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Gfiles Jan 2014

  2. 2. From the Editor W vol. 7, ISSUE 10 | JANUARY 2014 Anil Tyagi | editor TR Ramachandran | executive editor Niranjan Desai | roving editor GS Sood | consulting business editor Rakesh Bhardwaj | editorial consultant Arvind Tiwari | director, business development Naresh Minocha | associate editor Neeraj Mahajan | associate editor Alok Jain | coordinator (maharashtra) Ajit Ujjainkar | bureau chief (mumbai) Harishchandra Bhat | associate editor (bengaluru) Venugopalan | bureau chief (bengaluru) Kh Manglembi Devi | editorial coordinator Mayank Awasthi | reporter Pawan Kumar | production coordinator Sumer Singh | assistant manager, logistics Nipun Jain | finance Gautam Das | legal consultant Crossmedia Solutions | edit & design Taran Tejpal Singh | Webmaster (Design) advertising & marketing U K SHARMA— +919717588883 e-mail: RAKESH ARORA— +919810648809 SAKSHAY PAHUJA— +918527006688 e-mail: mumbai: 48/C-1, Areshwar, Mhada, S.V.P. Nagar, Andheri(W), Mumbai 400 053 bengaluru: 2210, 10b main road, 3 block, jayanagar, bengaluru 560 011 CONTACT — +91 9845730298 e-mail: +All information in gfiles is obtained from sources that the management considers reliable, and is disseminated to readers without any responsibility on our part. Any opinions or views on any contemporary or past topics, issues or developments expressed by third parties, whether in abstract or in interviews, are not necessarily shared by us. Copyright exclusively with Sarvashrestha Media Pvt. Ltd. All rights reserved throughout the world. Reproduction of any material of this magazine in whole, or in part(s), in any manner, without prior permission, is totally prohibited. The publisher accepts no responsibility for any material lost or damaged in transit. The publisher reserves the right to refuse, withdraw or otherwise deal with any advertisement without explanation. All advertisements must comply with the Indian Advertisements Code. Published and printed by Anil Tyagi on behalf of Sarvashrestha Media Pvt. Ltd at Kala Jyothi Process Pvt Ltd. E-125, Site-B, Surajpur Ind. Area, Gautam Budh Nagar, Greater Noida-201306 U.P. (INDIA). All disputes are subject to the exclusive jurisdiction of competent courts in New Delhi only ELCOME, 2014. In all probability, this is going to be a landmark year in India’s history. There will be a good deal of churning this year: Who will be the new Prime Minister of India? Which party will form the government? Will it be a hung parliament? Who will be the new Cabinet Secretary of India? How will the economy shape up? Is young India in a mood to transform the face of Indian politics? No one had been able to gauge the extent of the anger of the common man till the emergence of the Aam Aadmi Party (AAP). Will the AAP be able to sustain the momentum and become the agent of change for India? The mist will clear in 2014. What is happening in the ruling Congress party? gfiles’ cover story debates this. It states that if Rahul Gandhi is unable to muster votes and come up as a veritable cheerleader, then it is certain he will be out of the game for the next five years. The Congress leadership is completely disconnected from the common man. Voter mindset has altered—voters now desire that their leader should be among them, to be available as and when they need him. But Congress leaders behave like monarchs; the common man cannot find any commonality with them. As we analyse the emerging parliamentary scenario of 2014, the next Prime Minister will be decided by more than 200 Members of Parliament who will be neither from the Congress nor the BJP. It is going to be a fractured mandate and it will be interesting to see how the BJP is able to form the government or how the Congress allows others to form the government as it has done in Delhi. Meanwhile, TN Pandey, former Chairman of CBDT, angrily points out in his article, ‘Soft on tax evaders’, that tax economists and policymakers the world over discourage amnesty. When 10 lakh registered taxpayers are not discharging their obligations, they need to be dealt with sternly—not cajoled by being provided immunity from interest, penalty and prosecution. MG Devasahayam is concerned about Haryana, about the Gurgaon conundrum orchestrated by Bhupinder Singh Hooda and about the implications of a nuclear power plant at Fatehabad. He writes, “Since the Bhakra Water Sharing Agreement mandates that Bhakra water can only be used for irrigation and generation of hydel power, the BhakraBeas Management Board cannot give water for the nuclear plant.” In a related story discussing the role of the AERB, Devender Singh states, “There is no system in place for monitoring the expiry of authorisations and their renewals with instances of protracted delays for periods as long as 24 years. Alarmingly, 70 out of 135 Gamma Chamber units continue to function without valid authorisations.” Our Roving Editor, Niranjan Desai, comments on the Devyani Khobragade incident, “The government must insist on a reciprocal level playing field with the Americans on the question of diplomatic privileges and immunities, without any exception of any kind.” Amitabh Thakur carries forward his analysis of the bureaucracy: “They can become a political entity in their own right, not exactly dependent on various high commands, in case they definitely and strongly decide upon that and go religiously, meticulously and sincerely on that route.” Heartwarmingly, Kejriwal was a bureaucrat, not a politician, who has become the voice of the common man. In the new year, let us make a commitment that the communication channels of all the officers will be open for the common man. For, if you don’t open them now then the aam aadmi, who pays for everything one owns, will force open the door and raise the voice of pain and anger. ANIL TYAGI Download the gfiles app gfiles inside the government vol. 7, issue 10 | January 2014 3
  3. 3. CONTENTS 6 Bric-a-Brac LETTERS 10 Cover Story is the gandhi aura on the wane? SP MG EA DE K VA OU SA p3 T, HA 4 M YAM OD I! polls & trolls EXPOSÉ WHEN WILL ACTION BE TAKEN AGAINST JIGNESH SHAH? p28 December 10, 2013 VOL. 7, ISSUE 9 SUNIL PATNAIK: IAS TO ASHRAM FIRST STIRRINGS p42 22 Governance devyani case stirs up a storm 26 real estate boom in gurgaon 30 gorakhpur n-plant: is it all above board? 32 review of radiation management GOVERNANCE AWARDS 2013 regime 40 encouraging tax evaders 36 Insight the rise and fall of jignesh shah 42 First Stirrings ias officer takes to stargazing 46 My Corner serving the people 48 Silly Point ‘burking’ by the police 50 Stock Doctor book profits along the way 56 Perspective on true relationships 57 By the Way poll-pouri, hi-tech offices and more New Paradigms Governance awards I take this opportunity to compliment you for the excellent conduct of the gfiles governance awards event. I must say that your magazine is doing great work by identifying and felicitating public servants for their innovative solutions to complex social and economic issues of the country and their hard work. Shekhar Dutt Governor of Chhattisgarh I read with interest your December 2013 issue, highlighting innovative and commendable work done by our civil servants. Each and every award was truly well-researched and deserving. It is important that hardworking and committed civil servants get the recognition due to them, or else they will be engulfed by the malaise of corruption that is spreading in our society. It is extremely important that the bureaucracy stay motivated for then only will the standards of governance improve in our country. I congratulate you on successfully conducting the gfiles governance awards ceremony. BM Shah via email Black money COVER PHOTO: UNI 4 gfiles inside the government vol. 7, issue 10 | January 2014 The article on black money (gfiles, December 2013) clearly brings out the fact that unless there is strong political will to check black money and severely punish the guilty, the super-rich or politicians and industrialists will continue to stash money in safe havens abroad. There was a lot of hue and cry sometime back but nothing concrete seems to have emerged from it. The government needs to spell out to the public its strategies for unearthing and recovering black money stashed abroad. As pointed out in the article by TN Pandey, the role of black money in real estate transactions has been accepted by the Finance Minister of the country and no less. Unaccounted monies continue to be invested in real estate, given the good returns. We would like to know what the government is doing about it. Making speeches and releasing white papers is not enough. SK Mishra via email Wish list I wholeheartedly agree with the point made by MG Devasahayam (“Wish list for the wannabe Prime Minister”, gfiles, December 2013) that there are some issues that can work in favour of Narendra Modi—likely unemployment, corruption, price rise of basic commodities—but there are some points where he should review his facts before speaking at a public rally. The carnage of 2002 and its consequences are still haunting both him as well as his party members. Issues and concerns threatening the stability and integrity of the nation have not been meaningfully addressed by the Gujarat Chief Minister. But, there is no denying the Modi effect. Modi’s pull can be clearly seen in the results of the recent assembly elections where the BJP defeated the Congress by large margins. Is India really ready for a change? S Madhu on blog
  4. 4. gfiles inside the government vol. 7, issue 10 | January 2014 5
  5. 5. Bric-a-brac polls & trolls Hooda keeps the flag flying campaigns in chhattisgarh H ARYANA Chief Minister Bhupinder Singh Hooda knows exactly how to keep the Congress party bosses happy. No job or distance is too much. Everybody was surprised in Congress circles when Hooda landed at Raipur for campaigning. After all, Hooda is not a national leader and he does not have a mass following in the country, except in Haryana. However, some rich farmers who received handsome compensation for their land in Haryana, bought land in Chhattisgarh. After attending many public meetings across the state, Hooda camped for four days in Rajanandgaon, where assembly election was historic this time. Congress treasurer and Rajya Sabha member Motilal Vora’s son, Arun Vora, contested from the constituency. Arun had lost from Rajanandgaon three times, so it became a prestige issue for Motilal and his well-wishers (read Congress top brass) to win the seat. All the staff and members of the AICC Making the gods happy modi visits kashi hoped Arun could win as Motilal is loved by all. So Hooda was deputed to hold the fort, and he definitely kept the flag flying. The voters of Rajanandgaon were ‘very happy’ with Hooda’s benevolence. Arun won the election and the ageing, humble, worried Motilal is now happy and gratified as he had personally requested Sonia Gandhi to allot this seat to his son. g N ARENDRA Modi has managed to get the BJP’s godfathers to declare him the Prime Minister of India. But he is still not sure that the Almighty will bestow his blessings on him. It was naturally a complicated issue—how to make the gods happy. The task was duly assigned to his brother, Soma Bhai. Kashi Vishwanath is considered the most powerful god in Indian mythology. So Soma Bhai contacted the most prominent astrologers in Varanasi. Those top-notch astrologers of the historic city of Kashi predicted that Modi will be the next PM and he will do wonders. But they also suggested that Modi should visit Varanasi and take a sankalpa (oath) before Lord Shiva himself. Modi could not, however, go for this purpose alone, so a massive rally was organised. Modi paid his obeisance at Kashi Vishwanath and took the sankalpa. Apart from his brother, Soma Bhai, Smriti Irani, one of Modi’s ardent admirers, too is in touch with all kinds of personalities and characters to muster support for Modi. It is to be seen what the gods have in store for him, whether the gods of the BJP will keep their promise or he will have to rely on more worldly gods. g 6 gfiles inside the government vol. 7, issue 10 | January 2014
