla Ridge beyond the Zimithang Valley in NEFA (now Arunachal Pradesh). This was the beginning of the bloody clash across the previously considered ‘impregnable’ Himalayas that caught the Indian leadership napping and left 2,420 officers and men dead in this theatre alone............READ MORE

Taxing the poor

Vol. 6 | issue 7 | August 2012
taxation t n pandey
Taxing the poor
Short term committees, (like the Shome committee for GAAR) have become
camouflages for implementing preset Government’s decisions
The report of the Committee headed by Dr Parthasarathi Shome on General Anti-Avoidance Rules (GAAR) released on September 1, 2012, prima facie raises the broader issue whether such short-term committees, besides providing excuses to the Government to implement their preconceived decisions, serve the purpose of streamlining and improving the tax laws of a country? This is especially because the report is based on impressions and surmises are drawn after interviewing some persons and examining tax laws of some countries without any supporting empirical studies.
The practice of appointing short-term panels to examine fiscal, economic and taxation issues of fundamental importance to provide support to the Government for decisions already visualised has grown in recent few years.  What is more worrisome is that in a vast country like India, with a large reservoir of eminent economists and institutes of worldwide repute, the Government is not tapping them to find new avenues for such studies to usher in new views, ideas, thoughts, and vision and explore fresh approaches. 
It is common knowledge that experts like Dr Vijay Kelkar and Dr Shome are repeatedly assigned tasks of conducting many such short-term studies. While this is not to question their ability or integrity or competence, to handle the tasks so entrusted, such practice from the Government side raises issue of propriety. By repetitive engagements, such persons seem to have become a part of the Government – not independent commentators!
The terms of reference outlined for the Shome Committee reveal that an important objective of GAAR is checking of tax avoidance. However, meaningful guidelines on GAAR can be formulated only after undertaking empirical studies and studying relevant data and information from countries where such schemes have worked. The terms of reference (supra) too conceive that the committee should formulate its recommendations after undertaking widespread consultations. This cannot be possible in a time span of just 10 weeks, the time that the committee was given to submit its report. While it has submitted its interim report, it has again time only till September 30 to submit its final report.  Obviously, no meaningful work can be done in such a short time, especially as the GAAR provisions stand postponed by a year.  Actually, there was no need to legislate on this issue through the Finance Act, 2012, without studying all its implications when the applicability of the Direct Taxes Code 2010 itself is uncertain..............READ MORE

MCX-SX finally in the game

Vol. 6 | issue 7 | August 2012
markets equity
MCX-SX finally in the game
MCX-SX will be a testing case for the regulator
by Anil Tyagi
MCX-SX, which recently received permission to launch its equity trading platform, has announced that its benchmark index will be known as ‘SX-40’ – an index of 40 stocks chosen on the basis of liquidity and promoter stake in comparison with BSE Sensex that comprises of 30 stocks and the NSE Nifty that has 50 stocks.
MCX-SX Vice-Chairman, Mr Jignesh Shah, announced drastically lower transaction charges while launching the membership drive that is seen to be quite aggressive and may spark off fierce competition among the three players. Justifying the lower fee structure, Shah said, “The optimisation in transaction charges, along with optimal membership structure will lower the entry barriers to capital markets, thereby fostering inclusive growth.” However, there is hardly any empirical evidence to prove the same except for the fact that it may encourage members to go in for self driven volumes as also day traders who may not do any good to the market except making it more risky. It may be worth mentioning that the exchange fee accounts for only a small portion of the trader’s total cost.
The membership drive launched by MCX-SX is also likely to lead to claims and counter claims on its success. Some basic financial calculations reveal that the membership costs seem to be on the higher side. The basic fee plus deposits add up to Rs 50 lakh (though MCX-SX is offering some discounts to certain specific categories of members till October 18, 2012). A simple rate of interest at 12 per cent per annum works out to an opportunity cost of Rs 50,000 per month. Anyone, other than existing BSE and NSE members, who wants to start a broking business will have to spend a tidy sum on setting up considering the sky-rocketing real estate prices and soaring rentals. Add to this, the usual staff costs, administrative expenses, regulatory compliances and so on, the business model may not appear to be worthy of a second look. 
At the minimum, even in a class B or C city, the total may add up to a monthly expenditure of well above Rs 2 lakh or an outgo of Rs 10,000 per day assuming a total of 20 days the market works in a month. Earning a brokerage of Rs 10,000+, based on the author’s own experience and discussions with some well established brokers, is a herculean task by any standard that too coupled with the entire gamut of risks like client defaults and so on. This probably is the sole reason that has made the broking business witness a lot of consolidation in the recent past. Small brokers offering personalised services to retail investors are already a vanishing tribe.
The MCX-SX’ dream of having a nationwide network may come crashing despite its innovative though un-researched proposal of giving membership under the rural entrepreneur category. Looking at the way, markets have performed post the 2008 crisis and steadily dwindling retail investor population in view of the regulator’s failure to address their legitimate concerns and grievances, this category of membership may remain a non-starter. So, any claims of the membership drive being a hugely successful exercise need to be taken with a pinch of salt.
Moreover, the stock exchanges are expected to act as ground level regulators and are expected to take up issues facing governance and transparency facing their member brokers. Even an established and so-called efficient exchange like NSE is found wanting whenever complaints, especially by small investors, have been lodged against its member brokers. One can’t expect the situation to be any better in case of MCX-SX, more so when a real struggle is likely to be witnessed for notching up any additional business in a fiercely competitive scenario. The urge to grab a higher share of the market may lead to compromising on regulatory compliances and risk management. Is the SEBI listening?...........READ MORE

