gfiles Magazine November Issue 2011

...by the way

The five jewels

LIKE politics, the bureaucracy is also dynamic and the faces keep changing. Power circles are endlessly speculating on who the most important bureaucrats running the government are. Following the entry of new Cabinet Secretary Ajit Kumar Seth and the induction of Pulok Chatterji as Principal Secretary in the Prime Minister’s Office, the equations have changed. Insiders say Chatterji is now numero uno.

 

When Congress boss Sonia Gandhi was admitted in New York’s Sloan-Kettering hospital for an undisclosed surgery in August, Chatterji, a time-honoured Rajiv Gandhi loyalist, handled the logistics with such aplomb and secrecy that even the Indian Embassy in Washington was kept in the dark.

 

To continue the power equation calculus...politicians and bureaucrats who believed that Prime Ministerial adviser TKA “Kutty” Nair would recede into oblivion after his socalled “side-lining” have been proven wrong. The old bonds and long associations keep Nair in the number two slot and very much in command. The third most powerful bureaucrat is Seth, a low-profile but well-ensconced officer who thrives as he survives.

 

The number four in this power hierarchy is Vinod Rai, 1972-batch IAS officer from Kerala. He is the Comptroller and Auditor-General (CAG) of India who has been digging into the 2G telecom scam and the skulduggery in the KG hydrocarbons basin. In both cases, he has excoriated the government. He did not hesitate a moment in dragging in the name of the Prime Minister’s Office into the Commonwealth Games 2010 scandal.

 

And number five? There is no speculation on this score. The odds weigh heavily in favour of Pradeep Kumar, the 1972-batch IAS officer of the Haryana cadre who is the Chief Vigilance Commissioner of India. He is not a man in a hurry, but rather a man with a mission. He has started speaking his mind on what the role of the CVC should be, and how he intends to use his powers in the days ahead. Like the CAG, who derives his authority from the Constitution rather than a political boss, Kumar can escape the stifling clutches of the political power establishment when deciding the fate of the rich and powerful whose files land on his desk for inspection and clearance.

 

 

 

SC/STs fire a salvo 

THE Government is in a fix, thanks to the special attention it has to pay to the SC/ST classification of IAS/ IPS officers. Earlier, Ministers never bothered about the caste or community affiliations of an officer working as a Personal Secretary or while appointing a Joint Secretary. The scenario has turned topsy turvy now. In the UPA II government, Ministers are now reluctant to fill these posts until they are absolutely sure that an SC/ST candidate is not waiting in the wings. The wheel has come full circle because in the old days upper caste Ministers would balk at appointing an SC/ST IAS or IPS officer. Under established rules, the Establishment Officer in the Ministry of Personnel draws up a panel of Joint Secretary-level officers of the concerned Ministry and sends it to the Civil Services Board of which the concerned Ministry’s Secretary is a member. The Secretary, before proceeding to the meeting, discusses the panel with the Minister and finalizes the name of the candidate. The problem is that not many Dalits are empanelled as Joint Secretaries. The grudge among the Dalit officers is that, from Director-level onwards their CR is only given the remark of “good”. So the Dalit officer is discriminated against at this level through a grading system that prevents him from rising further. The Dalit Officers Federation is planning to write to the Cabinet Secretary to enquire as to how many Dalit officers have been empanelled in the last 10 years.

 

 

 

A coat of many colours

SUDDENLY, the face of the composition of the government in Delhi is changing. And rapidly. IAS and IPS officers of the UP and Bihar cadres are emerging as the top honchos. Earlier, more than 200 IAS or IPS officers who were either born in Kerala or belonged to the Kerala cadre were posted as Secretaries and Joint Secretaries. But ever since the ascendancy of Ajit Kumar Seth as the new Cabinet Secretary, the scenario is altering.

 

Take the Home Ministry. Home Secretary Raj Kumar Singh is a 1975-batch IAS officer from Bihar. The Ministry of Finance has a new Secretary, DK Mittal, who is an IAS officer from the 1975 batch of the UP cadre. Defence Secretary Shashi Kant Sharma is from Bihar. Interestingly, Pulok Chatterji, Principal Secretary to the Prime Minister, and the Cab Sec are batch mates. Himachal Pradesh cadre officers are finding their way into the Prime Minister’s Office, and some 12 Secretaries are now from the Northeast.

 

 

 

Scratch my back

ANNA Hazare is helpless here. As is usually the case when complicated matters arise within the labyrinthine bureaucracy. This is a tale of two top bureaucrats in an uber sensitive department of the Government of India. Let’s call them Tweedle Dum and Tweedle Dee. Mr Dee was supposed to get an extension in his post. But if he availed of that, Mr Dum, his number two in the hierarchy, with no more than six months left until his own retirement, would never get the chance to become numero uno as the legitimate successor.

