Atmosphere of cynicism: High time for introspection

Reliance Industries Limited (RIL) is the largest private sector conglomerate company in India headquartered at Mumbai. The company is largest by annual turnover of US $58.5 billion and market capitalization of US$78.2 billion for the fiscal year ending in March 2011 making it one of the largest India's private sector companies, being ranked at 264th position in the Fortune Global 500 (2009) and at the 126th position in the Forbes Global 2000 list (2010).

Reliance was founded by late business tycoon Dhirubhai Ambani in 1966. Ambani had been a pioneer in introducing financial instruments like fully convertible debentures to the Indian stock markets. Ambani was one of the first entrepreneurs to draw retail investors to the stock markets. The rise of RIL to the top slot in terms of market capitalization is largely due to Dhirubhai's ability to convince small investors by consistent confidence-building.

In September 2008, RIL was the only Indian firm featured in the Forbes's list of "world's 100 most respected companies". In 2010, it stood at 13th position in the Platts Top 250 Global Energy Company Rankings.  Blue chip shares of the RIL, were on the top position in stock market for a very long period till recently when Tata and Wipro overtook it.

In 2011, the RIL stock has fallen 18.3 percent, hitting two year low on June 16. This is more than double the fall in the BSE sensex, which is down 8.8 percent for the year. Why this phenomenal fall in RIL stock value? It reflected the nervousness among investors and loss of confidence.

In it’s leaked (who leaked it is a mystery) Draft Report (2010-2011), the Comptroller and Auditor General of India's (CAG) first ever audit of oil and gas companies operating in India, said that the Government of India unduly favoured private oil and natural gas explorers including the Mukesh Ambani-led RIL incurring a huge loss to the exchequer. The CAG report mentioned that the Ministry of Petroleum and Natural Gas (MOP&NG) and its regulatory arm - the Directorate General of Hydrocarbons (DGH) - allegedly favoured at least three private oil and natural gas explorers. The report alleges that the government allowed Ambani's RIL to violate terms of its contract with the government for exploration in the Krishna-Godavari basin (KG-D6). The CAG report also stated that the Directorate General of Hydrocarbons had allowed RIL to violate norms.The violation of terms, in turn, helped RIL increase its capital expenditure plan to start production from the Krisha-Godavari basin. Allegedly, 70% of the draft Comptroller and Auditor General of India report is devoted to RIL alone.

The government has been accused of providing “huge” and “undue benefit” to RIL — the Comptroller and Auditor General has indicted the Ministry of Petroleum and Natural Gas for allowing “irregularities and bending rules” to “oblige” RIL in the Krishna Godavari basin gas fields, leading to a massive and as yet “unquantifiable” loss to the national exchequer. In its 193-page Draft Report on production sharing contracts (PSCs) in the oil and gas field, the CAG exposes the “close nexus” between RIL and the “bureaucrats” working in the Petroleum Ministry as well as its Directorate General of Hydrocarbons. This allowed RIL to retain its entire offshore acreage, rather than surrendering those areas where it had not found oil or gas so that the government could invite fresh bids from other companies.

The CAG sent its Draft Report (only draft one and not final) to the Ministry of Petroleum and Natural Gas (MoP&NG) only on June 8, 2011 but even well before that the media could access it and it became the lead news for 24x7 news channels. The CAG report also noted that former Directorate General of Hydrocarbons (DGH) permitted RIL to inflate its development costs on extracting the gas in the D6 block to the KG basin (KG-D6) from USD $2.47 billion to a huge USD $ 8.84 billion. The CAG also cited a joint venture of RIL with British Gas(BG) and Oil and Natural Gas Corporation(ONGC) for hiking development costs in the Panna-Mukta and Tapti gas fields. It has earlier been alleged that an Empowered Group of Ministers (EGoM) had allowed RIL to sell per unit of the gas at a price of Rs. 4.20 even as the government companies were selling the same for just Rs.1.20.

Though the company’s petrochemicals, refining and oil and gas related operation form the core of its business, other segments of the company include textile, retail business, telecommunications and SEZ development. But following the leak of the draft CAG report (not even finalized report) and media frenzy, not only the stocks of RIL fell but also the company has suffered the repeated ignominy of being left kicking the dirt. Since January when the media ‘investigation’ started followed by draft report of the CAG, which endorsed the ‘findings’ of media investigation, several arms of the government have been critical of RIL’s productions and cost numbers of its gastrophy project, dismissive of its reported  oils finds and silent on a tie-up approval it needs today. All this is happening in the backdrop of the 2G telecom case. The fact that such responsible people could be jailed and denied bail is a paradigm shift in Indian consciousness. In the current atmosphere, everyone tends to see everything with suspicion. People in the corridors of power are alluding to the state of paralysis the government has slipped into, stalling and distorting decision making.

This state of affairs of the leading company in the country and the paralysis the government has slipped into is attributable to the Indian psyche, which culturally by tradition is highly pessimistic, cynical and suspicious. In his inimitable style Thanthai Periyar used to explain this mentality of our people thus: Ask any westerner ‘How are you?.’ Pat will come the reply, ‘Fine’ or ‘very well’. Put the same question to an Indian. He will say, ‘Somehow carrying on’ or ‘somehow carrying on by your grace.’ Even if he is well off and happy he says so suspecting others of envying him. After all, the media and arms of governance including the bureaucracy and the CAG are products and institutions of this society and not exceptions to such social mentality, in spite of education, exposures and self-proclamations instead of the avowed objective of creating confidence and self-confidence among people, they constantly and consistently create a perennial atmosphere of cynicism in the society.

