‘Scamania’, ‘scamedia’?!

 “A Nation of Cynics? – The National Psyche Seems To Believe The Most Ludicrous Charges Against The UPA Govt”

Do not search in dictionaries for the meanings of these words. In economics, we had two words ‘inflation’ and ‘stagnation’, the first defines ‘the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Central Banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum; and the second word indicates ‘a period of little or no growth in the economy’. But when the two phenomenon occur simultaneously at a time, (i.e.) when the situation in which the inflation rate is high, the economic growth rate slows down, the unemployment remain steadily high, it is called ‘stagflation’. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa. This can only happen under unusual circumstances. The term ‘stagflation’ was coined by economists in the 1970s to describe the previously unprecedented combination of slow economic growth and rising prices.

Now during the past three years, the way in which the media [possibly the office of the Comptroller and Auditor General (CAG) working in tandem with it] is systematically creating a national psyche, which is ready to believe the most ludicrous charges against UPA the government. The media smell some ‘scam’ in everything happening in the normal course and people are tuned to buy their sensational stories given by them. If the term ‘mania’ means obsession and the people are ready to believe all these ludicrous stories of ‘megascams’, then the term ‘scamania’ can be coined to describe the situation obtaining in India, created by scam-crazy media, ‘scamedia!’

The Comptroller and Auditor General (CAG) has joined the ranks of media moghuls and Gandhi topi-wielding Anna Hazare brigade to trigger a fresh burst of competitive activism against the ruling coalition.

Routine leakages of CAG reports on astronomical 2G presumptive losses, the ISRO-ANTRIX deal losses, and now the coal blocks allotment losses are causes for celebration among an opportunistic opposition and a sound-bite hungry media. Immediately there is hue and cry over ‘spectrum scam’, CWG scam, ISRO-ANTRIX scam and coal block allotment scam, presumptive losses turned scams, with nobody specifying so far who are the gainers.

Experts have begun to push for a more layered debate on issues related to allocation of natural resources. The interventions by the CAG as well as the courts are not necessarily the basis for an informed debate, they say.

'There can be a debate provided the basis for that debate is sound. I am questioning the very basis of this illiteracy that has been exhibited by the CAG in calculating the alleged losses in the allotment of coal blocks. The fact that the leakage of such a report may be linked to market manipulations that should ideally be probed by the SEBI is a different matter. What I want to know is how the CAG arrived at this figure in the first place. This speaks of an astounding economic illiteracy,' said Surjit S. Bhalla, chairman of a market advisory firm. According to Bhalla, the CAG coal loss figure is Rs.10.7 trillion (or lakh crore) at 2011 prices.

Besides the possible anomaly in the CAG figures, the larger concern is the readiness with which state institutions and individuals are being de-legitimized largely by ‘vigilante justice’ offered by those who are 'economically and politically illiterate'.

According to Leader of Opposition in the Rajya Sabha Arun Jaitley, there has to be a debate about whether natural resources should be auctioned or there can be a better mechanism to ensure transparency as well as affordable pricing pattern for the poor.

While the Opposition MPs do not attack the courts and the CAG publicly for the obvious reason of not being seen as batting for the UPA, the government has been fairly open about its contempt for such 'transgressions' by the CAG as well as the courts. Witness the stern warning to the Supreme Court by the Department of Telecom in the 2G review petition seeking reversal of the court judgment: 'The judgment, in respect of the policy, is directly contrary to the settled law, as laid down by the Supreme Court, that the essence of policymaking and governance is the weighting and balancing of different values and considerations, which is the role of the executive.'

According to senior counsel Rajeev Dhavan, tendency of the government spokespersons to 'shoot from the hip' and activism exhibited by the courts and the CAG has distorted the debate about natural resources and their use.

'The 2G judgment was the first and the CAG is the second joker in the pack. We need to look at resources, revenue and the fairness with which the government monitors the use of these resources. Pricing and revenue is an issue but the state needs to take into account how competitive bidding affects the end use. The CAG is an overseer of government expenditure but it has attributed to itself the role of an activist. The casualty of such posturing is informed debate,' said Dhawan.