 

But often a deal—fair-exchange-no-robbery—is the best way out of a sticky situation. Fate and happenstance also played a role in what transpired. The department just happened to have purchased some special aircraft for its aviation needs. The deal needed the consent of both Mr Dum and Mr Dee. It could not be executed without the consent of both officers.

 

 

 

So there dawned a novel opportunity for some old fashioned insider trading. Mr Dee would say goodbye to the department and retire gracefully and not request the powers that be for an extension. What would he get out of it? All the fringe benefits that accrue from the aircraft deal. Mr Dum happily agreed. Boss retired with the prize money and the second-in-command succeeded him and enjoyed a privileged status. It’s what the Americans call a win-win situation. g

gfiles Magazine November Issue 2011

Bric-a-brac

politics & ballistics

 

 

Sheila redux

sandeep keeps mommy dearest’s bounce alive

CHIEF Minister of Delhi Sheila Dixit is once again in regal command. She has survived the gamut of allegations against her regarding the Commonwealth Games 2010 scandal. The 73-year-old matriarch is active, agile, and ebullient. Her opponents, and she has enough of them, seem to have run out of ammunition.

 

She has systematically demolished and de-fanged all her opponents during her 13-year reign. Part of her supremacy stems from her proximity to 10, Janpath where she carries more clout than any State Congress leader from Delhi. Revolts against her leadership are planned with clockwork regularity but they fizzle out even before they emerge from the political closets.

 

For most rank and file Congressmen, Sheila is Delhi and Delhi is Sheila. She hogs the stage at every important function in the capital. Diwali, Christmas, New Year’s, Holi, book launches, Sheila is in demand.

 

Opposition leader Vijay Kumar Malhotra does not even come a close second. But Sheila is not without her own problems. She, too, like all Indians, wants her own dynasty. Her major preoccupation is installing son Sandeep Dixit as the next Chief Minister. Sandeep, as Sanjay once did with mother Indira Gandhi, is now taking a keener advice in offering advice to Mommy Dearest. He, too, now sees Delhi as his own battlefield. This is an additional problem for Sheila’s opponents because Sandeep is brilliantly networked.

 

 

 

 

Octogenarian odyssey

advani’s old wine in a new bottle

IS there a lesson or two to be learned on the art of organizing a nation-wide campaign from 84-year-old BJP warhorse Lal Krishna Advani? He is now riding his own chariot of saffron fire – a new rath in an old avatar – in his peculiar move to fight against corruption.

 

One problem is that his party leadership and the RSS are no longer in any mood to heed his sermonizing. Nor are they interested in what he talks about to others. And not too many ordinary folk can quite fathom the purpose of his new yatra. Nobody questions his zeal or spirit or enthusiasm. But the wags do raise questions about the exhibitionism of his new exercise: long convoys of cars, jeeps and trucks, and dozens of people who fly to pre-arranged destinations to meet him.

 

His rath brigade stays in A-class hotels. About 60 people accompany him to manage the show. They include daughter Pratibha, the main organizer along with the infamous Anant Kumar, who was allegedly the corrupt Minister who influenced civil aviation policies at the behest of a corporate lady lobbyist associated with the 3G scam.

 

Journalists have begun asking probing questions about where all the money is coming from in order to finance the lavish yatra.

 

 

 

 

Maya memsaab and Rahul baba

hazare can be the uttar pradesh spoiler

GOOD news for UP Chief Minister Mayawati and bad news for the Congress. The UP Assembly elections in 2012 will determine which party will be instrumental in electing the next President and Vice-President of India.

 

Both posts are important, keeping in mind the Parliamentary elections slated for 2014. After all, the President plays a supremely important role in choosing a government in case of no clear majority. And the Anna Hazare syndrome is going to be the pain in the neck for the Congress party.

 

According to several top American analysts who specialize in predicting the vicissitudes of Indian politics, Mayawati will be number one in the UP poll and candidates supported by Team Anna will be number two. The Samajwadi Party will be number three, BJP number four and Congress... the last.

 

How? If sources are to be believed, Hazare’s associates have been working for over a year to select appropriate candidates in UP. They are conducting surveys in each constituency. They are making a list, talking and interviewing the probable candidates. This job is being done in strict secrecy.

 

Sources say they have got some superbly praiseworthy candidates in most of the constituencies.