  6. 6. INSIDE EYE ILLUSTRATIONS: ARUNA Rahul’s elitist adviser mistry angers party workers D IGVIJAY Singh, Mohan Prakash, Madhusudan Mistry and CP Joshi are the top four advisers of Rahul Gandhi. They are now being blamed by party leaders and workers for the recent debacle in the assembly elections. Mistry, in particular, has been accused by Indore-based leader Raghu Parmar of taking money before finalising his ticket for the Indore-5 constituency. Parmar alleged at a press conference that money had exchanged hands in a Gujarat hotel. It is well known that though he was originally an RSS man, Madhusudan Devram Mistry today has enviably got the eyes and ears of Rahul and is in charge of all backroom strategy and plan- ning. Mistry was an acolyte of Shankarsinh Vaghela when the latter was in the BJP and had RSS leanings. He left the BJP in 1995 along with Vaghela to form the Rashtriya Janata Party (RJP). With the merger of the RJP with the Congress, Mistry became a Congressman. His corporate style of functioning, English orientation and database brand of politics have already ruffled many local leaders. An even bigger problem is accessibility. That is why he was roughed up at his residence in South Avenue by a few Congress workers from Meerut when he refused to meet them and asked them to come to Lucknow when he visited there next. Going to Lucknow to meet Mistry after taking prior appointment didn’t suit them as Delhi is hardly two hours from Meerut. Moreover, they were upset and anguished that their own party General Secretary insisting on prior appointment for a minor meeting! g gfiles inside the government vol. 7, issue 10 | January 2014 7
  7. 7. Bric-a-brac polls & trolls A party for all new entrants line up for aap A S politicians of all hues and inclinations queue up to join the Aam Aadmi Party (AAP), the latter would do well to recall a chapter from history. Today, there are rich and influential politicians of every political colour who are not averse to their supporters (read pawns) joining the AAP. This way, they can keep track of the goings-on inside the rookie party. Sources tell us that even some industrialists are deputing their top corporates to become AAP members. Sooner or later, these pawns will be in key posts. Recently, Alka Lamba, the ex-secretary of the Congress, resigned from the party and it is believed that she will join the AAP. Lamba is an ardent supporter of industrialist Navin Jindal. Her moves are being seen as part of Jindal’s penetration of the AAP. To go back in time: In 1978, when the Congress was divided, PC Sethi remained in the Congress (Reddy) as he was treasurer of the party. Indira Gandhi allowed him to be there as he was holding the keys to the treasure and she did not want the Janata Party to fritter it away. Congress (Reddy) was not the target of the Janata Party and Sethi’s activities went unnoticed. The moment Mrs G came back to power in the 1980s, Sethi joined the Congress(I) and brought along the wealth which he had kept as custodian in the Congress (Reddy). Now, we have to see how the AAP handles the pawns! g 8 gfiles inside the government vol. 7, issue 10 | January 2014
  8. 8. (A Government of India Enterprise) Power Transmission ince its inception, EPI has been committed to providing the best project management service through its dedicated and highly experienced team of personnel for a variety of multi-disciplinary projects. During the last 4 years, EPI has been engaged in the field of execution of large and multi-disciplinary industrial and construction projects on turnkey basis and project consultancy services in India and abroad. EPI’s areas of operations are spread across the following projects: ■ Civil and Infrastructure ■ Water Supply and Environmental Engineering ■ Material Handling ■ Metallurgical ■ Industrial and Process Plants ■ Oil and Petrochemical S Road Projects Grain Silos Water Treatment Plant EPI has contributed immensely in the advancement of the nation and the company is presently focusing on high technology, consultancy and high value projects. The company is re-establishing its activities in the overseas market. EPI has also diversified in the following sectors: ■ Mass Rapid Transit System ■ Renewable Energy EPI is a uniquely integrated engineering company capable of undertaking projects from the concept to commissioning and performs the following: ■ Feasibility Studies and Detailed Project Reports ■ Design and Engineering ■ Supply of Plant & Equipment ■ Quality Assurance ■ Project Construction ■ Erection and Commissioning ■ Operation and Maintenance ■ Overall Project Management in almost all areas of engineering and construction domain EPI’s composition and character makes it ideally suited to take up execution of large and complex construction projects in a wide spectrum of industries. Most of EPI personnel have grown up with the organisation and have considerable experience. Its engineers possess vast knowledge and experience in various disciplines like civil, mechanical, electrical, chemical, instrumentation and other engineering disciplines. Mass Rapid Transit System HOUSING COMPLEX, SURYANAGAR, BANGALORE Airports gfiles inside the government vol. 7, issue 10 | January 2014 9
  9. 9. COVER STORY politics congress Diminishing returns from dynasty The Congress has nobody but itself to blame for attempting to run a national party with the charisma of a single family. That, too, for the most part of its existence. If old, family-held enterprises can topple because they failed to move with the times, why can’t a family-held party? by K SUBRAMANIAM D IFFERENT States, different players, different playgrounds, different rules and yet the same result! It is time for the Congress leadership to sit back and dispassionately analyse as to what has brought it to this moribund state. Why is the party losing everywhere? Why has it failed to understand the needs and aspirations of the aam aadmi? Why has Rahul Gandhi failed as a leader? Why have Congress poll managers become so staid, stale, inefficient and incompetent in gauging the mood of the electorate? Where will it go from here and who will lead the party now in the forthcoming Lok Sabha polls? Whatever logic and explanation may be given by Congress leaders oncamera, yet the fact remains that nothing has worked for the Congress in the last four years. Be it Bihar, Uttar Pradesh, Gujarat, Punjab, Goa or the five states that recently went to polls—Chhattisgarh, Madhya Pradesh, Rajasthan, Delhi and Mizoram—nothing has worked for the Congress. If this could be hailed as the semi-final, then there is a clear indication that the Congress would struggle to even get into three digits in the forthcoming general election and will have a tough time in getting a two-digit tally in the Hindi heartland States. Rahul no gamechanger The biggest disappointment is the failure of Rahul Gandhi as a weapon which the Congress hoped to use as a gamechanger. In a private conversation, a very senior Congress leader said that “the Congress party can keep foisting Rahul on the electorate and we can never dare oppose him because he is the scion of the party’s first family. But it is clear that people are not prepared to accept him in the current avatar. The sooner our party accepts “Rahul Gandhi lacks the fluency and charisma that mark a politician who can excite or charm an audience. His mannered behaviour, his stiff body language and his inability to speak Hindi in a fashion that the audience can relate to, has clearly put paid to any expectation of mass support,” says a political commentator. 10 gfiles inside the government vol. 7, issue 10 | January 2014
  10. 10. this, the faster it can start re-building itself”. Rahul’s close confidants dants have been using the term nstrate ‘gamechanger’ to demonstrate that his ideas and ideals are als different from the present dissent pensation. The results of this s round of assembly polls have once s again proved that he did prove to be d a gamechanger. Instead of mobilisd ing the electorate and translating d them into votes, Rahul’s “poori roti ’s “ khayenge, Congress ko jitayenge (borrowed from Indira Gandhi’s election manifesto) in fact, boomeranged on him and his party. Now, the party think-tank will be forced to either ced abandon the term ‘gamechanger’, gamechanger’, or will have to look for fresh ideas and resh a better plan and projects to reclaim cts the term. Congress party insiders admit iders that, “as heir to the Nehru-Gandhi ru-Gandhi dynasty, there were but two possible reasons for the party to e look to Rahul Gandhi. One was their belief in the possibility of sibility Rahul Gandhi’s ability to enthuse o voters on the basis of his pedigree, while the other was that he may at be able to revitalise a decaying party organisation through his rough ans more scientific plans and preparations”. But a look at the rallies of Rahul ies f Rahul clearly indicates that he is not a man who has a natural connect with nnect crowds. “He lacks the fluency and luency charisma that mark a politician olitician who can excite or charm an rm audience. His mannered nered behaviour, his stiff body lany guage and his inability to speak o Hindi in a fashion that the hat audience can relate to, has clearly put paid to any expectaxpectation of mass support,” says a veteran political commentator. entator. gfiles inside h government gfiles inside the government fi es in d ns de overnm ov nm n ove n ent ve gfiles inside the government vol vol. issue 10 January 2014 vol. 7, issue 10 | January 2014 ol ol. issu ss ssu ss January 2014 anuary n 11 11
  11. 11. COVER STORY politics congress On many occasions, Rahul has proved to be an enigma and surprised both his friends and foes alike with his quips and quotes on some important issues. It is here that his failure is most evident and provides the clearest evidence that it may be best for the party to look beyond him. More than that, however, it is the systematic organisational failure and decay within the Congress which appears to have landed it in such a state. Many people would have to take the collective blame for this. Says another political analyst, “The fall of Rahul Gandhi as a leader is not the only problem with the Congress party. Manmohanomics and Sonianomics too have to take an equal share of blame for the present mess.” There is a lot of truth in this statement. First, take a look at a few statements made by Rahul in recent times. Rahul’s gaffe about intelligence agencies briefing him about plots by terror outfits to lure Muslim victims of communal violence in Muzaffarnagar, raised a lot of hue and cry. Apart from the stigma that the victims could do without, questions were raised about Rahul’s claim that intelligence agencies were briefing him when they had no business doing so; neither is he the Union Home Minister nor the Prime Minister. A national newspaper also published a report alleging that there had been largescale misuse of intelligence agencies to screen possible Congress candidates at the behest of Rahul and his team. Second, Rahul kept reminding voters in his speeches that the Land Acquisition Bill was his idea and that he had personally toiled on foot from Bhatta Parsaul to Noida in Uttar Pradesh to understand the related issues and then pushed the UPA to adopt this idea as law. He wanted the 12 gfiles inside the government vol. 7, issue 10 | January 2014 compensation of the required land to be raised to four times that of the market value in rural areas and twice the market value in urban areas. But his think-tank members perhaps failed to make him understand that the landed gentry was wellentrenched in the political game and knew how to use the Bill in their best interests. The business community and industry were already opposed to it as it would inflate costs and make the acquiring process so cumbersome that no new ventures would be practically possible. Even Congress President Sonia Gandhi and Congress workers remained blissfully oblivious to it and the net result was a dud! Third, Rahul tried to woo the voters in Madhya Pradesh and Rajasthan through tear-jerker narration of his mother’s illness and regret of not carrying her resolve to press the button during voting in Parliament for the Food Security Bill. He tried to connect to the sympathetic and emotional chord of the people by narrating how assassination of his grandmother and father impacted his Rahul Gandhi not only needs to learn from the past but also has to change his persona and style of functioning in the best interests of the party. He would have to make a fine balance by synthesising the traditional strongpoint of the Congress party along with a modern and realistic outlook and a scientific way of analysing the present trends and work for a better future. life. Even his belligerent ‘tear and throw the nonsense ordinance’ approved by his own party government failed to impress the voters. Dichotomy between words and deeds Rahul has always said that he wanted to usher in more democratisation in the party and was a votary of giving way to younger faces in elections. But the end result of all such exercises have been confusing and, at times, contradictory to his statements. For these assembly elections, the process of selection of candidates has been entirely the work of Rahul and his team, with the Central Election Committee (CEC) headed by Sonia Gandhi just working to endorse the selection. A report in a newspaper quoted a CEC member as saying: “At CEC meetings, names are taken and cleared almost like a ritual as we know Rahulji and his team have done the background check through independent surveys, intelligence agencies and various other sources. Madam (Sonia) does not intervene anymore and watches the proceedings silently.” A few members of Team Rahul also suggested that he has always favoured credible young faces. Yet the biggest howler was the Congress’ decision to give a ticket to 80-year-old Ameri Devi, the mother of Malkhan Singh Bishnoi, the main accused in the Bhanwari Devi abduction and gangrape case in Rajasthan. In terms of party reorganisation, Rahul seems to have relied heavily on people, who, like him, have inherited the privileges of power. In Rajasthan, for example, both Sachin Pilot and Jitendra Singh were made co-chairmen of the poll campaign committee. “This multiplication of imitations of Rahul across the party has virtually ensured that there are no grassroot leaders of