As signaled by Arun Jaitley's caveat, discussions in the Opposition quarters center around the latest panacea for all evils that the courts and the CAG have offered vis-à-vis allocation of natural resources via auction. The Supreme Court offered it for all natural resources in the Spectrum 2G allotment case, a suggestion being violently opposed by the government. And the CAG is invalidating the allotment of coal blocks and discovering a ‘scam’ based on the same allotment criteria which is now the law of the land. The Mines and Minerals (Development and Regulation) Amendment Act 2010 has now allowed the state governments to grant a prospecting license or mining lease for coal and lignite to private companies through auction by competitive bidding.

'Would you advocate auction of water? Or auctioning air for harvesting wind-power energy? Would that not result in the endproduct being based on equally competitive pricing pattern? Is that a just and fair method for the welfare state?' asked a senior opposition leader.

But until the media put an end to this sensation mongering and start playing an objective, meaningful and constructive role, the complex layers of such arguments will not find any echo among people who are fed with dosages of cynicism day in and out.

Amidst the hue and cry over the so-called ‘spectrum scam’, nobody seem to have taken note of the revelation about the CAG's credibility taking a beating.

Documents revealed through RTI enquiries cast serious doubts on the credibility of the Controller and Auditor Generals’ 2G report. It now appears that the Director General who conducted the audit was unable to quantify the loss or put it as low as Rs 2,645 crore but was overruled by his bosses who pushed the alleged loss all the way to Rs 1.76 lakh crore. Worse, file noting reveals that an attempt was made to silence the Director General.

Congress MP and PAC member Sanjay Nirupam discussed with CNBC-TV18’s Karan Thapar what all of this abounds to. Below is a verbatim transcript:

Q: As a member of the PAC how do you respond to the revelation that the Director General who did the Draft CAG report on 2G did not quantify the loss due to the decision not to auction spectrum and at the most suggested that the loss could be Rs 2,645 crore which is almost 70 times less than the Rs 1.76 lakh crore figure?

Nirupam: “There is no doubt that it is really a shocking revelation. I have already prepared a letter which I am going to send to Dr Murli Manohar Joshi who is the Chairman of PAC. I am going to ask him to setup an enquiry within PAC to look into the working of CAG. There is no doubt in the fact that CAG's credibility is getting eroded day by day.

As far as this 2G issue is concerned, how can the mathematics not be accurate? The way CAG has basically highlighted the presumptive loss of Rs 1.76 lakh crore, is nonsense, it's a senseless figure. Now it is coming out that there was a difference of opinion in CAG only. I am very happy that one channel has got access through RTI about this final information that the whole loss was not exactly more than Rs 2,645 crore.

Where is Rs 2,645 crore and where is Rs 1.76 lakh crore? The way CAG has worked in the last couple of years is nothing but it is being used politically by political parties. That is why the CAG report before it has been tabled in Parliament; it has been leaked to the media. I really condemn this kind of trend.”

But scam-maniac media, by and large, systematically buried this vital information on the lack of credibility of the CAG’s report on 2G spectrum allocation.

The national psyche seems ready to believe the most ludicrous charges against the government

Certain sections of the press have quoted a draft report of the CAG in recent weeks hinting at ‘crony capitalism’, creating some speculation in public mind as if there may be another mega scam in our midst. According to these reports, quoting the draft CAG report:

• The government has gifted away Rs.1.64 lakh crore to the GMR group, the developers of Delhi International Airport (DIAL).

• The government gave away the airport land to GMR at a measly Rs.100 per acre per annum, when the land is worth thousands of crores.

• Ministry of civil aviation, and later Airports Economic Regulatory Authority (AERA), granted post-contractual benefits in the form of airport development fee (ADF) to DIAL at the cost of passengers.

• The government granted unilateral rights to DIAL for extension of the concession period by 30 years without renegotiation.

