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September 12, 2000
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A minister who dares to take on business cabals

E-Mail this column to a friend Corrupt as the Indian political system is, every once in a while someone come along, who breaks through the hypocrisy, exposes corruption or cuts through the red tape and shows that it can be done.

Sometimes it is municipal commissioners like those of Thane, Surat or Pune (Chandrashekhar, S R Rao, Arun Bhatia) who single-handedly cleaned up the city and improved infrastructure. At others, it is a maverick deputy commissioner (G R Khairnar in Bombay) who, unfazed by bullets, abuse or suspension, carries on a lonely and relentless drive against illegal construction.

A former sycophant turns into a lion when charged with the independent statutory function of Chief Election Commissioner (T N Seshan) and demonstrate how elections can be conducted without the obscene display of money power, noise and ugly posters. The Chief Vigilance Commissioner (N Vittal), may not have notched up much success in eradicating corruption but he has struck a big blow by encouraging people to expose corruption. Many others have built institutions or carried on their quiet crusades without public recognition.

The judiciary is so often the hero these days. It has forced the executive to fulfill its duties towards citizens and restored our faith in democracy. A timely Supreme Court order was needed to stop the Karnataka and Tamil Nadu governments from caving in to the demands of the criminal, Veerappan, and releasing his comrades-in-crime from jail. The judgment against former Tamil Nadu chief minister J Jayalalitha is another recent example that the system sometimes does nail the mighty. There are plenty of other examples.

But a politician, that too a Union minister speaking out or doing anything positive is so rare, that I cannot remember an equal example. Arun Shourie, the minister of state for divestment, did exactly such a thing last week. One may argue that Arun Shourie is not your run-of-the-mill politician. He is a top class journalist and writer first, so reading and research are not alien to him. But let me not quibble and spoil a nice feel-good story.

On September 5, says The Indian Express, the Federation of Indian Chambers of Commerce and Industry invited Shourie to a seminar on divestment of public sector undertakings. He began mildly enough, speaking about the tremendous power of a body like FICCI. He then read out a letter by FICCI president G P Goenka to the prime minister wherein FICCI's aviation panel had proposed that foreign investors in Air-India, should not hold more than 25 per cent of the equity and that this was more than that allowed in China, Mexico, UK, Thailand, Taiwan, USA etc.

'Shourie then read out the recommendations of several parliamentarians, as well as those of the Standing Committee of Parliament -- Lo and behold, they were the same as FICCI's, right down to the etceteras,' says The Indian Express.

'Great minds that think alike?' asked Shourie, 'Or one great mind that was making everyone think alike?' He then went on to reveal who headed the FICCI aviation committee. It was none other than Naresh Goyal, the chief of Jet Airways -- in other words a man with a vested interest in ensuring that foreign airlines did not control Air-India. (Incidentally, while the media including scores of television crew covered the meeting in full force, it is only The Indian Express which reported what Arun Shourie said. The rest were either not paying attention or were persuaded not to report FICCI's discomfiture).

Having exposed FICCI's hypocrisy, Shourie grinned and asked them to make a full disclosure of their vested interest while making recommendations. He had done his homework well. He pointed out that the 25 per cent limit recommended by FICCI was significant. With a 26 per cent shareholding the foreigners could, under Indian law, block special resolutions and maintain some semblance of control over the organisation. None of the countries mentioned by FICCI had such a legal clause.

Shourie has clearly been reading up on the Divestment Commission (set up by the United Front government which later stripped off its powers even while it refused to implement its recommendations. The BJP government ignored the DC and allowed it to die away after its term ended). Under him and to an extent his predecessor Arun Jaitley, several of the DC's recommendations seem to have been accepted in a slightly modified form.

He went on to point out that another way of sabotaging the government's divestment programme is to vastly exaggerate the value of government undertakings and sabotage their divestment. At the same time, competition and low productivity continued to push these units further into the red and their losses are already a vast Rs 80 billion.

In fact, the saga of sabotage in the aviation business goes far beyond the instance quoted by Shourie, but in the past aviation ministers have been completely influenced by such interests.

The saga of the Tata group's efforts at getting into aviation in collaboration with Singapore Airlines is a good example. The Tatas were looking at the domestic aviation business and were a serious threat. They had the resources and would have had the skills and service to grab a substantial chunk of the business along with Singapore Airlines. The Tatas also had an impeccable pedigree. They pioneered the aviation business in India and until Jawaharlal Nehru broke J R D Tata's heart by nationalising the business, Air-India was rated among the best airlines in the world.

When the aviation business was opened up to the private sector and everybody from chicken farmers to businessmen with alleged underworld connections entered the fray. One would have expected the Tata group to be invited to enter the business. Instead, at least four different governments and at least as many aviation ministers trotted out the most specious excuses to deny them a license. The vested interests were obvious, but no names were ever mentioned. Curiously, no industry association ever spoke up for the Tatas although it was their members who badly needed an efficient alternative to Indian Airlines.

Over the last 10 years, the financially weaker airlines have fallen by the wayside and the business is a sort of duopoly. Jet Airways is the big beneficiary, since a bloated and inefficient Indian Airlines allowed it to hike fares and grow rapidly.

In fact, Jet faces its first obstacle in the fare hike game this week. It has announced a 20 per cent fare hike from September 15, probably confident that Indian Airlines was bound to follow -- after all air travelers have no other alternative. Instead, Indian Airlines has refused to budge.

Already, Jet is on the back foot and has rationalised its fare hike to only five per cent on the better serviced trunk routes and punishing those from smaller towns. Will Indian Airlines win back customers in the price-sensitive Indian market and will it avoid the temptation of an easy fare hike? It is too early to say. But it is clear to everyone that the aviation industry needs more players with deep pockets to give consumers a fair choice. The question is will policy ever get past vested interests?

Sucheta Dalal


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