  12. 12. General Election 2009: State-wise results BJP Congress Others Jammu & Kashmir (6) 2 BSP Punjab (13) 8 1 4 1 Trinamool Cong SP Himachal Pradesh (4) CPI(M) 3 Arunachal 2 Pradesh (2) Uttarakhand (5) Haryana (10) 9 DMK 4 4 1 1 Utt Rajasthan (25) 19 4 7 ar P rad e 22 2 Delhi (7) 22 Assam (14) Sikkim (1) sh ( 20 3 80) Bihar (40) 10 6 11 2 27 (11 ) Madhya Pradesh (29) Ch ha ttis ga rh 11 13 5 Maharashtra (48) 1 2 W es 8 tB Manipur (2) 2 1 1 en ga Tripura (2) 2 l (4 2) Odisha (21) 6 6 15 Jharkhand (14) 17 9 22 Nagaland (1) 1 Meghalaya (2) Gujarat (26) 17 9 4 7 1 1 7 6 1 Mizoram (1) 1 19 9 7 Andhra Pradesh (42) 31 Goa (42) 1 11 1 Karnataka (28) 18 9 1 Andaman & Nicobar (1) Tamil Nadu (39) 1 Chandigarh (1) 1 Kerala (20) 8 13 Dadra & Nagar Haveli (1) 1 13 7 18 Daman & Diu (1) 1 Lakshadweep (1) 1 Pondicherry (1) 1 gfiles inside the government vol. 7, issue 10 | January 2014 13
  13. 13. COVER STORY politics congress any importance emerging from within the party structure. At the very least, the result of Rahul’s intervention should have been the selection of candidates who represented the new and progressive face of the party,” said a senior editor of a prominent Hindi daily from Jaipur. They may not voice it in public, but a section of Congressmen has started saying that if the ability to win a seat is to override all constraints of public morality, then isn’t much of the posturing being done by Rahul just hypocrisy? If a small coterie of people, with no direct experience of how politics actually plays out on the ground in this country, can rely on survey agencies and, far more problematically, on intelligence agencies, to select candidates, what was Rahul doing over the past few years, trying to build the party from the grassroots? A few questions are also being raised on Congress President Sonia Gandhi’s brand of politics, termed ‘Sonianomics’. This section of the party describes her as the super government and her post of Chairperson of the National Advisory Council as a super constitutional position. Steps like the Food Security Bill and the Direct Cash Transfer schemes have been attributed to her and yet the vot- Though Rahul Gandhi has been the Congress vice-president for nearly a year, he has failed to make an impact ers gave a decisive mandate to the BJP in the recent assembly polls. The Rajasthan debacle was a clear pointer that distribution of freebees and doles in the election year do not help. Family-held enterprise The Congress has nobody but itself to blame for attempting to run a national party with the charisma of a single family. That, too, for the most part of its existence. If old family-held enterprises can fail because they failed to move with the times, why can’t a family-held party? A few political commentators following the Congress beat for years admit, “The first family never had much live contact with the rank and file, but it always had a feel of the people’s pulse and supporters had an unflinching faith. That has suffered a serious dent. The demoralisation in Congress ranks following a total rout in four north Indian States is slowly turning into deep disenchantment, even anger, against the person who they until recently worshipped as their unquestioned leader with a divine right to rule.” In their opinion, a leader’s aura comes with his ability to foresee an emerging situation, mould his action, gear up the organisation to meet the challenges and establish a connect with the people and be the vote catcher for the party. Rahul’s failing to deliver on those counts has diminished his authority. Ironically, it is not just the old guard that is angry with Rahul’s unpredictable statements but even the younger leaders, both sung and unsung, are deeply critical of him and the mismatch between his reaching and his practice. With the Rahul Gandhi card being ineffective, the Congress leadership appears to have plunged into a crisis of credibility. Muddled vision Rahul, in all his recent election campaign speeches, spoke about the aam aadmi and the steps taken by the Rahul Gandhi has not been able to enthuse party workers UNI 14 gfiles inside the government vol. 7, issue 10 | January 2014
  14. 14. RAJEEV TYAGI UPA for their upliftment. But, he miserably failed to get his point across. While all governments, particularly the BJP-led ones, have been as populist as the Congress at the Centre, what with several welfare schemes, it’s the latter that is being panned for trying to buy votes through schemes. Some experts feel that Rahul and his team should have been ready with a blueprint about his vision of India. He became the vice-president of the party in January and 11 months were good enough for his team of advisers to draft his vision and his mission. While BJP’s Prime Ministerial candidate, Narendra Modi, has made a lot of noise on his inclusive development model, neither Rahul nor the UPA have come out with a coherent view on an inclusive economy yet. It may be so because Rahul’s team of advisers has not yet been able to understand the reality of politics at the grassroots and are still torn between copying the American quick- The failure of Rahul Gandhi as a leader is not the only problem with the Congress party, Manmohanomics and Sonianomics too have to take an equal share of blame for the present mess. fix for Indian maladies. Moreover, his advisers like Madhusudan Mistry and Jairam Ramesh have been giving him prescriptions which are not in sync with the reality. While Mistry’s diagnosis of the party’s shrinking base in various States has been bizarre, Ramesh’s remark that “Modi on Lokpal is like Asaram talking on virginity” has only made the discourse frivolous. With regard to the Modi versus Rahul debate, the experience of taking responsibility is an important issue. So far, Rahul has avoided any ministerial responsibility, while Modi has a proven track record of governing a State well. “How can the Congress expect voters to accept Rahul for the top job easily? Surely, it has not stopped taking people for granted, or it has no other option left. If it has to survive, it has to sink or swim with him. This was the predicament with the BJP sometime ago and they found their solution in Modi,” wrote a veteran commentator a few days ago. The Congress party think-tank, on the other hand, appears to be convinced that it is a case of better late than never and that is how they want to present Rahul—on the basis of the good work done by the UPA II government in many areas which have not been given due publicity. Congress losing allies The DMK’s decision to dump the Congress in the forthcoming Lok gfiles inside the government vol. 7, issue 10 | January 2014 15
  15. 15. COVER STORY politics congress Sabha polls is another piece of evidence that power—or even the prospect of power—is the key to alliances. While this does not mean M Karunanidhi is about to seek an entry into the NDA under Modi, the smell of defeat that hangs around the Congress is certainly driving away allies, giving the BJP hope for 2014. On the other hand, AIADMK chief and Tamil Nadu chief minister J Jayalalithaa is also not ready to align with anybody. She has already made it clear that her party won’t have any alliance with the BJP ahead of the polls. That means, for the first time in decades, Tamil Nadu is likely to witness a solo performance during the next Lok Sabha elections by all major political parties in the State. The Nationalist Congress Party, led by Maratha chieftain Sharad Pawar, has also started making contrarian noises. Not only is the Congress-NCP alliance in Maharashtra tottering, Pawar’s statement on Rahul’s capability as well as his jholawala brigade of advisers has raised eyebrows in the Congress camp. According to a senior Congress leader, “Sharad Pawar is like a cat on the wall and his support cannot be taken for granted now.” Hard truths The biggest challenge before the Congress will be, how to manage the numbers? The fact that the Congress is ruling in 11 States today may look promising on paper, but all these States together account for only about 180 Lok Sabha seats, of which the Congress holds less than 100. In the last general election, the Congress and its allies had done well in these States and managed more than half of the seats. It is doubtful if the UNI Congress will reap the same kind of harvest in 2014. The Congress faces serious trouble in Andhra Pradesh, where it had won 33 out of the 42 seats last time. With its own Chief Minister, Kiran Reddy, preparing the ground for an exit from the party over bifurcation of the State and YSR Congress leader Jagan Mohan Reddy and TDP chief Chandrababu Naidu looking more amenable to aligning with the Modiled BJP, the party seems to have shot itself in the foot with Telangana. The situation is equally miserable in Maharashtra, where the CongressNCP alliance won 25 out of 48 seats last time. With the Adarsh housing and irrigation scams, law and order failures and no extraordinary governance to show, the Prithviraj Chavan government will certainly face the disadvantage of incumbency. Add to this the nuisance of a wily NCP supremo, who can embarrass the Congress and walk out of the alliance at the last moment. In that case, the Congress would not be in a position to take its tally to double digits. In Haryana, the Congress had managed nine out of 10 seats on the basis of Chief Minister Bhupinder Singh Hooda’s popularity and deft management. But then, there were no Robert Vadra land deals or Ashok Khemka inside stories. Additionally, if the AAP expands contiguously to the State, the Congress’s goose is likely to be cooked. Similarly, in Assam, the Congress won seven out of 14 seats. Will Tarun Gogoi deliver again remains a big question. In the wake of the recent rape outrage and charges of mis-governance, he looks like a defeated man. In Kerala, the party and the The youth brigade of the Congress seems cut off from the people 16 gfiles inside the government vol. 7, issue 10 | January 2014