 

 

 

 

Business of sports

corporate house taking over sports bodies

AN all-powerful business house appears to be systematically taking over sports bodies. Cricket, obviously, is foremost on the list. Indications are that it will ultimately slip from the hands of Sharad Pawar, the high-profile Union Minister for Agriculture. Already, State Cricket Associations are being taken over by those chosen by the corporate house. It has been instrumental in putting in place many members of the Board of Control for Cricket in India (BCCI). The icing on the cake was the recent appointment of Rajeev Shukla as Chief Commissioner of the Indian Premier League.

 

 

The business house is also said to have backed CP Joshi, Union Minister for Transport and President of the Rajasthan Cricket Association (RCA), in his successful battle against Sanjay Dixit, a 1986-batch IAS officer of the Rajasthan cadre and Secretary of the RCA. Earlier, their respective factions had put separate locks on the office of the RCA. The Joshi faction got the locks removed three weeks before the Irani Trophy was to begin on October 1.g

gfiles Magazine November Issue 2011

SPECIAL REPORT

sks ispat

 

 

Coal Ministry playing favourites

How Minister Subodh Kant Sahay lobbied with the PMO for coal concessions for a company in which his brother has an interest

 

 

by K SUBRAMANIAM

 

THE inside story of Indian coal is as black as the mineral itself. The markets are agog over India facing an acute shortage of coal. Had the planners sitting in the Coal Ministry been a little wiser, this situation could have been avoided. The country needs around 537 million tonnes of coal annually and it is short of 48.4 million tonnes every year.

 

The Coal Ministry, aware of the shortage, allotted 290 coal blocks long ago but only 25% of them are producing coal. Notices are being issued to the allottees but, beyond this, the Coal Ministry’s hands are tied. This is a result of things that India has become famous for, such as Cabinet Ministers openly pushing the interests of relatives. One glaring instance is of Subodh Kant Sahay, Cabinet Minister for Tourism, lobbying brazenly with the PMO for additional coal blocks for SKS Ispat & Power Ltd, a company with which his brother, Sudhir K Sahay, is a Director. This was despite the company failing to open up already allocated mines.

 

Four years ago, SKS Ispat was given a coal block with reserves of 170 million tonnes in Rawanwara, Madhya Pradesh, though its requirements were a rather nominal 12 million tonnes.

 

The company is yet to open this mine. The Coal Ministry has issued several showcause notices for cancelling the allotment but SKS Ispat has still not opened the mine. It has cited one or other reason for failing to do so.

 

Surprisingly, the Ministry refrained from going ahead and cancelling the allotment. On the other hand, it allocated two more coal blocks, Vijay Central and Fatehpur in Chhattisgarh, to the company.

 

There is only vacant land at SKS Ispat’s site at Raigarh and there are no signs of any attempt to construct a power plant. In the three years since the Fatehpur coal block was allocated, only a boundary wall has come up.

 

 

Sudhir K Sahay, who is the brother of Subodh, had attended the screening committee meeting of the Coal Ministry as a Director of SKS to present their case for allocation.

 

 

A PIL filed in Ranchi High Court alleges that Sahay has links with SKS Ispat. Moreover, while the Vijay Central and Fatehpur coal blocks were under consideration for allocation at the Coal Ministry, Sahay wrote to the Prime Minister, seeking his personal intervention in the allotment. The PMO then wrote to the Ministry.

 

Another writ petition in Delhi High Court alleges that these two coal blocks were allocated to SKS Ispat on political interference by Sahay. Documents obained through the RTI Act show that Sudhir K Sahay attended the Screening Committee meeting of the Coal Ministry as a Director of SKS Ispat to present the company’s case. Worse, SKS Ispat had sought coal requirement for its 600 MW power plant but the allocation by the Ministry was for a 1000 MW plant. Political interference and favouritism has led to the allocation of scarce national resources to unknown entities for personal gain, flouting all norms and reasoning.

 

 

SKS Ispat has been in the news on several occasions – for issues ranging from establishing an illegal coal washery, flouting pollution norms and disputes over land acquisition with land owners. Obviously, it is political clout that has kept it off-limits for government officials. g

gfiles Magazine November Issue 2011

REFLECTIONS

 

bn uniyal

 

 

Culture of crisis

Ethical values can radically alter economics

 

THE first two pages I look at when The Economist arrives every week are the last two, the ones that carry the global economic and financial indicators. This is the result of an old habit from the days when I edited an economic newspaper, though I seldom, if ever, wrote anything substantial on any economic subject. Some weeks ago, while scanning the pages of the magazine in my hotel room in Berlin, I was struck by the thought that the European economic crisis was more endemic to countries that are predominantly Roman Catholic than the ones that have been traditionally Protestant.