Vol. 6 | issue 7 | August 2012
talk time
 s l bansal oriental bank of commerce
‘Investments are only in gold, reales
As the 14th Chairman and Managing Director of Oriental Bank of Commerce, S L Bansal has his priorities clear. He wants to transform the Bank, which had its origins in Lahore, into one of the finest public sector banks that customers can depend upon. Bansal talks about his priorities in an interview with Neeraj Mahajan. Excerpts:
Today, there is a negative sentiment to the investment climate. However, while the public says that the interest rates are very high, to my mind this is not a factor that influences investment decisions. Even when the interest rates were as high as 19-20 per cent, people were bringing in projects and taking bold decisions. If an entrepreneur feels that he can make some profits, he will go ahead with a project whatever be the cost. However, the biggest hurdle an investor faces is getting the requisite clearances. For example, in case of a road project, an investor does not know whether the NHAI will be in a position to give them the right to way, or land on time, or whether all clearances will be there when they start acquiring land? It is these things that that lead to cost overruns. It is factors like these that create roadblocks for decision-making by entrepreneurs. Today, people are putting in their money in real estate and gold, as a result of which savings are declining. This decline in savings has a co-relation with investment and this is evident from the decline in gross capital formation.
Unlike earlier, banks today have empowered their customers. Today, almost 80 per cent of all banking activities are possible online. It is not only banks that are improving, but even other public sector companies are falling in track. For instance, Air India too has improved a lot. Even for a 15-minute delay in flight timings, they now send a SMS to their customers. This was not so earlier. This awareness is coming in to all bank employees also. If we can align users and the service provider’s viewpoints, then we can become a great country.
On our part, I would like Oriental Bank to become a great bank providing the best possible services. In fact, we want that whenever customers think of banking they should think of us. Whenever they want to look for a good service provider, they should think of OBC. That is my dream…In terms of assets and quality we are reasonably well placed as compared to any other bank. Of course, cost is an issue because of which we could not expand in the last 4-5 years in the way we could have. Today, despite our small network of 2,820 branches, we are still doing good business. This is a great achievement. Our per branch business is over Rs 1.50 crore – the highest in the industry. We have around 18,000 committed employees, with the productivity per employee being Rs 15 crore, which again is one of the highest in the industry. There are a lot of challenges but we are sensitising our employees and we expect them to meet our expectations........................READ MORE