  16. 16. Indrox Global Pvt. Ltd (IGPL) “POLLUTION ABATEMENT PLANT” “ Maintenance of Acid regeneration plant (ARP) and Iron oxide production facilities. Indrox Global is the only company in INDIA to take up Acid regeneration projects on turnkey basis i.e. build, operate & maintain the Plant & is also doing the marketing of Iron Oxide. Indrox Global Pvt. Ltd (IGPL) was set up in the year 2003 and started its operations to process the waste pickle liquor (WPL) in the year 2004. WPL produced by nearby steel plants to Jindal, Tata, Essar etc is treated in Indrox Global and converted into regenerated hydrochloric acid with yield up to 99% recovery and is returned to these industries for reuse. Indrox Global Pvt Ltd is ISO 9001:2008 certified for “Quality Management System” & ISO 14001:2004 certified for “Environmetal Management System”. Indrox Global employs more than 60 Engineering, Production and Project personnel. With broad spectrum of technical expertise and comprehensive in house capabilities, Indrox Global is a leader committed to provide economical solutions with superior technology to all our customers. Indrox Global technology offers flexibility to produce specific grades of “Iron Oxide” varying in physical properties and chemical purity. “ M/s Indrox Global Pvt. Ltd (IGPL) is the leading Indian company in Operation & Indrox Global is pioneer in Design, Installation, Operation and Maintenance of Acid Regeneration Plant (ARP) & Iron oxide production. CORE COMPETENCIES Indore Global Pvt. Ltd (IGPL), with its impressive Acid Regeneration Plant know-how, is in an excellent position to perform multi cultural business environment and to serve clients in following capacities: ● Operation & Maintenance of Acid Regeneration Plants ● Acid Regeneration plant on Turnkey basis Designing Basic & Detailed Engineering Equipment sourcing Construction Erection & Commissioning Operation & Maintenance ● Acid Regeneration Plant on BOO basis Build Own Operate & Maintain ● Plant UP gradation and replacement ● Marketing of Iron Oxide ● Hazardous Material Management NEED FOR ACID REGENERATION PLANT ● The Steel Industries producing cold rolled steel products use Picking operation for cleaning of the steel sheets, long and flat products, to remove surface iron oxide built up on steel. ● During Picking process, steel sheets are passed through pool of Hydrochloric acid to remove surface impurities, before these sheets can be processed further. This process generates waste hydrochloric acid WPL which is considered as industrial waste and needs further treatment before disposing into the environment as per the pollution standards. Typically, each ton of the steel pickled will produce 30-35 liters of WPL. ● Even the ETP treated effluent has been a potential hazard to the environment as the disposed acidic water contaminate the water bodies and the landfills affect the soil. These eventually result in unrecoverable damages to land and water bodies. ● Indrox Global designed plant is Zero discharge plant making the environment pollution-free. The plant provides total relief from environment hazards in disposal of acidic effluents. ● Indrox Global designed ARP ensure the compliance to ISO 14001:2004 (Environmental Pollution Control and Management) viz Section 26 of water (Prevention & control of Pollution) Act 1974 Section 21 of Air (Prevention & control of Pollution) Act 1974 Rule 5 of the Hazardous waste (Management & Handling) Rules 1989 and amendment rules 2003 ● The economics of the process is promising as apart from regeneration of hydrochloric acid with 99% chlorides recovery (that being re-used in pickling line), good quality Iron oxide is also produced as byproduct which is used by Paint Industries and in the manufacture of different grades of ferrites (used in magnetic and electronic components in various industries), under material for refractories etc. HEAD OFFICE: A-19, Ground Floor, Kailash Colony, New Delhi-110046 Pone: 011-29237845, 29237846 Fax: 011-29237849 Email: Website: 17 gfiles inside the government PLANT: B-11, MIDC Tarapur Industrial Area, Near TMRCT, Hospital, Boisar (W) 401506, Distt. Thane (Maharashtra) vol. 7, issue Phone: 02525-260614/261858 Fax: 02525-261627 E-mail: 10 | January 2014
  17. 17. COVER STORY politics congress Rahul Gandhi has not come out with a clear-cut vision to connect with people government it leads are in complete disarray, thanks to neverending scams— including its regular share of sex scandals—and internal fights. Unless the electorate is put off by the violent and opportunistic ways of the CPI(M), Oomen Chandy may not be of any major help. In Karnataka, which has 28 Lok Sabha seats, the Congress tally is nine and its government is in power. But Chief Minister K Siddaramaiah’s image has already started to take a beating, thanks to vociferous cries by senior Congressmen about all ex-Janata Dal men getting plum posts and say in governance. There are nine States—Madhya Pradesh (29 seats), Karnataka (28), Gujarat (26), Rajasthan (25), Chhattisgarh (11), Delhi (7), Uttarakhand (5), Himachal Pradesh (4) and Goa (2)—where the Congress is directly pitted against the BJP. Of these 137 seats, the Congress may find it tough to reach the 60 mark. Added to that are States like Jharkhand (14), Punjab (13), Haryana (10) and Jammu and Kashmir (6), where the BJP would be facing polls along with its local allies. Of the 43 Lok Sabha seats here, the Congress may find it difficult to retain even 15 seats. In Uttar Pradesh, which has the highest representation in the Lok Sabha with 80 seats, the Congress last time won 21, with more going to the ruling Samajwadi Party. If the multiple splits of the electorate (SP-BJPBSP-Congress) continue, the Congress is going to suffer. If it has to make it big, it has to win big-time in UP, which looks absolutely impossible at the moment. An alliance will not help much because both the SP and the BSP—if at all they choose to 18 gfiles inside the government vol. 7, issue 10 | January 2014 UNI The Congress party has indulged in breeding sycophants. That could be seen in the appointment of various AICC general secretaries who have failed to perform time and again and yet they continue to occupy prime positions. align with the Congress—will want to keep most of the seats for themselves. Indications are that most of the sitting ministers from the State in the Union Government are likely to lose and the Congress tally may not reach double digits this time. Tamil Nadu is an extremely important State for the Congress. With the DMK, it had 26 seats (DMK 18 and Congress 8) in the last elections. With no anti-Jayalalithaa sentiment visible in the State now, the taint of 2G and effete handling of the Sri Lankan Tamil issue will hurt the Congress and the DMK both. The only other State that stands out for the time being is Bihar which has 40 constituencies where the JD(U) and BJP together had won in 32. Whether the JD(U) will be able to repeat the performance with the Congress filling in for the BJP remains to be seen. The Congress had won only two seats the last time and that does not seem likely to increase this time either. The way forward It is here that the Congress leadership would have to invent a new wheel. It would have to change its leaders, politics and economics completely. It would have to start from the basics if it wants to be relevant in the Indian political arena. It would have to look beyond Rahul’s votebank politics, Manmohanomics and Sonianomics. The voice of opposition from within the party is likely to grow stronger now and the Gandhis will find it difficult to keep up the morale of the party workers to fight the big battle against a resurgent BJP with an aggressive and acerbic Modi as its commander. As a senior commentator writes, “What the Congress leaders would have to think of the next few weeks is the prospect that the grand old party could be wiped out of the political map of the bigger States in northern and eastern parts of India,
  18. 18. gfiles inside the government vol. 7, issue 10 | January 2014 19
  19. 19. COVER STORY politics congress Even Congress leaders admit in private that Rahul is no match for BJP’s Modi thanks to charges of corruption, poor governance, inability to rein in prices and general apathy towards the economy. Modi, with his loud and aggressive attack on the Congress and calculated approach to woo microconstituencies, has already got a massive early lead in the race of 2014. UNI with governments in only a few States like Karnataka, Assam, Himachal Pradesh, Uttarakhand and Haryana. This is a disastrous prospect for the party, given that it has no chance of revival in Bihar, UP, Odisha, West Bengal or Punjab.” Under these circumstances, both Sonia and Rahul would have to toil afresh to generate new content, work out new formulae, build up a new team of advisers and find new speech writers because they have already exhausted their rights-based government rhetoric in this round of assembly elections. A section of Congress leaders has also started saying in private conversation that their biggest concern now is that the Gandhis have stopped being vote-catchers for the party and that was clearly visible in the disastrous assembly election results. Clearly, declaring Rahul as the Congress party’s Prime Ministerial candidate to challenge the BJP’s Modi in the 2014 Lok Sabha polls would be out of sync with reality. A section of Congressmen feels that it would be an inopportune moment to 20 gfiles inside the government vol. 7, issue 10 | January 2014 expose Rahul as its trump card in the face of so many odds. The majority, however, is keen on making the Congress vice-president its Prime Ministerial candidate despite understanding the pitfalls associated with the decision. As a senior Congress MP from Andhra Pradesh said, “The present coterie culture has already destroyed the Congress party’s organisational architecture at all levels over the last few years. The self-serving and selfperpetuating middle level leadership has entrenched itself so deeply that nothing else than a purge would help clean the Augean stables and the efforts of Rahul to remedy the situation by bringing in elections to the organisation has not started delivering the results yet.” Another Congress leader was more forthright in saying that “Rahul Gandhi may have all good attentions and even a big pedigree, but he has a long way to go if he really wants to confront Modi and lead the party to a respectable stage”. Obviously, the party cannot ignore the external challenges—a hugely unpopular Central government Let the PM candidate be elected The Congress President has disclosed that she will name the Congress party’s Prime Ministerial candidate at an appropriate time. However, political pundits interpret it in different ways. According to one political commentator, “Rahul Gandhi should follow his promise by insisting that the PM candidate be chosen in an open election in which every primary member of the party has a vote. On the other hand, if the Congress President anoints Rahul Gandhi the same way she did with Manmohan Singh, then the voters of India will know that the Congress has had no real change of heart.” Another noted political commentator said, “Rahul Gandhi needs to do something dramatic to restore people’s faith in him. It is no use invoking the merits of AAP as long as the aam aadmi in the Congress has no say. Words have never been Rahul’s forté. Perhaps, then, radical action can save a fast-sinking trajectory.” Even a few Congress insiders are prepared to concede in private conversations that Rahul is turning into an object of voter apathy and they are worried that the party and Rahul need to re-discover their exact worth and charisma before plunging into the 2014 polls. g With inputs from Narendra Kaushik
  20. 20. GROUP HOUSING PROJECT For Civil Servants “Commonwealth Co-operative Group Housing Society Ltd” has been formed by a group of senior Civil Servants by enrolling members from IAS / IFS / IPS / IFOS / IRS / IES / Railways and other services not below the rank of Deputy Secretary to GOI. Limited membership is also open for PSUs, Bankers, eminent professionals such as CAs, Advocates, Business persons and Academicians. The society has already received more than 200 memberships. The objective of the society (in brief) would be to make available built-up flats / land for construction of flats for state-of-the-art highend residential accommodation at prime locations to its members in GURGAON / NOIDA / DELHI. For any further clarification/application form contact Prem Gupta, Chartered Accountant on email: or mobile: 09810137909, NEW DELHIthe government gfiles inside vol. 7, issue 10 | January 2014 21