 

Ireland, where the crisis first exploded two years ago, is predominantly Roman Catholic. So is Italy and so are Spain, Portugal and Poland, all badly affected by the current crisis. Greece, at present the worst affected, is Eastern Orthodox but the orthodox ethic is not very different from that of the Roman Catholics in its essence. France, which some say is also slipping into the grip of a crisis, is Roman Catholic too. The economic balance sheets of all these countries are in the red. I have just checked the past few months’ global economic and financial indicators in The Economist. All the figures for the latest GDP, trade balance, budget balance, industrial production, unemployment and so on for all these countries have been in the negative for many months. Only one Roman Catholic country on the continent can be said to be in good economic health and that is Austria but it is a Germanic nation.

 

Now, compare all this to countries with strong roots in Protestantism such as Germany, Switzerland, the Netherlands, Norway, Denmark and Sweden. Almost all figures for these are in the black with a plus sign in front. The global crisis has no doubt affected them too but certainly not as virulently as it has others. The pall of gloom is visibly much less in these countries. The sense of crisis is not as palpable as elsewhere. Actually, in countries like Germany and Sweden, the sense of crisis is almost negligible though German citizens are certainly concerned about the possible negative fallout of their country’s commitments in Greece, Spain and elsewhere.

 

Otherwise, Germany is still in great economic health. With a near $2 billion trade surplus, it is ahead of China, the world’s largest economy, and oil-rich Russia and Saudi Arabia. GDP growth in Germany and other Protestant countries is higher than in most others in the region. What is significant is that the figures for the economies in all these countries have remained consistently in the plus for a long time even as nations in their neighbourhood have been crumbling.

 

All this is not strange, considering the fact that the rise of capitalism itself in the West was long ago attributed largely to the Protestant and puritanical ethic. Max Weber said so in Protestant Ethic and the Rise of Capitalism as far back as 1905. The French scholar, Ernest Renan, had made an observation to that effect much before in 1870 when he said: “Catholicism cretinizes the individual…whereas Protestantism develops them.”

 

 

While in Sweden and listening to the Swedes, I have often been reminded of the many moral tales and proverbs and adages from the old times that our parents and elders used to tell us.

 

THERE is no doubt that the Protestant ethic, especially its north European Calvinist version, has contributed largely to the economic, moral and social strength and cohesion of the people of these countries. The world and these countries themselves have changed a great deal through the last 500 years or so since John Calvin’s days but the ethic he had preached still imbues the minds and spirits of the people of these north European nations.

 

The ethic is basically based on individual self-reliance, discipline, honesty and integrity, devotion to duty and work, avoidance of indebtedness, mutual trust and cooperation, a strong sense of social responsibility, care and concern for the weak and the needy and, perhaps, more than anything else, simple living and a distaste for excessive acquisition. Goods do not make a good life, as a Swede would say. I have been spending part of the year in Sweden, where our son lives, and elsewhere in Europe over the last several years which has enabled me to observe the lives of the people in these countries closely.

 

While in Sweden and listening to the Swedes, I have often been reminded of the many moral tales and proverbs and adages from the old times that our elders would tell us when we were children.

 

The moral values they tried to imbue us with were no different: live simply, do not seek to show off, work is worship, cultivate vidya or knowledge; first save, then spend; do not incur debt and, if you do, repay as soon as you can, for indebtedness is the worst slavery in life; live well but do not seek to make unnecessary accumulations, for you are not going to carry your wealth to the other world, and so on.

 

Most of these teachings have rubbed off from our minds. Manmohan Singh and Montek Singh Ahluwalia are seeing to it that whatever remains is erased too. But not all is lost.

 

 

Wherever this ethic is tinged with religious sentiment, as among the Jains and the Baniyas, especially in States like Gujarat, the crunch of the economic crisis has not been so bad. Not even in the south. I would wish to talk of Vaishnavism, Shaivism, Kali worship, Tantric worship and economic progress but that would need a book! g

gfiles Magazine November Issue 2011

FIRST STIRRINGS

jamsheed g kanga

 

‘Politicians have let down Mumbai’

As a tough, straightforward Parsi administrator, Jamsheed G Kanga had the guts to tell the Shiv Sena leaders newly elected to power in the BMC to learn the rules of the game. During the 1971-73 drought he took on veteran socialist party leader and trade union firebrand George Fernandes

 

I am from the 1956 batch that saw the likes of DM Sukhthankar, Sadashiv S Tinaikar and Naresh Chandra, who was Ambassador to the US, Cabinet Secretary and later Governor of Gujarat. It was a rare coincidence of sorts that for about eight to nine years after Sukhthankar, I became the BMC Municipal Commissioner, followed by Tinaikar, all from the same batch.