Rebutting the allegations and explaining every detail, V.Raghunathan, the CEO of GMR Varalakshmi Foundation wrote in ‘The Economic Times’ on June 23, the following:

“For one closely associated with the social responsibility arm of the group at a senior level, these are troubling issues. One can hardly sleep in peace and go about one’s business unconcerned without checking the veracity of these allegations. So, this writer dusted off the finance and accounting hat to look deeper into these issues. And if the findings come from an ‘interested party’, one offers no apologies for presenting the facts, as the issues at hand concern the country at large. What could be the possible basis for the estimate of a Rs.1.6-lakh-crore gift to GMR? GMR leased some land in 2007 at about Rs.1.58 crore per acre per annum for 58 years at an annual increment of 5.8%. This sum, over 58 years, adds up to nearly Rs. 690 crore (= 1.58 + 1.67 + and so on for 58 years, increasing at 5.8% year-on-year). Since GMR was given about 230 acres to develop, as one of the terms of revenue-share enhancement as per the open bid document, the total amount works to about Rs. 1.6 lakh crore. This obviously ignores time value of money. When discounted at 14%, the amount comes down to a mere Rs. 19 crore per acre, or about Rs. 4,500 crore, for 230 acres, of which 46% in any case goes to the government.

Now, in the last six years, DIAL paid out Rs.2,935 crore to the government as its share (46%) of the revenues. In 2011-12 alone, DIAL paid Rs.704 crore, and some quick computation on spreadsheet shows that Rs.704 crore growing at 5.8% per annum for the next 54 years adds up to nearly Rs.2.4 lakh crore. Thus, if the government was gifting away Rs.1,60,000 crore over 58 years to GMR, GMR would be returning the compliment with Rs. 2,40,000 crore to the government during the same period. And over and above this, the Airports Authority of India (AAI) is entitled to 26% share of dividends. The truth is that sums added over long periods without factoring the time value of money can look absurdly silly.

On the next point, while it is true that GMR was ‘given’ land at Rs. 100 per acre, it turns out that this was only a notional amount to effect the conveyance deed, and hardly reflective of the rental value. The land was simply given to the developers to operate and develop the airport and the associated infrastructure. Had the land been charged at market value, for instance, surely a bidder would automatically adjust that against a reduced top-line sharing? That brings us to the third point, the airport development fee (ADF). Was it a postcontractual benefit accorded to GMR? The government has been pilloried so badly in recent times that any attribution to the CAG seems to put the government and whoever they associate with automatically in the dock.

However, the facts appear to be as follows.

ADF is permitted under Section 22A of the AAI Act, 1994. The relevant Section was enacted in 2003 and was made available to all the bidders in 2005. Even though it is true that the operation, management and development agreement is silent on the ADF and allows only for debt, equity and user development fee (UDF) as sources of funds for the airport, the bid document also states that the bid is subject to various relevant laws, including the AAI Act, 1994.

In fact, the Supreme Court upheld the levy of ADF at Delhi airport, vide its order dated April 26, 2011, in response to civil appeal number 3611 of 2011. What is more, AERA, after detailed technical and financial audits and reviews, had also vetted the levy of ADF in January 2011.

But why was ADF levied? One understands that when the project cost had escalated for various reasons, and GMR approached AAI for additional injection of equity, the AAI was unable to do so. And that is when the ADF clause in AAI Act, 1994, was invoked by the government, even though ADF was not explicit in the original bid document. GMR itself would have been happier with additional equity, a government-guaranteed debt or higher UDF.

Lastly, why was GMR given a unilateral right to extend the concession period by 30 years? Well, this was part of the terms of the bid, applicable to all bidders. Such longterm leases are common internationally. Besides, had the lease term been shorter, or had the government held the right in its own hands, the bidders would simply have adjusted the revenue share downwards or not bid at all. Delhi airport is an impressive achievement, achieved under very difficult odds. Not only was the airport completed in a record time of 37 months, it was a face-saver for the Commonwealth Games. But what is tragic is that such unfounded accusations may give public-private partnership itself a bad name. Are we turning into a cynical country?”

The sections of the media, which reported this story of the ‘mega scam’ of the government ‘gifting away’ Rs.1.64 lakh crore to the GMR group, did not care to follow basic journalistic ethics of seeking the response of the group and publish it along with the report to enable the people draw the right opinion.