  21. 21. GOVERNANCE diplomacy controversy Give what you get India must insist on a reciprocal level playing field with the US on the question of diplomatic privileges and immunities, without any exception of any kind by NIRANJAN DESAI T HE Devyani Khobragade incident has created widespread outrage and revulsion in India primarily because of the inhuman and humiliating treatment accorded to her by the arresting authorities. It would not be wrong to say that in terms of the magnitude of the adverse impact it has created in Indo-US relations, this would rank after the decision of the Nixon-Kissinger duo to send the US Seventh Fleet into the Bay of Bengal during the war for the liberation of Bangladesh. However, it is not the intention here to go into the rights and wrongs of the incident. Enough debate has been generated in the media with an overwhelming majority condemning the treatment meted out to India’s Deputy Consul General. Of course, there are dissenting voices which focus narrowly on the legal aspects of the case, or view it from the so-called human rights angle. Even a national daily like The Indian Express (dubbed by a few after the incident as ‘American Express’) saw it in terms of the Indian Foreign Service issue and even castigated the Foreign Service as India Feudal Service, with its editor proudly proclaiming that he had indeed ‘a chip on his shoulder’ when it came to the Foreign Service. Be that as it may, there is no denying that it is a national issue because it was an Indian diplomat who was grossly mistreated in an arbitrary 22 gfiles inside the government vol. 7, issue 10 | January 2014 fashion as if the local authorities were apprehending an Al Qaeda terrorist! After all, a diplomat, to some extent, embodies a nation’s sovereignty. The question which arises is why the Americans chose to behave in this callous and thoughtless manner towards a diplomat of a friendly country, and that too with a diplomat of the female gender who certainly deserved to be treated with a lot of dignity. Normal diplomatic practices were thrown overboard and no courtesies were shown in informing the Foreign Secretary, who was on an official mission to the US. Maybe the streak of arrogance—in MJ Akbar’s words, of a ‘unilateralist’ power—was at play here. Perhaps they perceived the Indians as meek who will take the insult lying down, as we have repeatedly done in the case of China and Pakistan. It could also be possible that our general attitude of deferring to the white man, especially the Big White enchilada, may have encouraged this devil-may-care attitude towards this particular diplomat, who the Americans thought was allegedly in the wrong. We have, as a government, always shown a very generous attitude to American diplomats and the US Embassy, going beyond normal diplomatic practices and without insisting on reciprocity. www gfilesind www lesindia com w filesindi o
  22. 22. The reason being that this generates that elusive ‘goodwill’ which has never been quantified. We fail to realise that the world is a cruel place and no amount of goodwill is reciprocated when it comes to the crunch. The late Prime Minister, Inder Singh Gujral, was hailed by many when he propounded the rather infamous Gujral doctrine of not demanding reciprocity in dealing with a recalcitrant and hostile neighbour! Sixty years of independence has not taught us that in foreign policy and diplomatic behaviour the surest guiding principle is absolute reciprocity—you get what you give—because that ensures fairness and acts as a deterrent to any arbitrary and unilateral action on the part of any one party. There was a famous case quite sometime back of a vehicle of the Nigerian Embassy in Washington being towed away by local authorities. The Nigerians in Lagos quietly rounded up a few vehicles of the US Embassy and towed them into a forest area, from where the US Embassy was asked to recover the vehicles. The Nigerians were then left alone, one was told! O R, take the case of Brazil, which promptly instituted a system of fingerprinting of all American arrivals into the country when the Americans instituted such a system for all visitors to the US. When the Americans protested that only Americans were targeted by Brazil while the US had this requirement for visitors without any discrimination, the Brazilian retort was that the US had exempted several countries and Brazil should also have been exempted! We, on the contrary, bend over backwards towards the US Embassy and it is therefore natural that Devyani Khobragade (left) was posted at the Indian Consulate in New York (above) American always demand more than they give in terms of privileges and immunities and we have acquiesced to this non-reciprocal regime over the years. The Ministry of External Affairs always insists on not giving any undue privileges to US diplomats, but other ministries and agencies are always ready to bend! I recall an incident when I was the Chief of Protocol and was temporarily looking after the Americas Division. The then US Ambassador was visiting the NorthEast and he had then to fly to Bhutan. I received a request from the US Embassy that since the Ambassador had to reach Thimphu by a certain time, he was not in a position to go to Calcutta and clear immigration there before flying off to Bhutan. So, could he please complete immigration formalities in Guwahati and fly to Bhutan from there? It was also conveyed that the State authorities in Assam were quite willing to arrange this, provided the Home Ministry and the MEA agreed to it. The Home Ministry was wishy-washy on the issue and wanted the MEA to take the final decision. I politely told the US Embassy that Guwahati was not a designated international airport and, therefore, no immigration facilities were available there and the Ambassador would thus gfiles inside the government vol. 7, issue 10 | January 2014 23
  23. 23. GOVERNANCE diplomacy controversy unilaterally confer such entitlements which have no reciprocity. This clearly means that getting a green card for a near and dear one in lieu of special favour will not covered under any reciprocal arrangement! H One of the many protests in India against US highhandedness have to go to Calcutta before flying off to Bhutan. Mercifully, this happened quite late in the evening and therefore there was no other contrary direction from any higher-ups. The Ambassador cancelled his visit to Bhutan and I was reminded several times that I was the cause why he could not visit Bhutan! The other issue over which the MEA Protocol then had continuous argument with the Defence Ministry was the question of the American Embassy’s PX flights which, invariably, for inexplicable reasons, were allowed to land at Palam Technical Area instead of IGI airport. Our objections then were disregarded by the Defence Ministry. I am not aware of the present position, but the matter has to be looked into if this practice still persists. Another issue was the practice of the US Embassy in insisting that certain cars belonging to the Embassy officials should be given normal Delhi number plates instead of CD plates. Here again the IB had its way, disregarding the MEA. 24 gfiles inside the government vol. 7, issue 10 | January 2014 UNI The Ministry of External Affairs always insists on not giving any undue privileges to US diplomats, but other ministries and agencies are always ready. The present problem provides an excellent opportunity to have serious negotiations with the Americans about diplomatic privileges and immunity on a strictly reciprocal and level playing basis. In other words, we would give them what they give us; nothing more, nothing less. This would mean, for instance, that US dignitaries visiting India will be received by US diplomats only after the dignitary goes past immigration, as is the case in the US when our dignitaries go there. The government must also make it clear that on the issue of diplomatic privileges and immunities, the decision of the MEA shall be final and all other ministries and agencies cannot OWEVER, it remains to be seen whether we have enough political courage to take the bull by the horns as there are too many vested interests who may wish to take a softer line towards the US. One recalls what former American Ambassador Patrick Moynihan used to say, that despite all the abuses America used to receive in Parliament during the day, he was inundated in the evening by requests from the same set of characters for green cards for their near and dear ones! There was another such issue which created quite a furore in India. This had nothing to do with diplomats, but related to young girls going to UK for marriage purposes and who were subjected to undignified virginity tests by the UK authorities. There was a lot of anger and fury at that time over this and there was demand for ‘strong’ action against the UK. But in the end, nothing much happened. The Joint Secretary in charge of the Europe Division then, the brilliant Sumal Sinha, had rightly predicted that nothing much would come out of it as too many people in power had sons and daughters in the UK. One hopes that this will not come to pass again and the government must insist on a reciprocal levelplaying field with the Americans on the question of diplomatic privileges and immunities, without any exception of any kind. We must shed this notion of generating goodwill; national dignity and honour are more sacred. g Niranjan Desai is a former Indian Foreign Service officer
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  25. 25. GOVERNANCE agenda mg devasahayam Haryana: From Green to Grey State? The Haryana Chief Minister has adopted a zamindari style of functioning! While banishing those who obstruct his real estate agenda, he rewards his loyalists with fortunes and coveted postings S CHOLARS believe that the name ‘Haryana’ came from the words Hari (Sanskrit Harit, ‘green’) and Aranya (forest). At its formation in 1966, Haryana was meant to be so with early-day governments under Chief Ministers Bansi Lal and Devi Lal laying strong foundations for a Green State with their emphasis on agriculture, forestry and irrigation. Having joined the cadre around that time, I have seen and participated in the process in the arid districts of Hissar and Bhiwani adjoining the deserts of Rajasthan. In recent years, Haryana’s political/bureaucratic architecture is geared to transform the once Green State into a Grey State with obsessive pursuit of land-lust as the overarching policy. This is evident from the way IAS officers of the State are being Gurgaon is standing testimony to how urbanisation should not be gone about in India 26 gfiles inside the government vol. 7, issue 10 | January 2014 dealt with. While Ashok Khemka, who boldly stood against the marauding land lobby, is being ruthlessly hounded, his predecessors in the post of Director General, Consolidation of Land Holdings—Anil Kumar and SC Goyal—are being fiercely protected despite their being indicted by the Punjab and Haryana High Court for passing several illegal orders favouring the land mafia which have been PHOTOS: NARENDRA KAUSHIK