 

I spent my training period (1957-61) in Pune and later in Satara where I also briefly served as the District Collector as well. In 1961, the concept of Zilla Parishads was introduced in Maharashtra and I was appointed the administrator (the post later came to be known as Chief Executive Officer). I held charge of two districts, Parbhani and Wardha. After the first elections were held, I assumed charge as CEO, Wardha.

 

Between 1965-67, I was Controller of Rationing. In those days, statutory rationing had been introduced. In 1965, there was acute food shortage in Mumbai and the rest of the State. The government had to introduce Statutory Rationing. The US gave wheat and foodgrains under the PL 480 scheme. The cities had lots of purchasing power whereas the villages were expected to sustain themselves on their own resources.

 

The policy was to control the foodgrain rationing in the cities. No food grain was allowed to be shipped out of the cities so as to ensure that the villages managed to sustain themselves. The government had to do a sort of census of the Mumbai population. People tried to indulge in cheating by including extended family members and bogus names. So we had to verify each person and in 1965 the government issued cards to the then 60 lakh population of Mumbai. The government had to ensure that Public Distribution Shops were opened in all the areas of the city.

 

During my stint as CEO of the Wardha ZP, the Planning Commission had come up with the Wardha Plan in association with Dhananjay Gadgil of the Gokhale Institute of Economics, Pune. It was Mahatma Gandhi’s chosen district and we came up with a model for planning things from ground level. We studied the best agricultural practices and other models of manufacturing. What we did was to explain to the people and in turn got their feedback and then the project was put out for implementation.

In 1972, during my stint as District Collector, Pune, the city witnessed its worst communal riot. The minority community was in no mood to trust the impartiality of the Police Commissioner, so it approached the then Governor, Ali Yavar Jung, and wanted the District Magistrate to take charge. The Chief Minister called me up and asked me to take charge of the law and order situation. Going by the law, I could not assume charge as District Magistrate as the Police Commissioner was very much in the post. So a middle path was chosen and it was decided that the Police Commissioner and I would travel together in the riot-hit areas. The impression gained was that the decisions were being taken jointly and in a fair manner.

 

Touring Pune district, I came across two men yoked to a plough, ploughing the field. A photographer was taking their pictures.

 

FROM 1971-73, I was District Collector, Pune. For three years the rains had failed in the State. The drought had forced more than three to four lakhs of people on to the Employment Guarantee Scheme (EGS), which was pioneered by Maharashtra. The District Collectors were given the power to sanction works. Chief Minister Vasantrao Naik had given the collectors the go-ahead but had also asked us to ensure that no deaths took place.

 

The impact of the drought was so severe that even farmers who owned 30 to 40 acres of land queued up for work under the EGS as no grain grew in those three years. Works were planned and were started in 200-odd sites in the taluka as it was mandatory that every village had to be covered, work had to be provided within a 5-km radius of the village and people had to be fed nutritious food. In those days, people used to come in large numbers to seek work and projects like building roads to villages, percolation tanks and so on were easily accomplished as there was no dearth of manpower.

 

After the drought was over, since a large number of cattle had died, the government came up with a loan scheme to provide farmers with livestock. One day, as I was on a tour of Pune district, I came across two men yoked to a plough and ploughing the field. A photographer was taking their pictures. The Opposition in those days was quick to point out the inadequacies of the ruling party.

 

I got down and confronted George Fernandes, who was then with the Praja Socialist Party (PSP). Veteran socialist leader SM Joshi was their leader. Fernandes argued that the government had failed to protect the farmer and provide him with bullocks to plough the field. I vehemently protested and asked Fernandes to accompany me to the place where all these things were happening, which he could not. Thus the George Fernandes hoax was exposed. Years later, a writer in The Illustrated Weekly of India used the same picture for representation purpose to narrate what could happen if we failed to do our water management properly.

 

In 1983, the State government superseded the BMC. Initially it was Sukhthankar who was the administrator and later, after the polls were held in 1984, I became the Municipal Commissioner. The Sena was new to power and as soon as it came to power it began to think that it could do whatever it wanted. Chhagan Bhujbal was the Mayor. Under the BMC Act, the Mayor has no real authority. The power actually lies with the general body, the various committees like the Standing Committee, Improvements Committee, Works Committee, and the Municipal Commissioner. Each of these committees is independent of the others. Initially, the Sena greenhorns thought they could do anything after assuming power. Then I had to ask senior Sena leaders like Manohar Joshi and others who had been Mayors in the past to educate the newly-elected Sena corporators on the committee system and how they could get their work done through the committees.