Vol. 6 | issue 7 | August 2012
ajit nimbalkar
A Maratha with finesse
 Senior Maharashtra IAS officer Ajit Nimbalkar is the epitome of a development-oriented bureaucrat.
The ultimate dream of any bureaucrat is to retire as Secretary in the Central Government or as Chief Secretary of a State. At 68 years of age, Ajit Nimbalkar, a retired Maharashtra cadre Indian Administrative Service Officer of the 1967 batch, has had the satisfaction of having experienced it all. He retired as Chief Secretary of Maharashtra in 2004 and prior to that he was the Secretary, Defense Production in New Delhi.
All through, it has been a long and eventful journey, which has seen him in the forefront of action in a variety of ways at the Centre or the State. He saw action from the closest quarters as Secretary to two of the most powerful Chief Ministers of Maharashtra – Vasant Dada Patil and Sharad Pawar. This apart, he was Chief Secretary of Maharashtra during the terms of Vilas Rao Deshmukh and Sushil Kumar Shinde. In fact, Deshmukh as Chief Minister pitched for him to be brought back to the State as Chief Secretary.
Whether it was a question of dealing with the textile strike called by belligerent trade-union leader Dutta Samant as the Commissioner of Labour, initiating the first-ever dialogue with Enron for private investment in the power sector in Maharashtra or starting the initial negotiations with the Bodo militants in North East as the Special Secretary (Home) in the Government of India, there has never been a dull moment in his life. This apart as Joint Secretary and DG (Employment and Vocational Training), he brought in the first World Bank vocational training project, developed roads from the Ghat to the Deccan Plateau as part of the Road Development Corporation, set up new power stations as the head of the State Electricity Board and distributed natural gas to reluctant buyers on behalf of Mahanagar Gas Ltd.
Early in life as the director of sugar factories in Maharashtra, Nimbalkar helped groups of farmers without any previous experience of running an industry to come together to start as many as 86 factories. It was the peak period of development of cooperative sugar factories in the State. It was also a period when he was able to assemble a group of farmers not knowing how to run an industry to come together. They needed to be helped first in drafting the proposal, getting it cleared at the State level and to get a license from the Central Government. Then came the question of arranging finances. As the director of sugar factories, he had to appear on behalf of the farmers. “It was almost like setting up multiple new units. I learnt a lot how leadership from rural areas can take such positive steps given proper guidance. They may have started with sugar factories but afterwards they became growth centres… schools, colleges, hospitals, roads. Overnight, the rural areas became centres of development,” he says.
His stint as Vice Chairman and Managing Director of Maharashtra State Road Development Corporation saw him chasing deadlines to complete the Mumbai-Pune Expressway and the Bandra-Worli sea link. He also served as the first Chairman of the Maharashtra Water Resources Regulatory Authority, a qausi-judicial post after retirement and is now a non-official part-time Director on the Board of NTPC.............READ MORE

Vol. 6 | issue 7 | August 2012
praveen kumar administrator, huda, Gurgaon
Man of the street
His weird, out-of-the-box antics may be made fun of by some but the 2001 batch IAS officer also knows how to keep government officials on their toes and solve the problems of the citizens.
by Narendra Kaushik
The Administrator of Haryana Urban Development Authority (HUDA) in Gurgaon, Praveen Kumar, does not mind making a spectacle of himself if that helps him defuse a difficult situation. He also does not mind doling out corporal punishment to his corrupt juniors as, according to him, the government machinery more often than not fails to take the latter to task.
In November last year, he beat himself with his own shoes when people in Sikanderpur, a village in the millennium city on Mehrauli-Gurgaon road, accused him of favouring a builder and obstructed his anti-encroachment drive for several hours. A month later, he slapped Mukesh, a peon in his department for being corrupt, and justified the act in court by likening the beating to ‘a surgeon tearing the abdomen of a patient to remove a tumour’. He justifies his beating of peon. “He was taking money. I slapped him. It was a conscious decision.” When asked why he did not initiate disciplinary action against him, he claims it is difficult to find evidence.
His weird, out-of-the-box antics may be made fun of by bureaucrats who believe in going strictly by the book, or the media which ridicule his behaviour to increase its TRPs, but one thing is sure: Kumar knows how to create news. And going by his over ten-month record, the 2001-batch Indian Administrative Officer (IAS) also knows how to keep the government officials on their toes and solve the problems of the citizens................READ MORE

Vol. 6 | issue 7 | August 2012
ambassadors club k n bakshi
It’s a boy
The making of the Simla Agreement and the lessons we should learn
In the joint production that was the Simla summit, we had written the script so far; but, as the play evolved, the script came to be increasingly written and played out by Zulfikar Ali Bhutto and the large contingent of ‘performers’ he had carefully chosen to bring along with him. Bhutto, who had repeatedly spoken of a thousand-year war with India, was all sugar and honey, smiles and warmth, friendship and cooperation, peace and prosperity – in public or in private.
* * *
But, the talks failed; there was no agreement. We returned to our hotel and were preparing to leave Simla the next day. There was only one official engagement left; the return banquet hosted by Bhutto. Much of the dinner proceeded in a very vocal silence. We were waiting for dessert when Mrs. Gandhi and Bhutto simply got up and walked out of the hall. Just like that! We didn’t know what was happening. We all stood up, not knowing what to do. Swaran Singh had the presence of mind to say something about sitting down after the two had left. And so we did. Dessert came. In between, PN Haksar and Rafi Raza got up and left the hall. Coffee was served. A few more from both sides joined the two leaders. The dinner came to an end. We trooped out of the hall into the foyer. Slowly, most people left. And then it happened.
The scene is still vivid in my memory. Benazir, PM’s Social Secretary Usha Bhagat, Bhutto’s Press Secretary Khalid Hassan, Nareshwar and I stood outside the room where the two leaders were meeting. Haskar Sahib came out of the room slowly walked towards us and started lighting his pipe. Usha Bhagat asked him: Haskar Sahib, ladki hui ki ladka? (Haksar sahib, is it a girl or a boy?) Haksar Sahib took his time, smiled a little, cleared his throat, and said “Ladka hua aur woh bhi MA pass”. (It is a boy – that too with a Master’s degree) We had reached an agreement.
* * *
Unknown to us officials, a meeting had taken place between the PM and Bhutto in the late afternoon of July 2, 1972. No one else was present. There was nothing new in what Bhutto told the PM, but he conveyed it to her with an even greater passion than he demonstrated in public. In every turn of phrase, every gesture and expression, he emphasised that he wanted peace with India. He said, he was fully convinced that conflict cannot resolve anything, that the future lies only in cooperation, and that they have a historic duty to write a new chapter in bilateral relations. He played upon his relatively short (and short-lived) democratic credentials. He emphasised that he had just been elected as President; democracy was new in Pakistan; he had enemies all around him – in the armed forces, in the establishment, in the political opposition. They would kill him if he was seen to have capitulated. He underlined that he represented a defeated nation, and that he did not have any concessions to offer; on the other hand, India was the victor and only India could give any concessions. In conclusion, he asked Mrs. Gandhi to help him by showing statesmanship..........................READ MORE