This sordid atmosphere is anathema to liberalized economy and globalization India has adopted since 1991. The media as a whole proclaim from rooftops that they are wedded to Economic liberalization policy and globalization. It is the same media that acclaimed Dr. Manmohan Singh as the ‘Architect of Liberalization’ and ‘The Messiah of Economy’ when he was serving as the Finance Minister and given a free hand by the then Prime Minister P.V.Narasimha Rao, who was also accused of highly reticent. Now the policy of liberalization and globalization has come to stay and all governments thereafter both at the Centre and States sail with it. Even the Left-led governments in States were no exception.

The huge beneficiary of the policy of liberalization and globalization in the world is communist China, which, in the last four decades since the rise of Deng Xiaoping in late 1970s, has turned into an Economic Superpower challenging even the mighty USA. Today China is the biggest creditor of USA holding more than 50 percent of US Treasury bonds and high stakes in American business. Under the caption ‘How China builds these….. and why India never does’,  the business daily ‘The Economic Times’ in its issue dated July 3, 2011 has published a photo feature article. It says “just last month, China commissioned into operation the world’s longest natural gas pipeline (From Central Asia to Chinese cities at a cost of $22 billion) the word’s longest cross-sea bridge (34.48 kms  cost $23 bullion) and the world’s longest high-speed rail link (Beijing-Shanghai 1318 kms cost $32 billion). In the next few months the world’s longest power plant will also become fully operational. (Three Gorges Dam Power project with a capacity of 18.2 gigawatts (1000 million watts). It will generate 100 tetrawatt hour of power a year, cost $26 billion). What enables China to build such mega projects at dazzling speed and why India can never match up?” To this question the article gives many reasons one among which is “China has used its high savings rate (of its people) to mobilize capital for infrastructure investments” It implies confidence-building steps taken among its people to save and invest in infrastructure projects unmindful of ‘the rate of returns in the short terms.’ (Economists and politicians of all hues from Subramanian Swamy of the Extreme Right to Prakash Karats of the Left cite China for emulation by India.)

Precisely the opposite of this (confidence-breaking instead of confidence-building) is the order of the day here. If the media indulge in it for circulation/ viewership the opposition parties for political gains unmindful of the harm to the nation. As a result India is starved of fresh investments and the governments have to seek the aids of international financial institutions for capital investment in even irrigation and drinking water project and creating infrastructure like roads, bridges, ports etc., The states are engaged in unhealthy competition to attract foreign direct investments (FDIs) for industrial development offering huge tax cuts, acquiring lands even by force and by suppressing rights of workers to provide ‘congenial industrial atmosphere’, all these measures inviting people’s wrath.  Moreover, these sections simply forget that India, of late is the target of destabilisation by internal and external subverting elements.

This sordid state of affairs has prompted the renowned economist and Prime Minister Dr. Manmohan Singh to observe on the roles of media and the likes of the CAG, (during his meeting with editors on June 29) thus,

I think that there is a growing perception that this government is in siege, that we have not been able to deliver on our agenda. An atmosphere has been created in the country - and this I say with all humility - the role of the media today in many cases has become that of the accuser, the prosecutor and the judge.

Now that way no Parliamentary democracy can function and I would like to tell you that if you are taking governmental decisions, particularly big macro decisions, we don't know all the facts and yet we have to take decisions.

We live in a world of uncertainty and ex-post whether it is the Comptroller and Auditor General, whether it is a Parliamentary committee then they analyse post facto. They have a lot more facts which were not available to those who took the decision.

I am not saying that it is not possible that some people may deliberately do wrong things, but in many cases it would turn out in that sort of a scenario it is very difficult to operate. So we must create in this country an environment in which Governments, Ministers and civil servants will not be discouraged from taking decisions in the national interest when all facts are not known, they will never be known. We take decisions in a world of uncertainty and that's the perspective I think Parliament, our CAG and our media must adopt if this nation is to move forward.

Q: The judiciary has also made some strong statements?

A: The Supreme Court justification is that these questions and answers are necessary to get answers from the Bar about things that are bothering them. But they say the way the press uses them is the real problem. I have talked to the judges and they said the question-answers are in order to clarify the way but they said that it is the press who should recognise this that they are not orders.

Interjection – But some of the Judges statements are virtual opinions?

A: But, I think everybody should exercise restraint. . When I talk to the Judges they tell me this is not our intention to say that these are our orders or instructions. We ask these questions in order to clarify the issues. But the press, in the way it uses them that causes sensationalism.

Q: What about the CAG draft report on KG Gas?

A: I have not read the full report. This is a special report which the ministry themselves had asked for. And this is a draft report and after clarifications if there are any irregularities there are mechanisms to correct them. But it is still premature.

Interjection – I understand from sources within the CAG that it took them 16 months to get the data.

A- Well I think the CAG also leaks. It is not the function of the CAG , It has never been the case that the CAG has held a Press Conference as the present CAG has done. But nobody is commenting on all this. It is not right for the CAG to go into issues which are not the concern of the CAG, it is not the CAG's business to comment on policy issues. I think they should limit themselves to the mandate given under the constitution. We are now a permissive society, I think if the media can get away with murder so can the CAG.”

Expectedly leading English dailies and News channels have come out with impulsive editorials and articles and discussions strongly taking exception to the views of the Prime Minister. It is high time the media dispassionately carry out honest and transparent introspection, at least in the interests of posterity!