 

The Mumbai Metro has not been properly planned. Land prices shot up as builders bought up all the open spaces.

 

The functioning of the BMC was quite different from the normal street-style administration that the Sena was known for. The role of the Municipal Commissioner is very much like a housewife’s. Like she cannot antagonize the maid servant, sweeper and so on, the Municipal Commissioner too cannot antagonize the corporators as he has to depend upon them for their support in getting the funds approved so that he can run the city administration. Many Municipal Commissioners have done many irregular things but in my personal experience, if you are tough and straightforward with them then they dare not take you for granted. Mumbai was once known to be the best planned city. The Mumbai Metropolitan Region Development Authority (MMRDA) was meant to cater to the development of the Mumbai metropolitan region that extended beyond Mumbai and covered satellite towns like Kalyan, Bhiwandi and others.

 

Planning was expected to be done by the BMC which abdicated its responsibility as it did not have the requisite machinery to do so, thus paving the way for the State government- controlled MMRDA to take over the planning part.

 

The role of the BMC has been diluted to a great extent. The Development Plan of Mumbai for 1981 to 2010 which Sukhthankar drew up in the 1980s is now being revised. The plan we drew up took into consideration the aspect of land use. How to utilize available land and at the same time provide facilities to the people while anticipating future growth of population. Suburbs of Mumbai like Mulund and Borivali at that point of time were growing and we had to cater to their civic needs like schools, hospitals, playgrounds and so on.

 

Conceptual planning or planning while taking into account the future growth of the city and its population has never been done. Now they have appointed a Singapore based consultant to draw up a development plan for the next 50 years for Mumbai. Today the government is changing the Mumbai development plan, allowing more Floor Space Index (FSI) without having the capacity to manage plans.

 

Without water, without proper roads or civic infrastructure, this permission for increased FSI is going to force existing people to surrender their open space to people migrating in the future to spaces earmarked originally for them. The government is using FSI as a tool to make money. During my career days, the system was not so corrupt and politicians were more or less clean. You could give unbiased opinion without fear of being penalized. Today, if you do not give the opinion as desired by the politician, you are penalized.

 

This Mumbai Metro has also not been properly planned. Even before the Mumbai Metro was to come up, land prices at the designated places shot up, builders bought up all the land that was meant for restaurants and open spaces. Skywalks is another example of a knee-jerk reaction to the impending crisis. They were haphazardly planned, hardly any of them are being fully used today by the people. Mumbai has the lowest per capita open space in the world, it is just 0.3 per 1,000 people, whereas New York has a ratio of 14 and London 20.

 

IN the 0.3 the authorities have now included traffic parking lots as well. Open space meant for recreational purposes is being given to clubs. Planning in Mumbai has failed, it has to be made to succeed. Pressure on the Mumbai Island City district is less as people are migrating to suburbs, rendering hospitals and schools surplus. However, the pressure on traffic is tremendous.

 

I once attended a World Bank seminar on city infrastructure and one of the photographs showed the Municipal Commissioner seated in the lawn of his palatial bungalow while below you could see the Gamadia Hill slums. So they asked me, is this the case in Mumbai? People in the West do not realize the kind of compulsions that we face in our administration. So I asked them as to what would have happened if more than 300 people came in daily and settled in Washington – all the parks would have been occupied and there would be no open space left.

 

The State government is controlled by the legislature. The politicians from outside Mumbai are not interested in the city. For them you come to Mumbai just to make money. The guardian Minister for Mumbai, Jayant Patil, is from Sangli. The Shiv Sena, though it has been a Mumbai-centric party, has done very little for the city.

 

Before my retirement in 1991, I could have become the Chief Secretary of Jammu and Kashmir. But I wanted to take some leave before I could join. Between 1988-91 I was the Chairman and Managing Director of ECGCI and retired as Secretary in the Department of Commerce, Government of India. The corporation has 35 branches all over India and bails out exporters who have insurance policies and export to unstable regions or countries in the world. g

 

-As told to Prashant Hamine

gfiles Magazine November Issue 2011

ANALYSIS

investor safeguards

 

Investor protection: who bothers about it?