 Vol. 6 | issue 7 | August 2012
intrigue shailaja chandra
Minister’s Rotten Pupil
One Union Health Minister wanted to build a model hospital in his constituency. His Secretary, who had no post-retirement sinecure in sight, was sulking. He sent a long hand-written note to say why the model hospital idea was “outside Central Government policy and could not be supported”.
Weary of constant stone-walling, the Minister found another ploy to garner support. He began summoning the four Joint Secretaries under him, hopeful that they might be more amenable. On such occasions, he lost no time in reminding us that the Secretary would soon retire while he would continue.
One evening, it was my turn to be singled out. He had just told me that I had the makings of a Cabinet Secretary. My only failure was that I did not know how to ‘exercise authority’.
‘I will show you how to apply the power you have,’ he said.  A few minutes later, the secretary will come to see me. You please don’t get up. I will ask you to keep sitting. I want you to watch what happens. And take a lesson from that.’
At exactly 6 pm, there was a sharp knock and the Health Secretary (let me call him Sharma) walked in, with long purposeful strides with a ramrod straight spine. Quite the pukka sahib!
‘Yes, Mr Sharma, you wanted to see me? All is well I hope?’ queried the Minister, his gold rimmed glasses and diamond kurta buttons glinting under the glare of two score neon lights.
‘All is quite well, Sir,’ replied the Secretary, as he cleared his throat –something he always did when he wanted to emphasise a point. He looked down at the jottings in his notebook.
‘Sir you will be very happy to know that the Planning Commission has agreed to your request and our budget has been raised by 10 per cent. It was your letter that did the trick. Remember you had added a sentence? Well, that made all the difference. That, Sir, was a superb stroke on your part!’...........READ MORE

Vol. 6 | issue 7 | August 2012
reservation amitabh thakur
Don’t ignore the poor
If we base reservation on economic criterion, then alone will the truly
needy benefit and the the concept of equality upheld
Reservation in Government jobs has been one of the most controversial and contentious topics in India, right from its inception. Today, it is again being hugely debated, with the Central Government bringing in a new bill as regards certain provisions related to reservations in promotion. The genesis of this concept lies in the hierarchical caste system in India, more so as regards those who have been called Shudras and Pancham, previously regarded as outcasts or untouchables. The blatant inequality of these groups led the Constitution-makers to opt for the provisions of reservation. This happened despite there being very strong emphasis of the Constitution on the concept of equality.
There are many issues related with reservation, but the one I would specifically like to discuss is as regards the logic of reservations being made on the basis of economic criteria and not on the basis of caste. This thought has been doing the rounds for long but with more and more provisions coming in as regards caste-based reservations, a large section of people are slowly converging to the idea for setting aside all caste-based reservations and introducing the alternative form of reservation based solely on economic criteria. This issue occupied the national imagination, with an Office Memorandum being issued on September 25, 1991, which provided for 27 per cent reservation to Backward Classes and 10 per cent reservation to other economically backward sections of people not covered by any of existing schemes of reservation....................READ MORE