The media’s negative role in breeding a nation of cynics and sensationalism is gracefully admitted by the leading national daily ‘The Hindu’ on June 29 under the heading ‘What’s in a name? A life’ on the sensational goof up made by the media on June 27 on the release of Indian prisoner in Pakistan:

“No excuses, no nitpicking. The entire media got the ‘Sarabjit to be released’ story wrong — including The Hindu, in its early editions before we stopped press at midnight to make the correction. If anything, the Sarabjit/Surjeet Singh mix-up has held a mirror to the beast that the media has become: easily excitable, know-it-all and supremely confident to the extent of being tone deaf even when Pakistan’s Presidential spokesman Farhatullah Babar was clearly saying on Indian television channels — and by extension to the tuned-in print media — that “Surjeet Singh” was entitled to be released. The media stands exposed but still does not have the grace to admit it was wrong, let alone introspect or apologise for giving false hope to the family of a condemned man. Worse, a section of the media has topped it all up with theories galore on why Islamabad made the “midnight switch”. Ironically, because of the nature of the story and how it unfolded, Sarabjit’s family at least got to air its disappointment. But what of all those mistakes that are being made by the media in the rush to be first with the news? The insensitive line of questioning to bring out raw emotion on camera, the crowding around rescue operations for a “quote”, or ruining investigations by breezing into crime scenes? In this particular case, there is the fig leaf of an excuse in the two names sounding similar but the media was clearly not listening and kept repeating ‘Sarabjit’ so often that on at least one TV show, Mr. Babar himself got confused and used that name for the man he had referred to only seconds earlier as ‘Surjeet.’

In the India-Pakistan context, the role of the media on both sides has been particularly dubious; leading the pack in baying for blood at the smallest of irritants even while talking Track-II, overly obsessing with certain issues, and allowing emotions and rhetoric to determine the narrative instead of informed discourse. To be fair to both governments, the Foreign Offices in recent months have been restrained in the face of provocation from the media. If Islamabad was at pains to explain to the local media that granting ‘Most Favoured Nation’ status to India was not equivalent to making it Pakistan’s ‘Most Favourite Nation’, officials of the Ministry of External Affairs sought to drive home the fact that both Kashmir and the Mumbai terror attacks got equal play in the last round of Foreign Secretary-level talks. Both governments have been trying to create space for each other to navigate the slippery route to peaceful co-existence and cooperation, made all the more treacherous by the media which has allowed shrill voices to flourish to the detriment of sane and studied opinion. Mercifully, the media-created fiasco that made the Pakistan government — already under siege for other reasons — look bad did not stall Surjeet Singh’s release. His return should now set the stage for the repatriation of all Indian and Pakistani prisoners who remain incarcerated across the border despite completing their sentences.”

It is time the media, print and visual, introspected itself whether it’s disseminating information in the true sense or adding unwanted colour and its own perception to get attention. Sensationalism has become the order of the day. Many sections of the media are obsessed with false reports. Vying with one another to be the first to report and in competitive sensationalism, media houses display insensivity to human sufferings, particularly during major calamities and damages caused to the national psyche, when issues of national importance, public order, governance and economic development are discussed/ reported. It is time journalism became true journalism again – reporting, reviewing, analyzing and acting as a bridge between the rulers and the ruled in unbiased manner. What we see today is more of ‘investigative journalism, reporting questionable information and drawing hasty conclusions. It should go back to the basics of checking facts before publishing/ reporting news.

In contrast to the media’s attitude towards the UPA government at the Centre, making mountains of mole hills and concocting stories out of nothing, their attitude towards the anti-people and anti-democratic regime of Jayalalitha in Tamil Nadu, is shamefully cowardly, submissive and sycophantic. The reasons are obvious: the rulers at the Centre are seasoned democrats, while the one in the state is an unchanging autocrat. Braving democracy and capitulating to autocracy is not the creed of free and independent journalism.

The fact that the media plays a significant role in a democracy cannot be denied. But it stands badly exposed now. In many cases, the media instead of informing and creating public opinion, creates confusion and distorts public opinion. It should bear in mind that it occupies an important place in a democracy.

In the words of MalcolmX, the famous American leader, “The media’s the most powerful entity on the earth. They have the power to make the innocent guilty, and the guilty innocent, and that’s power. Because they control the minds of the masses. It is, therefore, important for the media to be responsible.”