SEBI seems to be following in the footsteps of MCA and has abandoned the idea of educating and protecting investors

 

 

by DR GS SOOD

 

INVESTOR protection as an agenda may be high on the priority list of the Finance Ministry but the two key implementing agencies, i.e. the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI), seem to be least bothered about it as indicated by the way they are functioning in this regard. This probably is the single most important reason for the sharply dwindling investor population in the country and may pose a big hurdle in the process of capital formation that the country desperately needs to increase if the sharply declining growth rate is to be arrested. According to the D Swarup Committee report, India has 0.80 million investors (who invest in debt and equity markets, either directly or through mutual funds and market-linked insurance plans) which represents a sharp decline from the figure of 20 million, as claimed by the investor surveys commissioned by SEBI in the 1990s.

 

The main purpose of constituting the Investor Education and Protection Fund (IEPF) under the MCA was to spread awareness amongst investors and educate them so that they could take informed decisions and protect themselves from being taken for a ride.

 

This is possibly the only way to achieve the ultimate goal of investor protection and development of healthy capital markets in a country that can ensure the safety of investors and bring them back to the capital markets. It is quite understandable that such a task is herculean and can only be achieved over a very long period of time especially in a country where there is mass illiteracy and lack of formal education.

 

However, the goal of spreading financial literacy and investor education has started appearing a mirage if one looks at the composition of the Sub- Committee on IEPF constituted to achieve it. A cursory look at the members gives enough of an idea of how hardly any of them has either a research background on issues facing small investors or as actually worked with small investors. The fund under the IEPF which runs into around Rs 1,000 crore has now every possibility of being squandered since it has been entrusted to those very hands against whom the investors usually have to fight for their rights. It is very strange that a committee working for the interests of investors has no investors’ representation.

 

SEBI too seems to be following in the footsteps of the MCA and has almost abandoned the idea of educating and protecting investors, judging by the way its new chief is functioning. The gains made during the previous chief’s regime appear to have been squandered.

 

Whereas Investor Association meetings were called and conducted very religiously during each quarter of the year under Bhave (who did not miss a single meeting), Sinha is yet to call his first meeting in almost nine months since he assumed charge. Whereas Bhave always encouraged his critics to speak their minds, Sinha is busy keeping them and potential critics at arm’s length. The present SEBI chief has in fact reversed some of the gains that were achieved the very hard way during Bhave’s time with the active cooperation and assistance of some of the more vocal Investor Association representatives.

 

His anxiety to avoid any new controversy and wanting to play it safe seem to be stalling any fresh thinking and the initiation of any bold reforms.

 

A closer look at the composition of major committees reconstituted by the present SEBI chief is enough indication of the future of investor protection at least during his tenure. The three major committees, i.e. Primary Market, Secondary Market and Mutual Fund Advisory Committee, have been reconstituted with the clear intent of marginalizing the presence of investor activists. The number of representatives of the SEBI-registered Investor Associations is not only reduced drastically, at the same time it has been ensured that the stalwarts and more vocal investor activists are kept at bay. It goes without saying that the morale of Investor Associations, who till date have been instrumental in the spread of investor education, is at an all time low and is likely to hamper the investor education programme at the grass-roots level.

 

Investor Association meetings were called and conducted regularly under Bhave . Sinha is yet to call even the first meeting in almost 9 months since he assumed charge.

 

I have had the opportunity to work with four different SEBI chiefs and have no hesitation in admitting that Bhave’s tenure can best be described as the golden era for small investors. His firm resolve, swiftness and the attitude of facing contentious issues head-on resulted in landmark decisions such as “No entry loads” for mutual funds, IPO grading, streamlining of the arbitration mechanism, code of conduct for Investors’ Associations, empanelment of qualified resource persons for investor awareness and financial literacy programmes, issue of unauthorized trading in clients’ accounts and guidelines with regard to PoA by clients favouring brokers, SMS alerts and simplification of the client registration form with brokers to better protect investors and avoid confusion, compensation to investors in the IPO scam, ASBA, and so on.

 

The present scenario in MCA and SEBI therefore suggests that investor education and protection remain the last priority for the regulators in India, including the stock exchanges. The programme has been reduced to a numbers crunching game with the regulators indulging in one-upmanship with least regard for deliverables. g

gfiles Magazine November Issue 2011

MANDARIN MATTERS

secrecy

 

Do we need a tight upper lipped Indian bureaucracy?

An analysis of a dilemma: What comes first? Devotion and loyalty to the service along with the accompanying concept of discipline, or devotion and loyalty to society and the nation?