  26. 26. described by the court as fraud! In line with this architecture, the Haryana Chief Minister has adopted a zamindari style of functioning! While banishing those who obstruct his real estate agenda, he rewards his loyalists with fortunes and coveted postings. His most loyal aide in meticulously pursuing the agenda for eight long years was recently appointed to the prestigious constitutional position of Member UPSC, thereby ravaging the virginity of this hallowed institution! Just prior to the appointment, this officer had managed to scuttle a ‘performance audit’ by the CAG of the fraud indulged in by the land mafia. In the State government, it is the real estate bureaucrats who occupy key positions in the Chief Minister’s charmed circle. They include the Principal Secretary to the CM who has already spent seven years as Director and Principal Secretary, Department of Town & Country Planning (DTCP). Another one is following suit, with more than three years as DTCP. As against this, dissenter Khemka, who had earlier seen 40 transfers in 20 years of his career, was allowed just 80 days in the job from where he had blown the whistle. After being repeatedly humiliated and tormented, he is now being chargesheeted for misconduct in cancelling the mutation of a fraudulent land deal between Robert Vadra and DLF in Gurgaon in October 2012, thereby ‘damaging their reputation’! It is obvious that the Haryana leadership has been assiduously building a kleptocratic network, comprising of politicians, brokers and bureaucrats, to usher in a real estate-oriented administration. In his report, submitted to the Haryana Government on May 23, 2013, Khemka named seven senindulging in or covering up corrupt land deals, as the bureaucratic part of this network. On September 6, TV Channel Headlines Today telecast an exposé of the political/broker component of this network, naming eight MLAs and their cronies who were charging `1 crore per acre for recommending change of land use. Earlier, on February 4, a detailed investigative story published in The Hindu named Chief Minister Bhupinder Singh Hooda as the patriarch of this network! The modus operandi has been simple. The Chief Minister kept to himself the portfolios of DTCP—the licensing arm of the Haryana Urban Development Authority (HUDA), the government’s real estate developer —and the Haryana State Industrial Development Corporation (HSIDC), It is obvious the Haryana leadership has been assiduously building a kleptocratic network, comprising politicians, brokers and bureaucrats, to usher in a real estateoriented administration. the industrial promotion entity. This gave him complete control over all land deals in the State. Under the Land Acquisition Act, HUDA and HSIDC have powers to acquire land under Sections 4 and 6 through the rate with landowners/farmers, offering them a modest premium over the government’s prevailing compensation rate. If landowners/farmers resist, Section 6 is imposed, declaring the State’s intention to acquire the land. This forces even resisting landowners to enter into agreements. Between the imposition of Sections 4 and 6, builders apply for change of land use and licences to DTCP in collaboration with farmers/landowners. Once the land is released from acquisition, its value skyrockets and there is a kill! T HE epicentre of the real estate kleptocracy is Gurgaon, not long ago a sleepy village on the outskirts of Delhi, now hailed as the ‘Millennium City’. According to Khemka, DTCP issued various types of colony licences for 21,366 acres from 2005 to 2012. He points out that if the market premium for a colony licence is assumed to be as low as `1 crore per acre, the land licensing scam in the past eight years is worth roughly `20,000 crore. At the premium of `15.78 crore would jump to `3.5 lakh crore! It has been separately reported that in a span of six years, the Haryana Chief Minister had made a staggering 54,000 acres of land available for residential, commercial and industrial use change and award of licence are under DTCP. Builders who are unable to coerce the farmers to sell their land turn to successive masterplans for Gurgaon. Customisation of land development and crucial changes in land use have played an important role in the landto-gold stories of many real estate companies. This would be loot of tion that the government requires lic purpose’. At this stage, builders enter into agreements to sell/collabo- other scams that have so far surfaced. The Gurgaon story started sometime in the early 1980s when KP Singh, Chairman of DLF, was tom-tomming possession of 3,000 gfiles inside the government vol. 7, issue 10 | January 2014 27
  27. 27. GOVERNANCE agenda mg devasahayam Agricultural fields (above) are being gobbled up by the builder mafia in Haryana (right) acres of agricultural land at Gurgaon bought dirt-cheap, to build a highrise, high-intensity ‘world-class’ city, whereas Gurgaon hardly had the carrying capacity to withstand lowdensity, low-rise development. I was then Haryana’s Director, DTCP-cum-Chief Administrator, HUDA, having just moved in from the post of MD, HSIDC. At that time, we had no intention whatsoever of allowing private players since HUDA was capable of managing the low-intensity, low-rise development of Gurgaon. Things took a dramatic turn after the then Chief Minister, Bhajan Lal, defected en masse to Indira Gandhi’s fold on her return to power in early 1980. One of Indira Gandhi’s conditions was to put the State Government machinery at the disposal of DLF to make Gurgaon a ‘world-class city’! To facilitate this, I was eased out of the job with the kind of sophistication only Bhajan Lal was capable of. One DTCP was too small a department for my capabilities and that I should handle the ‘bigger’ and ‘problematic’ 28 gfiles inside the government vol. 7, issue 10 | January 2014 It has been reported that, in a span of six years, the Haryana Chief Minister made a staggering 54,000 acres of land available for residential, commercial and industrial use through the notification of three successive masterplans for Gurgaon. transport department, which was then a three-in-one job as Commissioner, State Transport Authority, and Chief of Haryana Roadways. My protests did not work and I was packed off. S OON, thereafter, in 1981, the and ‘DLF City’ came up. In 1985, DLF started plotted development in the 3,000 acres. Other realtors joined in and there was no stopping Gurgaon from ‘developing’ into a ‘monster city’—in the process, destroying every vestige of town planning, urbanism, environment and sustainability. Not one prudent town planning norm has been adhered to. In short, Gurgaon is standing testimony as to how urbanisation should not be done in India. The sole consideration was vulgar real estate/property ‘development’ with the purpose of raking in billions. More than any other State in India, Special Economic Zones (SEZ) have been a massive scandal in Haryana. Real estate giants and multinational acres of land to set up SEZs, were givof the land and permission to use it for other purposes. As a result, nearly two dozen projects—many of them in the lucrative urban markets of Gurgaon and Faridabad—are being converted into residential and commercial properties. Haryana had over the years acres of land from farmers, much of it in Gurgaon and Faridabad. Of these, only six have so far been set up. The allowed change of land use, enabling
  28. 28. But the one to take the cake is Reliance Industries Limited (RIL). Planned on around 12,500 acres, RIL’s Gurgaon SEZ failed primarily on account of farmers’ refusal to part with their land. The company was able to procure 2,584 acres of land— 1,200 acres from farmers and 1,384 acres allotted by HSIDC. With the RIL failing to acquire requisite land, HSIDC revoked the allotment. SEZ having failed, the company is now developing a money-spinning Integrated Township Project on this 1,200 acres of prime land. Earlier, Reliance was given permission to develop a 25,000-acre SEZ in Gurgaon and Jhajjar districts. Quite a real estate rampage by one of the small-sized States of the Indian Union! That is not all. Now Chinese companies are being offered thousands of acres of land for purchase. China Development Bank representatives recently visited a sprawling 6,000acre site in Gohana, which is on offer. They were also shown a 3,664-acre site in Kharkoda, around 50 km from New Delhi. In a bid to court Chinese investment, Haryana officials have visited Beijing and Shanghai and presented the State’s real estate ‘expertise’ as the unique selling point! With their deep pockets, the Chinese could gobble up vast quantum of land at prime prices, another windfall for the realtors! T HE real estate boom will sustain only if massive MNC/commercial/residential/industrial complexes, malls and theme parks get built all over. The key to this is copious supply of water and electricity. While water is diverted from irrigation use, power plants are being set up on fragile canal banks. Typical is the 2800 MW-capacity Gorakhpur Nuclear Power Plant on the Fatehabad Branch of the Bhakra Canal system. For this plant, the Haryana government has allotted 320 cusecs of water that would deprive over 140,000 acres of irrigation in this semi-arid region. Agriculture will perish and radiation/pollution will cause serious damage to crops, drinking water and wildlife (deer/blackbuck) in hundreds of downstream villages. This is a clear case of extractive policy to destroy farming and promote real estate business. For this project, 1,600 acres of prime farming land have been acquired by virtually bribing landowners with compensation ranging from `12 lakh to `32 lakh per acre. The Central Government is fully involved in this racket. The Nuclear Power Corporation of India is the owner of the project, the Ministry of Environment and Forest has given clearance without even looking into the water issues and the Planning Commission has granted its approval. What is worse, the Prime Minister is to lay the foundation stone of this project being opposed by almost every villager downstream! Haryana is inexorably morphing from a green to grey state only to promote a black economy! The damage will be permanent. Will posterity forgive us? g The writer is a former Army and IAS officer. Email: gfiles inside the government vol. 7, issue 10 | January 2014 29
  29. 29. GOVERNANCE n-regime power Gorakhpur Nuclear Power Plant Inviting Disaster In an over-populated country like India with limited land and water resources and weak regulatory governance, setting up a nuclear plant in Haryana seems a strange decision by MG DEVASAHAYAM P RIME Minister Manmohan Singh is scheduled to soon lay the foundation stone of the 2800-MW Gorakhpur Nuclear Power Plant (GNPP) in Fatehabad district of Haryana. According to the Department of Atomic Energy (DAE), 1,503 acres of land have been acquired for the project, which will accelerate the pace of ‘development’. What has been left unsaid is that this water-guzzling plant is located on the fragile Fatehabad Branch of the Bhakra canal system. For operating this plant, the Haryana government has allocated 320 cusecs of water from the State’s share under the Bhakra Water Sharing Agreement of 1959 between Punjab and Rajasthan. Haryana, being the successor state of Punjab, is legally bound by this agreement. Since the agreement mandates that Bhakra water can only be used for irrigation and generation of hydel power, the Bhakra-Beas Management Board (BBMB) cannot allocate water to the nuclear plant. Water use allotment for irrigation in the cultivable command area is 2.25 cusecs per thousand acres. According to estimates, 320 cusecs can irrigate about 142,000 acres. Thus, diverting this quantum of water to generate nuclear power will deprive a vast area 30 gfiles inside the government vol. 7, issue 10 | January 2014 of irrigation. Even after taking into account that 30 per cent of the water will be recycled back to the canal, the potential irrigated area lost would be about 100,000 acres. Further, the polluted water that would return to the canal would slowly poison downstream agricultural fields and drinking water. This canal is also plagued with frequent breaches that could pose a serious danger to the safety of the power plant. Water is the lifeline of this semiarid region. Power generated in this nuclear plant would no doubt lead to the ‘development’ of MNC/commercial/residential/industrial complexes, malls and theme parks in Delhi, Gurgaon and other places, but in the project-affected area, agriculture will suffer and radiation will cause serious damage to wildlife. In fact, on this count, the National Green Tribunal had ruled against the setting up of a GNPP residential colony in the neigh- There was no public consultation about the project. Prime farming land was acquired for the project, allegedly through coercion and bribing of landowners with huge compensation. bouring Badopal village. Legally too, this diversion of water is untenable. Water comes within the guarantee of Right to Life under Article 21 of the Constitution. A huge quantity cannot be diverted in an already water-deficit area in violation of the 1959 agreement, which permits collaboration for improving irrigation and generation of hydroelectric power only. The Environmental Impact Assessment of the project does not address this critical issue. All it says is: “….The Government of Haryana confirmed allocation of 320 cusecs of water for consumptive use through Fatehabad branch canal, sourced by Bhakra mainline tail-end at Tohana headworks”. There was no public consultation about the project. Prime farming land was acquired for the project, allegedly through coercion and bribing of landowners with huge compensation. The Central government is fully involved in this skullduggery. The Nuclear Power Corporation of India (NPCI) is the owner of the project, and the Ministry of Environment and Forest has dealt with the water issue in a most shabby manner by giving conditional environmental clearance to the plant. Pursuing a pre-set agenda, the Planning Commission has also given its in-principle approval.