humour mk kaw
Right to Education a farce
Today, when we survey the educational scene in India, all we see is an awful mess. The reason is the absence of a single cohesive, integrated vision which can sift through the reports of numerous expert committees and come up with workable, pragmatic solutions. Things are done in such a tearing hurry that no one has time to think through the repercussions of decisions already taken.
  • Take, for example, the Right to Education Act. When it was passed, it looked like the long-awaited culmination of hopes and aspirations of millions of illiterate children. But when we examine the practical implementation of the Act in the field, we find that it has many lacunae:
  • It would be apparent to the meanest intelligence that you can have total coverage of all out-of-school children only if you declare a large majority of our schools as neighbourhood schools.  The principal and staff of such schools will then be legally responsible to physically bring each out-of-school child to school. In practice, the whole concept of neighbourhood schools is missing. Lip service is paid to the concept by awarding some points to distance of residence from school. Even in this watered down version, parents take the school managements for a ride by giving false residential addresses.
  • As my maid servant’s daughter was eligible to attend school, she went along with her husband to a school run by the Government of Delhi a few yards from my house. Even though they had filled in forms and submitted numerous proofs, they were no closer to admission. Then my daughter-in-law accompanied them but to no avail. Finally, I had to go myself to the principal. He was reluctant to give a positive decision and I had perforce to reveal my identity as the former Education Secretary in the Government of India before he obliged. What sort of right is this that takes so much effort to enforce and that too in Greater Kailash-I in the heart of New Delhi?.............READ MORE

dr gs sood
Watch the bull run
Happy days are here again. The markets have moved fast in the last couple of weeks, cheering the recent policy announcements by the Government and abundant liquidity unleashed by central banks of the world’s major economies.
In what appeared to be a reforms blitz, the UPA government besides declaring support to the domestic mutual fund industry announced a Rs 5 per litre increase in diesel prices, capped the subsidy on LPG cylinders, allowed FDI in retail, aviation, power trading and broadcasting services, declared disinvestment in public sector undertakings even as it constituted a panel to study the controversial tax proposals under the General Anti-Avoidance Rules (GAAR).
The markets responded positively and decisively to these policy pronouncements. However, some economists continue to be sceptical about the positive impact of the announcements, citing the long and uncertain time lag between the implementation of the reforms and their impact on the economic upturn.
I am of the firm opinion that the market operates mainly on sentiment, with fundamentals playing only a secondary role. The fact that foreign institutional investors (FIIs) poured in more than $1 billion within a week of these announcements speaks volumes about the role of sentiments. The response was all the more exciting due to the fact that the markets were not expecting such announcements and that too in such a bold manner, with the UPA government even opting to jettison a key ally. The sentiments, when they turn for the good, can create a series of reactions bringing in more things into play, increasing liquidity thereby preparing the capex cycle to restart and strengthen the rupee. This also has its impact on containing the fiscal and revenue deficits, and inflationary pressures that a weak rupee is said to create.........READ MORE

Vol. 6 | issue 7 | August 2012
Cairn: Fuellin­­g India’s energy security
With India’s crude oil import bill rising to $141 billion for last year, oil is probably the country’s highest import item by value. The country’s import dependence on oil is likely to further increase from an already high figure of 83 per cent—today, domestic production is only 37-38 million tonnes while imports total approximately 170 million tonnes. Even as the import bill has been spiralling, Cairn India has recently produced 100 million barrels of crude from its prolific Rajasthan oil fields and has helped reduce imports by approximately Rs 45,000 crore. The company has thus contributed nearly Rs 15,000 crore to the national exchequer. Today, Cairn India produces over 200,000 bopd andcontributes over 25 per cent of the domestic crude oil production.
Cairn India has been exploring hydrocarbons in India for more than 17 years. Today, it has a proven track record of making exploration discoveries and fast tracking them to production. Three out of the seven landmark discoveries made in India between the years 2000 and 2005 were by Cairn India. This includes the prolific Rajasthan block, RJ-ON-90/1 in Barmer Basin, which is currently producing 175,000 bopd, which includes the Mangla oilfield producing at 150,000 bopd, the Bhagyam field producing 25,000 bopd and the Raageshwari and Saraswati fields which commenced production last year cumulatively producing at a rate of around 500bopd. The Aishwariya field is being developed and is expected to commence production by the end of the current fiscal. Till date, 25 discoveries have been made in the Rajasthan block RJ-ON-90/1. 
According to the Ministry of Petroleum and Natural Gas (MoPNG) estimates, the national reserves of crude oil were 757.44 million tonnes in 2011. Of this, a significant amount comes from the Rajasthan block, which is now estimated to hold about 210 million tonnes of recoverable reserves, or approximately 28 per cent of national recoverable reserve.
The Rajasthan block holds a record 7.3 billion barrels of oil equivalent (bnboe), of which 3.1 billion barrels of reserves are yet to be discovered. Considering the risk prospectively, there is a potential to recover 530 million barrels of oil. The Rajasthan oil fields can produce approximately 15 million tonnes of oil, probably the highest by any field in India. This resource base can support 300,000 bopd, equivalent to a contribution of around 40 per cent of India’s current crude production, subject to further investments and regulatory approvals..........READ MORE 