 

 

by AMITABH

 

THE State of Gujarat has been thrust in the news by some of its IPS officers. It all began probably when RB Sreekumar, then Additional DGP in the Intelligence Department, supposedly said something which was considered as being against the conduct rules prescribed for an officer of the All India Services. Another case is that of Rahul Sharma, then Superintendent of Police of Bhavnagar district when the infamous Gujarat riots of 2000 took place. He came into the limelight when he was said to have procured certain documents and evidence, including phone tapes, telephone records and emails, in his personal capacity – which the Service rules did not permit. Again, when he apparently handed over these documents to an inquiry committee looking into the Gujarat riots, the matter was taken seriously by the State government as being against the conduct rules. Recently, the matter has again come to the fore with the Sanjeev Bhatt case. Here, the concerned IPS officer, at present in jail for alleged criminal misdemeanour, was given a show cause notice and later suspended for reasons probably related to his putting some facts on record through an affidavit before the Supreme Court and then before the Gujarat High Court on his own initiative and then interacting with the media about these affidavits.

 

The conduct rules that apply to Sreekumar, Sharma and Bhatt apply as much to me and hence it would be highly inappropriate for me to directly comment on the appropriateness or otherwise of these individual events. I also make it very clear that the facts being stated by me are only those gathered through various media reports and I cannot vouch for their veracity beyond what the media has been telling us.

 

To me what is more important is an academic analysis of the entire affair. What it involves is the presence of two aspects – one is devotion and loyalty to the service along with the accompanying concept of discipline and the other of similar devotion and loyalty to society and the nation, along with breach of the conduct rules. Theoretically, the two concepts should not have any divergence and dichotomy between them as devotion and loyalty to the service should naturally correlate with devotion and loyalty to the larger societal interest. Unfortunately, in recent times, more and more incidents are coming into the public domain where it is perceived that the two interests are diverging. Thus, we sometimes see government officers bemoaning some action of theirs, saying they were forced into it even if they knew that it was not correct legally or was against the larger national interest. But the fact is that the public does not seem to have sympathy for such officers because it feels that they come up with all this repentance only on getting caught. This belated rise of spirit does not seem to convince the public.

 

The IPS officer was given a showcause and suspended for reasons probably related to his act of putting some facts on record through an affidavit before the Supreme Court.

 

Another phenomenon seen quite often is the appearance of reminiscences and statements by retired officers. We have dozens of memoirs and autobiographies of retired IAS, IPS and other officers who come up with startling revelations of how something wrong was done by their political masters and the senior bureaucratic fraternity.

 

But the first thought that arises in everyone’s mind is, “Why was this man silent all along? What was he doing when the entire thing was actually happening? Where was his conscience at that time?” Thus, the credibility of the officer is often hugely diminished and people also start searching for reasons for this sudden awakening.

 

Hence, the issue involved here is the conflict between an officer’s responsibility regarding discretion and silence, and his responsibility to society to tell it the truth and to save the nation from inglorious and self-motivated acts.

 

The legal provisions regarding officers of the All India Services, i.e. the IAS, IPS and Indian Forest Service, is provided in the All India Services (Conduct) Rules, 1968. Rule 7 says, “No member of the Service shall, in any radio broadcast or communication over any public media or in any document published anonymously, pseudonymously or in his own name or in the name of any other person or in any communication to the press or in any public utterance, make any statement of fact or opinion which has the effect of an adverse criticism of any current or recent policy or action of the Central Government or a State Government.”

 

Similarly, Section 8(1) says, “Save as provided in sub-rule (3), no member of the Service shall, except with the previous sanction of the Government, give evidence in connection with any inquiry conducted by any person, committee or other authority.” Rule 9, related with “unauthorised communication of information”, says that no member of the Service shall, except in accordance with any general or special order of the Government or in the performance in good faith of duties assigned to him, communicate directly or indirectly any official document or part thereof or information to any government servant or any other person to whom he is not authorized to communicate such document or information.

 

THUS we see an almost clear-cut position of the conduct rules, which possibly match the “tight upper lip” typically related with Britain. But the question that complicates the entire issue is the change in the circumstances in which current bureaucrats are serving vis-a-vis those that prevailed in the days when these rules were formulated. Thus, today more and more government servants are finding themselves in a fix as to whether to follow the conduct rules and keep a tight upper lip or open their lips and lose so many comforts of life, besides exposing themselves to the accusation of being indisciplined. This is a conflict that is bound to escalate in days to come and thus the norms of the administrative structure need to be restudied and reevaluated with the changing times and circumstances.

 

To me, the larger societal and national interests would any day count far more than the conduct rules of the Services because ultimately any law and rule is formulated for the larger societal and public interests and nothing can take supremacy over this. g

 

The writer is an IPS officer of the UP cadre and President of the National RTI Forum, a society working for transparency in governance