Indian economy under seize
By Nantoo Banerjee
This can happen only in India. The two-trillion-dollar-plus economy of the multi-party federal democracy of 1.2 billion people, living in 28 states and seven union territories, has been held hostage by a bunch of corrupt power-hungry political party satraps, highly belligerent to each other, bureaucrats-turned corporate advisors and unscrupulous businessmen and sensational story-hunters in the media. The latter are having a field-day with corruption expose’ after expose’ landing on their laps at regular intervals since the UPA government began its second innings over two years ago. Indian economy has never looked so very shaky. There is no single instrument to fathom the bottomless pits of corruption. No one knows for sure where and when it will end with what consequences to economy and the people of the country.
The latest orders – first, by Goa’s BJP chief minister Manohar Parrikar and, two days later, by union environment and forests minister Jayanti Natarajan – forcing suspension of operation of all 93 functional mining leases in the mineral-rich state in the country’s west coast for allegedly flouting the environment protection act threaten to paralyze the operation of many steel, metals and engineering units in the country as well as serve a heavy blow to the country’s export commitments. The fate of several miners, those associated with the attended services and their family members has become uncertain over the impact or side-effect of the bitter double-dose work-stoppage medicine served on the Goa miners by the state and the central government.
Iron ore mining irregularities in Karnataka and Andhra Pradesh, leading to partial stoppage of mining and export of ore, has already affected steel production in the region. The ‘detection’ and sudden halt of illegal lignite ore mining in Tamil Nadu by persons closely linked with some DMK top brass, including a minister in the UPA government, have already created panic among user industries in the region. The production of steel and power has slumped like never before due to shortage and resultant high prices of raw materials. This, in turn, is bound to have an adverse impact on the growth of engineering and a host of other user industries, including infrastructure and housing, in the coming months. Entrepreneurs are holding back new investments in the manufacturing sector due to the prevailing uncertain industrial condition and falling demand. Large companies are cutting down their marketing and ad spend.
The uproar over the coalgate has created a kind of uneasiness among producers of steel, cement and power. Some of the big names in the industry such as Tata Steel, Reliance Power, JSW, IST Steel and Power, Parliamentarian Naveen Jindal’s steel and power group, Aditya Birla’s Grasim, B K Birla’s Kesoram Industries, SKS Ispat and Power, Monet group and Bihar Sponge are dragged by officials into the coal block allocation controversy almost daily to add spice to the scam. This has impacted the market and affected the price and movement of many such blue chip stocks. Half the 58 coal block allocations under scrutiny belong to the private sector. And, all the current controversies are surrounded only around them, their forest and environment clearance, inability to meet milestones, some not having proper mining lease and some others having land acquisition problems.
The coal block allocation scam is doing more harm to the economy than the 2G spectrum allocation scandal. The latter did not impact the operation of the cellular telephony sector as such. In fact, the telecom business has exploded since the outbreak of the scandal. Now, the government is preparing with the auction of 4G licenses. With some of the telecom corruption cases lying before the Supreme Court, the 2G scam has for the time being lost some of its fizz. The coal block allocation issue covers a much wider spectrum of the industry. The longer it gets dragged, the more complicated would be the end result, leading to more suffering of the core sector of the economy. The government decision to cancel four private coal block allocation licenses apparently on non-compliance grounds too has a political undertone as three of them were granted under the previous NDA regime. More private coal block licenses may be cancelled soon on similar grounds.
Ironically, no politician or bureaucrat seems to be truly concerned about the economic consequence of the current political slug-fest. Political characters and ex-bureaucrats so far named in the coal block allocation corruption cases come from all the four regions of the country. The prime minister’s name has been mischievously dragged in by some of these people, including past and present stakeholders of the UPA government, deliberately to hide or lighten their complicity in the case. It is a gamble some of those stakeholders are seen to be playing effectively all through the scam season, involving ministries and departments such as finance, home affairs, defence, telecommunications, space, coal and mines, environment and forests, civil aviation and sports. The PMO has been made a soft target of all those controversies. This is despite the fact that the Prime Minister directly heads only four departments — planning; atomic energy; space and ministry of personnel, public grievances & pensions.
Curiously, the phone tapping controversy in the union finance minister’s North Block office after Pranab Mukherjee was given the portfolio replacing P. Chidambaram, who was shifted to Home Affairs in the same Block; foreign business consultant Neera Radia’s phone tapping and selective leak of her phone conversations with politicians, business persons and certain journalists; media leakage of CAG reports on 2G allocation, commonwealth games spending , award of Delhi airport contract and coal block allocation; leakage of finance ministry’s internal memo to PMO on 2G spectrum allocation controversy; leakage of DGCA and civil aviation secretary’s letters; among several others, and, now, leakage of a letter written by a joint secretary in the union finance ministry questioning the validity and authority of the inter-ministerial group (IMG) to decide on the fate of private coal block allottees point at a possible conspiracy within the UPA government to undermine, if not malign, the role and executive authority of the PMO.
Without going into the merits of those cases, their progression and the debate on the usefulness of such leaks for the general public to have glimpses of the natures of political corruption, business-bureaucracy-politician nexus and the state of governance in the country, those despicable developments and issues have, instead of solving any so far, only pushed the economy to retardation, if not yet to the point of a possible breakdown. The razzmatazz over the political corruption may last only till the next Lok Sabha election, but the deep wound it has inflicted on Indian economy will take several years to heal. (IPA Service)