  30. 30. Gorakhpur villagers at a protest meeting against the nuclear plant Be that as it may, there are certain basic realities about nuclear power. First, people see, quite correctly, the nuclear reactor as a major threat to their lives and livelihood when the reactors are located in areas that support lakhs of people living off farming, fishing and other occupations. After the Fukushima nuclear disaster in Japan in 2011, this concern has become much more severe and tangible. The Indian government’s response has been a combination of coercion, bribery, and propaganda. Clearly, its nuclear efforts are not respectful of human and democratic rights. The second reality is that nuclear energy is not the answer to India’s electricity problems. The current nuclear capacity in the country is just 5,780 MW, about 2.5 per cent of the total generation capacity, and meeting not more than 1 per cent of the country’s electricity needs. Even with optimistic assumptions, this is unlikely to increase to more than 5 per cent for decades. The DAE has long made ambitious projections and failed to deliver. In 1969, the nuclear establishment had predicted that by 2000, there would be 43,500 MW of nuclear power-generating capacity. In 2011, the figure was only 4,800 MW and the government’s ambition to increase it to about 64,000 MW by 2032 is utopian and impractical. This is because the DAE’s plans involve constructing hundreds of fast-breeder reactors. In the early decades of nuclear power, many countries pursued breeder reactor programmes, but practically all of them have given up on breeder reactors as unsafe and uneconomical. Imported light water reactors are unproven and prohibitively costly. The DAE has simply not learnt from the history of nuclear technology globally, and, thus, has shown a lack of organisational learning. T HE third reality is that India needs electricity that is cheap and affordable, whereas nuclear power is expensive. If all costs—construction, commissioning, operation, decommissioning and safe storage of spent fuel—are honestly factored in, nuclear power is way costlier than any other source of electricity. Future reactors, both imported and indigenous, will continue to be much more expensive, making electricity generated here unaffordable for many sections of society. Expectations that the nuclear industry will learn from past experiences and lower the construction costs have been belied repeatedly. On the other hand, the cost has been going up while wind/ solar power costs are declining. What is worse, Parliament’s Public Accounts Committee (PAC) Report says that India’s Atomic Energy Regulatory Board (AERB) is weak, under-resourced and “slow in adopting international benchmarks and good practices in the areas of nuclear and radiation operation”. The PAC recently tabled a scathing 81-page report in Parliament, critical of the decades-long delay in establishing an independent regulator for the nuclear industry. The sum and substance of the PAC Report is that the failure to have an autonomous and independent regulator is clearly ‘fraught with grave risks’ for setting up nuclear power plants in India. The Fukushima lessons, as brought out by Japan’s Independent Investigation Commission, are pointed, poignant and portend ill for nuclear power in an over-populated India with limited land and water resources and weak regulatory governance. In the event, the Prime Minister laying the foundation of GNPP is odd and inappropriate! g The writer is a former IAS officer of the Haryana cadre with experience in the power sector—government and corporate. He was formerly SDM of Fatehabad subdivision, where this plant is located. gfiles inside the government vol. 7, issue 10 | January 2014 31
  31. 31. GOVERNANCE n-regime devender singh Strengthening the AERB A review of the radiation regulatory regime is a must and it is hoped that the proposed Nuclear Safety Regulatory Authority Bill will ensure this R ADIATION and radioactive substances have many beneficial applications, ranging from power generation to uses in medicine, industries and agriculture but the risks that arise are enormous, often transcending national borders. Radiation risk management, therefore, necessitates international co-operation to promote and enhance global safety and mitigate harmful consequences. In order that the radiation regulator acts independently,countries such as Australia, Canada, France, the United States of America and even Pakistan have conferred legal status on their nuclear regulating bodies as stressed by the International Atomic Energy Agency (IAEA). In India, the Atomic Energy Regulatory Board (AERB) was set up in 1983 to carry out regulatory and safety functions as envisaged in the Atomic Energy Act, 1962. Surprisingly, the AERB remains a subordinate authority under the Department of Atomic Energy (DAE) though India has ratified the Convention on Nuclear Safety. A regulatory body must be equipped to exercise its key regulatory functions, namely, standard-setting, authorisation, inspection and enforcement and must possess the core values of competence, independence, stringency and transparency. A review of the performance of 32 gfiles inside the government vol. 7, issue 10 | January 2014 the AERB recently by the PAC found glaring deficiencies and lacunae with respect to the regulatory framework for nuclear and radiation facilities; development of safety policy, standards and codes; weak monitoring of radiation facilities, and so on. AERB’s independence is circumscribed by the absence of institutional separation of regulatory and non-regulatory functions; absence of a fixed term of office of the Chairman of AERB; dependence on DAE for budgetary and administrative support; and apparent conflict of responsibilities as the Chairman, AERB, reports to the Chairman, AEC. The penalty for contravention of the provisions of the Act and Rules made thereunder remains abysmally low at a maximum fine of `500, which by no stretch of imagination can be construed as a deterrent. More so, the penal provisions were never invoked, rendering it virtually a dead letter. The need for hastening the process of development of safety documents, codes, standards, guides and manuals was stressed by the Meckoni Committee Report way back in 1987 and the Raja Ramanna Committee in 1997. A consolidated safety policy document is yet to be brought out. It is noteworthy that, subsequent to the Fukushima nuclear incident, the AERB set up a high-level committee on nuclear safety but the recommendations are said to be under implementation. Another serious problem bedevilling the AERB is lack of manpower, compounding the gap in the regulating and monitoring regime. This needs to be addressed as the nation can illafford to take any risk, given the constantly increasing application of radiation, especially in fields like medicine, industry and agriculture. There is no system in place for monitoring the expiry of authorisations and their renewals with instances of protracted delays for periods as long as 24 years. Alarmingly, 70 out of 135 Gamma Chamber units continue to function without valid authorisations. Subsequent to the Mayapuri incident of April 2010, the AERB has taken steps to ensure that operational gamma chambers are subjected to
  32. 32. close regulatory monitoring and nonoperational ones are safely disposed of within a reasonable timeframe. T HE PAC noted that the regulatory mechanism concerning X-ray units was virtually non-existent. Out of a total of 57,443 medical X-ray facilities operating in the country, only 5,270 units had been registered and were under the regulatory control of the AERB. In other words, 52,173 units or 91 per cent of the total units are operating without registration. The AERB admitted that, with its very limited workforce, it was impossible to regulate so many X-ray machines. The accelerated usage of ionising radiation, such as medical X-rays, as an essential diagnostic tool poses grave risks to the health of medical workers and the public in the vicinity of these facilities. Surprisingly, even after the Supreme Court directive in 2001 for setting up a Directorate of Radiation Safety (DRS) in each State for regulating the use of medical diagnostic X-rays, only Kerala and Mizoram have complied so far. From 2005-06 to 2011-12, regulatory inspections had been made of only 15 per cent of both industrial radiography and radiotherapy units having high radiation hazard potential. Apart from this alarming shortfall, the frequency of regulatory inspections of such facilities is yet to be fixed in spite of prescribed international benchmarks. As regards radiological exposure of the public, it is heartening to note that during the period 2005-2010, the effective exposure was far less than the The Fukushima nuclear incident renewed concern about nuclear plants prescribed annual limit of one mSv (Milli Sievert) in all nuclear facility sites. However, as the Health, Safety and Environment Group of the Bhabha Atomic Research Centre (BARC) carries out environmental surveillance through its Environmental Survey Laboratories (ESLs), the authority of the AERB with regard to environmental surveillance apparently weakens. Safe disposal of radioactive waste is another concern, exacerbated by the tragic Mayapuri incident in 2010, where one person died and several were injured. Of course, the incident was a case of a legacy source, which occurred before the regulating regime came into being. It is also heartening gfiles inside the government vol. 7, issue 10 | January 2014 33
  33. 33. GOVERNANCE n-regime devender singh Construction of the Koodankulam nuclear power plant in progress to note that the radioactive waste control management of our nuclear power plants (NPPs) and fuel cycle facilities has an impeccable record and the same needs to be maintained scrupulously. Given the wide uses of radiation in various fields apart from the stateowned NPPs, the AERB should be accorded independent legal status for effective monitoring so as to ensure radiological protection of workers in NPPs, and entrusted with the responsibility of environmental surveillance with the close cooperation of ESLs. A comprehensive inventory needs to be prepared of all radioactive radiation sources across the country indicating the suppliers/manufacturers and suitable awareness created for safe handling and disposal of radioactive waste and to be updated regularly. Systemic and well conceived linkages need to be established with schools and colleges and communities for disseminating greater aware- 34 gfiles inside the government vol. 7, issue 10 | January 2014 ness about the advantages of atomic energy and the safeguards provided against radiation and radioactive substances and appropriate curriculum must be included in NCERT/ CBSE syllabi for enhanced sensitisation of impressionable young minds about the lurking dangers of radiation and over-exposure as also potential application with adequate safeguards. W E also need to strengthen the regulatory aspect of emergency preparedness in the area of other radiation facilities— prescribe mandatory safety codes/ procedures and emergency preparedness plans based on strict assessment of risk factors; and put in place effective control mechanisms for securing compliance to the prescribed safety codes in accordance with the Nuclear Safety Convention. An effective legislative framework also needs to be provided for decommissioning of NPPs. Any NPP or nuclear fuel cycle facility, after its life is over, needs to be decommissioned, decontaminated and demolished. The role of AERB with reference to decommissioning, therefore, needs to be strengthened and subjected to international peer review and appraisal to derive assurance of its effectiveness. The PAC was assured that this would be done once the Nuclear Safety Regulatory Authority Bill was enacted in the form recommended by the Standing Committee of Parliament on Science and Technology. One hopes that once the law is enacted, the AERB will take care of all these concerns and emerge as an independent and credible nuclear regulatory authority. g This article is based on the 90th report of the PAC, presented to Parliament on December 9, 2013. The author is a senior parliamentary official and a student of constitutional and parliamentary studies. The views expressed here are personal. He can be reached at
