The BJP may have pilloried Kapil Sibal for his there-was-no-loss theory of telecom following the CAG report that put the A Raja scam between Rs 57,000 crore and Rs 176,000 crore, but last week’s developments would have gladdened his heart. The Attorney General (AG), KK Venugopal, told the Supreme Court (SC) that its actions of cancelling coal and telecom licences had caused enormous harm to the country.
Venugopal was reacting to SC taking cognizance of various PILs and then asking the government uncomfortable questions—over the past few weeks, these ranged from why there were so many rapes in the country, to the need to unclog over-crowded jails and even suggesting that garbage in the capital be dumped in front of the Lieutenant Governor’s house if the government had no solution to the mountains of garbage.
But asking SC to examine the budgetary impact of various PILs they were ruling on is one thing and rubbishing it for cancelling illegal coal/telecom licences is quite another. More so since the BJP had run its entire election campaign on the UPA’s corruption. So, was the AG arguing that, while there was corruption running into tens of thousands of crore rupees—even if you don’t buy the CAG’s Rs 176,000 crore loss estimate for telecom—SC shouldn’t have cancelled the licences because this hit economic activity in the case of coal and foreign investor sentiment in telecom? That only encourages more such illegality by creating facts-on-the-ground—build an illegal residential complex, sell it to a few hundred families and, when the authorities come to demolish it, argue that hundred of innocents and crores of rupees are at stake.
No one doubts the problems caused by SC to those who had bought Raja’s licenses, but this is not responsible for the industry’s problems, nor did it hit the country’s FDI prospects. Even when the licences were bought by foreign investors, their shaky foundations were known—indeed, the then Trai chief was openly writing letters accusing Raja of cherry-picking from his recommendations. And, even after the licences were cancelled, serious foreign investors like Vodafone and Singtel continue to invest billions of dollars.
And, to the extent the sector has low sentiments, apart from that caused by RJio’s pricing, it is due to the fact that the government continues to charge unconscionably high annual revenue charges and artificially high spectrum fees due to too little spectrum being released for auctions or a policy of using the last auction value as the reserve price for the next auction.
In the coal sector, there is no doubt the cancellation of 204 coal licences hit production, but this has largely recovered—the operating mines produced 50 million tonnes when they were shut in August 2014, and they produce 34 million tonnes today. And, the good thing is that, India now has a clear transparent policy of auctions instead of a corrupt and inefficient system. More important, had the government been able to execute its policy well, India’s output would have recovered faster. While around 60% of the blocks were allocated to public sector companies, of the 72 blocks put up for auction to the private sector, only 31 were awarded—around half the blocks that didn’t get bidders didn’t have environment clearances (EC) or forest clearances (FC) in place.
The larger problem, as Vedanta’s Anil Agarwal points out is that, while non-oil minerals account for 30% of India’s import bill, just 10% of India’s area with mining potential has been explored as compared to 95% in the case of Australia—Agarwal, in fact, is of the view that a sensible mining policy can cut minerals imports by half and create 20 million jobs in the bargain. If mining in India has been hobbled, this is due to high government imposts, delays in EC and FC, and the distrust of mining by local communities due to poor environment management by most miners and the government’s inability to do much about this.
Indeed, when Coal India was fined over Rs 40,000 crore due to the fact that it didn’t have ECs—the fine rose manifold due to a retrospective interpretation of the law by the government!—it was found that ECs could even take up to 390 days to get, and that it was routine practice for the government to give these late and then retrospectively condone the mining that took place without ECs!
So, why blame the Supreme Court for this? Indeed, had the government been able to spend the Rs 90,000 crore lying with the Compensatory Afforestation Fund Management and Planning Authority (CAMPA)—this is one of the issues SC raised with the AG last week—local communities would look at mining quite differently. And while Rs 18,500 crore has been collected under the District Mineral Foundation—DMF funds are to be used to benefit local people affected by mining—so far, only Rs 3,552 crore has been spent. Once again, that is not SC’s fault.
Blaming SC for India’s woes is easy, but it is mostly poor government policy that is responsible. The AG argued that SC wanted the government to do more and more, but there was no money. But look at how much is wasted. The Food Security Act alone costs around Rs 120,000 crore a year since it gives two-thirds of the population wheat and rice at around a tenth the cost—surely this can be halved quite easily to create money for other priorities?