bureaucrats sadhguru
Play simply
Our nationhood stands not on its political leaders or electoral system, but on its bureaucracy. It is only because we have a tenacious and well-organised bureaucratic system, accompanied by a certain training, that our nation remains functional.
The task of administering this country is a far bigger responsibility than the five-year terms that politicians get. So empowering a bureaucrat’s life towards a stress-free and disease-free mode is important to ensure that the nation does not creak under its own weight.
If the nation is creaking today it is because its fundamental structure is being pushed beyond its limits. Our bureaucrats are being asked to do unreasonable things, often to bend the law rather than enforce it. This makes the life of a civil servant extremely demanding.
While corporate management is largely unidirectional, bureaucratic management entails a complex and multi-dimensional negotiation of men and materials. The nature of this work can take its toll on an individual unless he takes charge of inner situations and ensures that these are not shaken by external circumstances.....................READ MORE 

Communal jazz

 Vol. 6 | issue 7 | August 2012
political analysis
Communal jazz
The political landscape is changing, affirms Sanghvi
by Sanu Nair
Vijay Sanghvi presents a thesis in his book, Communal Politics in India: Rise & Decline, that communalism is on the decline because of the rapid transition of the Indian society from an agrarian one to a modern one. He believes that global economic trends and exposure of society due to the spread of education and glut of news channels that pour opinions and information about economic development has affected the modern generation, including those who struggle to eke out their living. He provides enough evidence by quoting authorities and their research work in this regard.
However, the evidence that he provides of its impact on political minds is too thin to be convincing even though some of the incidents provide enough material to make everyone to think again. He claims that Bihar Chief Minister Nitish Kumar proved conclusively that Indian politics does not need the communal approach any more to win the minds and votes of the people. Accordingly, he forced the communal baggage of his main ally, the Bharatiya Janata Party, out of his state during the Assembly elections, insisting that Gujarat Chief Minister Narendra Modi, who is viewed as the epitome of communalism, also be kept out. In the process, he delivered the best striking rate for the BJP, convincing even his Muslim voters to elect BJP candidates.
He also cites the victory of Mulayam Singh Yadav and Mayavati in Uttar Pradesh in this context. Between them, they reduced the two main parties, the BJP and the Congress to third and fourth positions, respectively, in the State Assembly. The two main parties could not grab more than 20 per cent of seats while the two parties that opposed communal politics took away 75 per cent. The two could not have shown such performance if their politics was based only on appeal to castes and sub-castes state. ...........READ MORE

Five Chief Ministers of UP

 Vol. 6 | issue 7 | August 2012
Five Chief Ministers of UP
mulayam, akhilesh & uncles…
THERE is no doubt that Mulayam Singh Yadav is the de-facto Chief Minister of Uttar Pradesh, but it may surprise many to learn that actually there are other four Chief Ministers in the State. As a result, despite sitting in the ruling chair, Mulayam’s sweet-tongued son, Akhilesh Yadav, is caught in a piquant situation, not knowing how to react to the power games being played by the four other prominent party leaders. While his uncle Shiv Pal Singh Yadav, the State PWD Minister, is a maverick, he is also a good manager, solely responsible for all ‘business’ emanating from the PWD mafia in the State. On the other part, Mohammad Azam Khan, Minister for Urban Development, has his own persona and style of work, and keeps on ordering officers, caring little for others in the Government. Similarly, Ram Gopal Yadav while being the face of the Samajvadi Party in Delhi, actually runs his own fiefdom in UP, having built up his own coterie of officials, who operate as he desires and who he shields from any adverse action. While the de-jure Chief Minister is Akhilesh Yadav, he is reportedly so terrified of not only his father but all his uncles that he was unable to direct officials to select the ‘correct’ photograph of the current chief minister to adorn State offices. The picture finally selected, shows Akhilesh calling upon Manmohan Singh, trying to show his presence and authority in the Centre and State Governments.

Punjabi by nature?