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  35. 35. INSIGHT nsel scam Shah of good & bad times Some people are born with a silver spoon; others achieve heights by their deeds. Born in a mediocre family, Jignesh Shah rose to the very top as the uncrowned czar of the world of finance. But after a quick and phenomenal rise, the bubble burst and his empire came crashing down—all within a span of 10 years. It is too early to say whether he will be remembered for his magical success or equally astonishing collapse. by NEERAJ MAHAJAN I F Rahul Gandhi is to be believed, the role of the government is to maintain the rule of law, book the guilty and ensure equality before law. But when a petty criminal is caught stealing a loaf of bread, he is beaten black and blue and locked up in jail before being given a chance to explain, whereas Jignesh Shah is getting preferential treatment. This is one of those rare cases where the government is trying to recover money and intimidate others on behalf of the kingpin. If you intend to commit a crime, do so on such a massive scale that you have enough booty left for yourself even after distributing some to all the needy and greedy. The whole idea is that you should comfortably enjoy the fruits of your crime and, whatever happens, neither the investors nor the guardians of the law should be able to touch your money which should continue to grow. You should continue to prosper under the patronage of high and mighty friends–partners in crime—who feel obliged to bail you out. These are among the most 36 gfiles inside the government vol. 7, issue 10 | January 2014 important lessons to be learnt from the Shah case. On the face of it, the law finally seems to have caught up with Shah, Joseph Massey and Shrikant Javalgekar, who were found “unfit and improper” to hold board or managerial positions in a recognised commodity exchange. In a strongly worded order, commodity markets regulator Forward Markets Commission (FMC) barred Shah and two of his aides from holding more than 2 per cent stake individually or through others in any recognised commodity exchange. Shah’s properties, including his Juhu bungalow, a house worth `78 lakh in Aarey Colony and a residential plot in Pune, were attached by the Economic Offences Wing (EOW) of Mumbai Police. He had to step down from the board of directors of Multi Commodity Exchange of India and MCX SX—the very companies he founded. But is this fit and proper punishment for a man who has been described as the “head and brain” as well as the “highest beneficiary of the fraud”? Not when you consider that `5,600 crore deceitfully swindled from some 13,000 investors is lying untraced while the settlement guarantee fund– a corpus created for investor protection—has mysteriously vanished. Till such time this money is recovered, any talk of allowing Shah to retain `931 crore recovered from the sale of Singapore Mercantile Exchange (SMX), or the differential amount recovered from downsizing the equity to 2 per cent, would amount to allowing him to benefit from his own crime. How can such a company be notified as a “recognised stock exchange” under Section 2(39) of the Companies Act? The FMC order makes it clear that all this was done with “mala fide intention on part of the promoter of the FTIL to use the trading platform of its subsidiary company for illicit gains, away from the eyes of the regulator”. Still, instead of being punished, FTIL is being deliberately allowed to sell 100 per cent of its equity ownership in Singapore Mercantile Exchange Pte Ltd (together with its wholly-owned subsidiary, Singapore Mercantile Exchange Clearing Corporation Pte Ltd) to ICE Singapore Holdings Pte Ltd for US$150 million. FTIL is also
  36. 36. selling total stake in the National Bulk Handling Corp—FTIL’s warehousing, which, in turn, holds a 60.88 per cent stake in IBMA—and remitting these funds to offshore subsidiaries. If this is allowed, the real money will get parked overseas, out of the reach of NSEL investors who will be left holding the stump. FTIL has reportedly remitted over US$90 million (about `560 crore) to its offshore SPVs on the pretext of prepaying offshore loans, over the past few months. S INCE August 2013, when this fraud came to light, FTIL has remitted US$90 million as loan to FT Group Investments Pvt Ltd (FTGIPL), a wholly-owned subsidiary, to prepay an unsecured foreign currency loan availed of by FTGIPL, purportedly for meeting its working capital requirements of overseas exchange ventures. Of this, FTGIPL prepaid US$42 million towards the foreign currency loan and US$44 million was sent back by FTIL. This was utilised to prepay External Commercial Borrowings worth US$33.25 million on September 19, 2013. Similarly, there are apprehensions that FTIL might wish to siphon off funds recovered from sale of its 100 per cent shares in the Bahrain Financial Exchange, 100 per cent in FT Group Investments Pvt Ltd in Mauritius, 99.98 per cent in Bourse Africa Pte Ltd, 100 per cent in Knowledge Assets Pvt Ltd, Mauritius, 100 per cent in the Global Board of Trade Ltd, GBOT Clear Ltd, Mauritius, Singapore Mercantile Exchange Ltd and several other stock exchanges. Such foreign currency transactions without the permission of the Reserve Bank of India are illegal and seriously compromise the interests of FTIL’s 75,400 shareholders. Jignesh Shah had to step down from the board of directors of the very companies he founded. He cannot anymore sit on the board and manage the affairs of any commodity derivatives exchange and is legally mandated to downsize his shareholdings to 2 per cent. But is all this a fit and proper punishment for the man who has been described as the “head and brain” as well as the “highest beneficiary of the fraud”? gfiles inside the government vol. 7, issue 10 | January 2014 37
  37. 37. INSIGHT nsel scam VEY RESULTS: 25-28 DELHI POLL SUR 30-33 02-05 2013 September 5, 6 VOL. 7, ISSUE T HIS demolishes NSEL’s former CEO, Anjani Sinha’s claim in his first affidavit that the promoters were no way involved, but substantiates his second affidavit in which he said that he was blackmailed into giving a clean chit to the promoters. This is also what another NSEL employee, Amit Mukherjee, claimed. With regard to Shrikant Javalgekar, former MD and CEO of MCX and board member of NSEL and Indian Bullion Markets Association (IBMA), the order says, “Such association by the MD of a regulated exchange with group entities of FTIL, which also participated in the trading platform of the same regulated entity of which he was the MD, displays a lack of honesty and integrity of the individual.” Commenting on Joseph Massey’s 38 gfiles inside the government vol. 7, issue 10 | January 2014 YAM MG DEVASAHA HOPE FROM DURGA p82 interest A gfiles public attention initiative for the rt Supreme Cou of the OT NATIONAL SP D SCAM C M EXCHANGE LT JIGNESH SHAH GREAT R GAMBLE THE FI RS S TS SJ T OG p7 IRR 8 IN GS Innocent victim or cunning plotter One of the significant aspects of the FTIL order is the manner in which it has peeled off Shah’s outer veneer as the innocent victim who did not know any thing of what his employees and senior management were up to. The man has been exposed as the person who engaged the services of his maternal uncle, Mukesh Shah, as the statutory auditor of NSEL, to cover his tracks. “It appears that Jignesh Shah has got himself excluded from the list of key management personnel, ostensibly to distance himself from NSEL when continuous defaults by members had thrown the company completely out of gear,” the FMC order says. “Shah, as the promoter of FTIL and NSEL, has misused his position to create confidence in the minds of the participants regarding the legitimacy of the business and its operations in the exchange platform of NSEL,” the order states. “Shah, as the promoter of FTIL and NSEL, has misused his position to create confidence in the minds of participants regarding the legitimacy of the business and its operations in the exchange platform of NSEL,” the FMC order states. role, FMC states, “His conduct through the series of events that led to the settlement crisis at NSEL has certainly eroded his general reputation, record of fairness, honesty and integrity...” Significantly, even the Registrar of Companies (RoC), in its 69-page report, opined, “The directors of FTIL have failed in their fiduciary duty to safeguard the interests of shareholders and creditors by not exercising due diligence and prudence in respect of its subsidiary (NSEL) and should not continue as directors of FTIL and NSEL.” Prime facie, it appears that the FTIL board allowed the state of affairs at NSEL to continue, which resulted in the fraud. Some of the violations are so serious that they can lead to their imprisonment under the Companies Act, the report adds. Highest beneficiary of NSEL scam Isn’t it surprising that, while officials like Amit Mukerjee and Anjani Sinha are now cooling their heels in a Mumbai jail, mastermind Shah is out of it? The government, on its part, claims to have done its bit by ordering the commodity spot exchange to stop trading for violating trading rules. For a change, the far-reaching FMC order goes on to call a spade a spade. “It can be logically concluded that behind the corporate veil, the management and governance of NSEL was practically carried out by Jignesh Shah through the vehicle of FTIL.” This is not the end of the story as more trouble seems to be heading Shah’s way and soon he might have to vacate the chair on the board of India’s largest electricity exchange— Indian Electricity Exchange (IEX)— offering a platform to more than 2,600 participants to sell and purchase electricity. The five-year-old IEX commands a 95 per cent share in the market. The Central Electricity Regulatory Commission (CERC), led by its chairman, Girish Pradhan, is challenging Shah’s right to remain on the IEX board. The ball is now in the court of IEX, chaired by former FMC chairman and Maharashtra Electricity Regulatory Commission member Venkat Chary. Two IAS officers, KT Chacko and Asha Das, as independent directors will also have a say. Besides Shah, Paras Ajmera is also on the IEX board. As of today, FTIL controls one-third of IEX shares. But once the CERC guidelines are implemented, Shah’s state and control over the IEX too will get diluted. g
  38. 38. gfiles inside the government vol. 7, issue 10 | January 2014 39