7/28/2019 A Cynical Government
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july 13, 2013
Economic & Political Weekly EPW july 13, 2013 vol xlviII no
28 7
A Cynical GovernmentSocial welfare has become a means to hide
corporate capture of national resources.
One would have thought that after the revelations on
theCommonwealth Games scandal, the telecom skuldug-gery and the
coal block heists, the United Progressive Alliance ( UPA)
government would be a little careful about placingthe interests of
private groups over that of the common weal. That isnot so. There
is now a brazenness with which the UPA governmentis ever willing to
shower benets on particular business groups.Two recent examples are
the decisions to double the price of naturalgas and, earlier, to
favour Abu Dhabi with a fourfold increase inpassenger trafc
capacity between India and that Emirate.
The decision to double the price of natural gas from $4.20
to$8.40 per million British thermal units (mm BTU) has beenbased
ostensibly on the considered recommendations of a gov-ernment
committee set up to look into the issue. However, asindependent
analysts familiar with natural gas markets have
pointed out, the methodology used by this committee seems toshow
no awareness of the structure of the market and the globalprices
and that the consequent formula is completely irrele-
vant. (See, for instance, Natural Gas Price Hike:
SubsidisingProducers Prots? in this issue.) It has also been
pointed outthat the rationale of a higher price attracting new
investment tothe sector does not wash, for similar price increases
in the pastdecade have not yielded such outlays.
This is not the rst time that the government has arbitrarily set
prices for natural gas. It did so in 2007 as well when, of
allentities, a Group of Ministers gave producers a price of
$4.20per mm BTU rather than under $3 per mm BTU that many at
thetime had argued was the more appropriate benchmark. Now, asin
2007, the unmistakable conclusion is that the government hasset a
price that will benet the largest gas producer in the country,
which also happens to be Indias largest private corporate
group.This company, which has continuously pressurised the
governmentto raise prices without any reference to the costs of
explorationor production, has violated the production sharing
contract ithad signed with the government; it has been found to
gold-plateits investment in gas exploration and production; it has
stone-
walled an investigation by the Comptroller and Auditor
General;and it is believed to have had more than one union
petroleum
minister shunted out of ofce for not doing its bidding.The
latest price hike could, it has been estimated, give
Indiascorporate behemoth an additional largesse of as much as
Rs 26,000 crore every year! All this for its extraction of a
publicnatural resource, which, at the new rates, will either
makepower and fertilisers more expensive or call for larger
subsidiesto hold down their prices. Does one need more evidence of
thehold of this particular corporate over government policy?
If on gas the union cabinet took a decision, then in
anotherinstance an individual ministry has done what it pleases
it,again to benet a particular private company. Air servicesrights,
which decide the airline passenger capacity, betweenany two
countries are bilaterally negotiated by governments.One of the most
coveted routes from India is to West Asia andsince the last decade
the government has been liberally givingaway rights to airlines of
that region. Indeed, one reason for AirIndias present plight has
got to do with UPA-I having beenovergenerous in handing over rights
to Dubai-based airlines.
This time the Ministry of Civil Aviation has gone even
further.On 24 April it signed a memorandum of understanding ( Mo
U)
with its counterpart in Abu Dhabi awarding it a
threefoldincrease in the number of passengers it could y to and
fromIndia every week. That the Mo U was signed on the same day as
the national carrier of Abu Dhabi announced its decisionto acquire
24% in a private Indian airline could of course only be a
coincidence. And that the same Indian airline whichstands to benet
from seat expansion and infusion of foreignequity has been
demonstrating its ability for close to twodecades to inuence
government policy in civil aviation is alsoof course just a
coincidence. With all these coincidences raisinga stink, we are now
witness to the unseemly sight of thePrime Ministers Ofce trying to
show that its hands are clean,implying that if there is any
wrongdoing, it is the Ministry of Civil Aviation to blame! In this
ongoing loot there is anarchy inthe government as well.
Corruption, manipulation of public policy and capture of
eco-nomic resources by powerful private groups, none of this is
new.Since the early 1990s, each successive government whateverits
ideological persuasion has sought to surpass its predecessorin
handing out public economic resources to private interests. Itseems
that since economic growth has accelerated the value of
these resources has also grown and with it has grown the size of
the appropriation for private gain. If this government has
appearedto have taken the sanction of public loot to new heights,
one can be