Vol. 6 | issue 7 | August 2012
Punjabi by nature?
manmohan’s clever moves
IF you think that Manmohan Singh stands isolated in the Congress Party and in the Cabinet, then you should think again. Through his recent actions, the Prime Minister has proven himself to be an excellent politician, creating his own club of supporters and admirers not only in India but in the world, outsmarting even the stalwarts within Congress and the Opposition. His government’s announcement allowing foreign direct investment in retail was not the bombshell that many have made it out to be. Instead, most of the Congress Party’s favoured business houses have known for over a year now that such a decision was inevitable; a key indicator here being that they had begun putting in money in the market more than a year earlier, confident that policy change would follow. But what surprised everybody was the manner in which Manmohan’s Cabinet and party colleagues – Kapil Sibal, Anand Sharma, Sharad Pawar, Ambika Soni, Praful Patel, Ajit Singh, Ashwani Kumar and Manish Tiwari – started to sing the pro-FDI song when he took the step forward. It was also observed that Lok Sabha and Rajya Sabha members from Punjab and other members of the House, all ‘Punjabi by nature’, joined in the chorus, with the Prime Minister being the conductor. Industrialists Sunil Bharti Mittal and Mukesh Ambani were reportedly active in gathering support for FDI as were certain top industrialists from Punjab. So, if one thought that the tortoise could not outrace the hare, think again!

Silsila at Rashtrapati Bhavan

 Vol. 6 | issue 7 | August 2012
Silsila at Rashtrapati Bhavan
pranab da meets rekha
EVER since Pranab Mukherjee has taken over as President of India, Rashtrapati Bhavan is full of life. Every day, we learn, scores of dignitaries visit. Two special visitors recently  were film star Rekha and cricketer Sachin Tendulkar. The idea to visit the President was floated by V Narayanasamy, Minister for Personnel and Training, during the Vice-Presidential elections. Rajya Sabha MPs Rekha and Sachin had come to cast their vote. Narayanasamy spoke to Rekha in Tamil and suggested she should visit the President. And, so they did. Pranab da met them for over 40 minutes and spoke at length. He gave a full lecture on the importance of Rajya Sabha and its role in Indian society and politics. Rekha and Sachin were impressed by the knowledge of the President. At the end, Rekha asked Pranab Da, have you seen any movie of mine. Pranab Da replied that he had not seen a film for a long but recollected having seen “your one beautiful film Silsila”.  Life goes on…

Keeping the flock together

Vol. 6 | issue 7 | August 2012
Keeping the flock together
political manoeuvres & hidden agendas
HOW does one party support another party that it is opposing? This is a puzzle that only the Indian political system has an answer to. Today, most supporters of the ruling UPA government are also opposing it. The behaviour of Mulayam Singh Yadav, Mayawati and Karunanidhi has puzzled everybody. Nobody is able to understand the emerging dynamics. But, politics was never simple, especially as it has evolved in a democratic India. For politicians are a clever breed, every step they take has its meaning. Thus, for Mulayam Singh Yadav, it is not the future of the UPA government that is important, instead it is his son Akhilesh Yadav’s future that is more important. And, for this, if Mulayam has to keep the UPA Government at the Centre stable, even though he may not be happy doing so, he is willing to do so. He also knows of the ‘reported file’ that the CBI has maintained on the benami properties owned by him, his son and daughter-in-law Dimple, which the UPA Government will pursue vigorously in the courts if he decides to pull out. Similarly, Karunanidhi’s predicament is understandable, as he desires that his daughter Kanimozi and nephew Dayanidhi Maran be exonerated in the 2G scam.  Whether the Congress will eventually succumb to their pressure or not depends on the number game in the House. Mayawati’s problem is much more serious. Her ‘Taj Corridor’ scandal case is still pending. Sources say that the Directorate of Enforcement has a full dossier on properties she and brother Anand Kumar have allegedly amassed that are worth more than Rs 1 lakh crore. It is learnt that Anand Kumar is hopping from Malaysia to Dubai on a weekly basis just to avoid arrest. Both the brother and sister today appear to be side-stepping party and political concerns to support the government. What all this only goes to show is that when you have the stick, and know how to wield it, the flock stays together; something that the Congress certainly knows how to do.

Municipal woes

 Vol. 6 | issue 7 | August 2012 the way
Municipal woes
IT is going to be a bad year for Delhi. Believe it or not! With its newly constituted Municipal Corporations, headed by leaders from the BJP, and the State Government, being headed by the Congress, the city is today facing piquant problems of governance. What adds to the paradox is that the three Municipal Corporations are headed by women, who can be said to have just jumped out from their ‘kitchens’ into the ‘frying pan’ that public life and governance is all about. Again, while the municipalities comes under the Ministry of Urban Development and Local Bodies, the issues that they are looking after, read civic amenities, are those that need to be cleared by the State Government, headed by Sheila Dixit. And with elections round the bend (December 2013), the Dixit Government appears to be in no mood to release funds to these Municipalities, something that they are woefully short of. Shiela Dixit does not want to cede any credit to the BJP-ruled municipalities for better work so she is squeezing their funds, preventing them from undertaking any ‘developmental’ work. The shrewd politician that Dixit is, she has also said that all work related to roads and street lights will not be handled by the Municipalities but by the Public Works Department, which comes directly under the State Government. Now, roads and street lights are areas where everybody is ‘interested’. These Municipalities are also short of experienced and trained officers, with there being many officials eager to switch over from Delhi Administration or to join on deputation from different cadres. But their files are pending with the local commissioners, who are in a fix; if the files are cleared by the Chief Secretary, it is not necessary that the three Mayors will approve of the appointment. So, from pillar to post, the files are moving and decisions are pending.

Vacancies galore

Vol. 6 | issue 7 | August 2012 the way
Vacancies galore
THERE is eerie silence in the government on the issue of the selection of IAS, IFS and IPS officers. There is a shortage of 2,300 IAS officers against the sanctioned strength of 6,077. There is a shortage of a similar number of IPS officers. The Supreme Court had ruled in 1982 that there would be a 49.5 per cent quota in government jobs for SC/ST and OBC candidates. Since that ruling, it has been observed that the Government is going slow in filling up vacancies. If the SC ruling had been implemented, nearly half of all District Collectors and Superintendents of Police would have been from the SC/ST/OBC. According to a reply submitted in Parliament, in the 149 secretary-level posts today, there are only 4 ST officers. Again, for the 108 Additional Secretary level postings, only two SC/STs candidates have been found fit while for the 477 Joint Secretary level postings, only 6.5 per cent or 31 SC candidates and 3.1 per cent or 15 ST candidates have been found to be eligible. Likewise, for the 590 posts of directors, only 2.9 per cent or 17 SC candidates and 1.2 per cent or seven STs have been appointed.  The trend to reduce staff strength started when Atal Bihari Vajpayee was Prime Minister. It has been observed that in the last decade, at times only 50 or 60 vacancies were notified to the UPSC for selection of IAS/IPS/IFS officers. Who is forcing the current Government to move in this direction is not yet clear. As one member of UPSC admitted that the age relaxation for selection up to 30-35 years makes a mockery of selection of SC/ST and OBC candidates. This is because given their high average age, a majority of them become due for retirement by the time they reach the level of Joint Secretaries and only a few have the chance to reach the top-most level of Secretary or Cabinet Secretary.

My right is right!

Vol. 6 | issue 7 | August 2012 the way
My right is right!
HARYANA and human rights, the two do not gel. Thus, it was not surprising that the post of the Chairman of the Haryana Human Rights Commission had been lying vacant for last 18 years. Again, it was not surprising that the recent incidents of violence against certain sections of its population saw the Haryana Government swing into action, albeit 18 years late! Swinging into action last month, Haryana Chief Minister Bhupinder Singh Hooda had a meeting with Leader of Opposition Om Prakash Chautala on who they should appoint as the head of the Human Rights Commission. Despite their differences, the two unanimously agreed on appointing the former Chief Justice of Punjab and Haryana High Court, Vijender Jain. They also agreed, albeit with some protests from Chautala, on who the two other members of this ‘almost defunct’ institution should be: former judge of the Himachal Pradesh High Court H S Bhalla and retired IAS officer J S Ahlawat. So far so good. Now that its members have been nominated, what remains to be seen is the time it will take for the Commission to get its office infrastructure in place: it has no office or staff. As many bureaucrats say, if took 18 years to appoint key personae, one can be sure that it will take some time to get the requisite infrastructure in place. “It could even be after the term of the just-appointed members expires.” But people who know Vijender Jain say he is a doer and knows how the government works. This apart, he has been breaking bread with both Hooda and Chautala. One can only wait and watch to see whether Haryana finally bonds with human rights.

Proxy rule in MP?

Vol. 6 | issue 7 | August 2012 the way
Proxy rule in MP?
IF you are asked who rules Madhya Pradesh then obvious answer is the Chief Minister Shiv Raj Chauhan. No, it is not so simple. He is the de-jure boss of the state but de facto boss is his wife Sadhna Singh and Ten top IAS officers and some top industrialists. The group of around 15 to 20 people rules the state as they like and reportedly mint money faster than any currency printing press. The work under the ministries of Power, PWD, health, Education, Urban Development and Local Bodies, Excise and Taxation, Revenue and Land acquisition, Home Ministry are managed by these trusted lieutenants of Sadhna Singh. Shiv Raj and Sadhna are very simple human beings and are scared from scandals as his arch rival and minister in his cabinet Kailash Vijayvargiya keeps him busy in one controversy or the other disclosing small scandals to media. Kailash has very good friends in media. It is reported that if one meets Sadhna for any work directly, it is done in half the price but when the needy goes to the officials, the cost just doubles. Wait and watch gfiles will publish the names of the officials and the industrialists who are ruling the state by proxy and enjoying.