The Great Looting of the Indian Telecom Sector

The liberalisation-privatisation-globalisation policies initiated in 1991 resulted in unimaginable looting of the Government treasury, the economy, the natural resources  and draining of resources from India to foreign countries. Telecom Sector is one of the sectors where this looting is taking place in astronomical amounts.

Following are the main incidents of this great looting in the telecom sector;

a)      Telecom Scam 1999

The NDA Government lead by the BJP introduced New Telecom Policy 1999 allowing the private telecom companies to migrate from the payment of fixed license fees(payment of the license fee as a onetime lump sum amount)  to  annual payment as a share in the revenue. As per the reply given by the Minister of State For Communications to an unstarred question in the Loksabha on 23-11-2011, due to this migration policy, the Government lost an amount of Rs 43523.92 crores and the details are as below:

CMTS Licenses

i)        Fixed license fee to be paid by the CMTS(Cellular Mobile Telephone Services) Licensees for 10 year license period=Rs 30492.12 crores

ii)       License fees actually paid by these companies for the ten year license period on the basis of migration to revenue sharing=Rs 11234.90 crores

iii)     Loss to the Government exchequer=Rs 19257.22 crores

Fixed telephone Licenses

i)        Fixed license fee to be paid by the Fixed Telephone Services  Licensees for 15 year license period=Rs 27862.50 crores

ii)       License fees actually paid by these companies for the 15 year license period on the basis of migration to revenue sharing=Rs 3595.80  crores

iii)     Loss to the Government exchequer=Rs 24266.70 crores.

Total Loss=Rs 19257.22+24266.70=Rs 43523.92 crores. This is the looting done by the Private Telecom Operators with the co-operation of the BJP lead NDA Government. Yet, the leader of the BJP Sri L.K.Advani held a rath yatra recently against corruption!  

b)      2G Scam

Under the UPA Government lead by the Congress, the 2G spectrum scam took place and the scaam is in allotting 2G spectrum at dead cheap rate to certain favored telecom companies in 2008 and as per the estimate of the CAG(Comptroller and Auditor-General), the Government lost an astronomical amount of Rs 1,76,000 crores in this scam and to this extent the private telecom operators have benefitted illegally.

c)       3G Scam

Airtel paid to the Government for 3G spectrum for 13 circles, but providing 3G services in 20 circles. Vodafone paid for 11 Circles, but providing services in 20 circles. Idea paid for 9 Circles, but providing seerrvices in 19 circles. All these 3 companies signed “intra-circle roaming agreements” among themselves as per which the company among them which is not having the 3G spectrum in the concerned circle will provide the 3G services by sharing the 3G spectrum of the company having it in that Circle. As per the license condition, 3G services have to be provided by a company in the circles where it purchased 3G spectrum from the Government and no sharing of the 3G spectrum is allowed. It is estimated that these 3 Companies together were benefitted to the extent of Rs 20,000 crores (the value of the 3G spectrum for the circles where they are providing 3G services without purchasing 3G spectrum). This scam thus resulted in a loss of Rs 20,000 crores to the Government. DoT, after a lot of hesitation, finally issued notice to these 3 operrators to terminate their intra-circle 3G roaming agreements within 24 hours and stop providing the 3G services in the circles where they are not having 3G spectrum. But these 3 operators have decided to “fight” against this.

d)      Draining of resources to foreign countries

The private telecom operators have procured the equipment required for the expansion of their networks from the foreign telecom equipment manufacturing companies and as a result domestic telecom equipment manufacturing industries like ITI etc became sick and domestic research and development in telecom sector came to a virtual halt. As per the TRAI’s estimation, during the five year period 2004-05 to 2008-09, the cost of the telecom equipment utilized for the expansion of telecom network was Rs 309369 crores. Out of this, the value accrued to India was only Rs 34031 crores(11%) and the remaining Rs 2,75,338 was paid to foreign telecom equipment companies and went to foreign countries.

Further, as per the reply given by the Minister of State For Communications Sri Milind Deora in Loksabha on 7-12-2011, during the years 2009-10 and 2010-11, the cost of the equipment imported was Rs 95172 crores and equipment produced indigenously was Rs 1,04,275 crores. But in this indigenously produced equipment what was the value added in India was not mentioned. Even though the equipment is produced in India, it is largely nothing but assembling of imported parts. Only 10 to 20% of the value is added by such assembling and the remaining 80 to 90% of the value is for importing the spare parts. Therefore, at the best, out of this Rs 1,04,275 crores  value of the equipment indigenously produced, the value created at the best in India will be to the extent of 20% and the remaining 80% was for importing thee parts. Hence about another Rs 80000 crores was utilized for importing the parts for the assembling in the factories in india. Thus, approximately, in the two years 2009-10 and 2010-11, Rs 1,75,172 crores was utilized for importing the equipment(95172+80000)).

During the period 1997 to 2011 March the number of telecom subscribers increased from 1.75 crores to 85 crores. For the period 2005-05 to 2010-11, the cost of the equipment imported was Rs 2,75,338crores + 1,75,172 crores=Rs4,50,510 crores. If we assume that for the period 1997-98 to 2003-04, the cost of equipment imported was half of this Rs 4,50,510 crores i.e Rs 225255 crores, the total cost of the imported equipment during the period 1997-98 to 2010-11 would be Rs 6,75,765 crores. Such an astronomical amount was drained from our country to foreign country for procuring equipment. If the equipment of this much cost was produced in India entirely without importing parts, by developing our own research and development, how much the country would have benefitted? But the private companies do not care for this. Their aim is to loot the economy in collaboration with the foreign companies. 

How much was looted?

It cannot be said exactly. But from the above said cases, the estimated loot/draining out of resources was (a) 43523 crores   under BJP lead NDA regime due to the change in the policy allowing this loot  (b) 2G scam Rs 1,76,000 crores and  (c) 3G scam Rs 20000 crores under UPA regime and a drainage of money to the extent of Rs 6,75,765 crores for importing equipment during NDA/UPA regimes. Thus the total amount was Rs 915288 crores. To this, the amount looted by the scams during 1993 to 1996 under the Congress Government with Sukhram as its Communications Minister has to be added. Also the selling of VSNL at dead cheap rate by the NDA Government to Tatas has to be added. 

This proves that the story told by the BJP/Congress lead Governments that the foreign direct investment is necessary since we are not having the capital required for development is a false story intended for supporting the joint looting of the Indian economy by the Indian and foreign big capitalists. Actually these policies are resulting in draining out of our resources to foreign countries instead of helping in our development.

It is thus an established fact that the big corporate and the liberalization-privatization -globalization policies are the root cause of the mega scams and mega corruption. But why Anna Hazare and his team are not exposing this mega corruption due to the   big corporate and liberalization policies and why they are confining their anti-corruption movement to attack mainly the government employees and officers? Why their attack is not concentrated on the big corporate-ruling politician-bureaucrat nexus which is the root cause of corruption?

               If we have to save telecom sector and if we have to save the Indian economy, we have to defeat the liberalization-privatization-globalization policies and compel the Government to adopt alternative policies oriented towards strengthening self reliance and people oriented development. There is no other alternative.

----P.Asokababu

India Cinemascope

[This is an article written by Sitaram Yechury, MP(Rajyasabha) and Member, Politbureau, CPI(M)]

Dilip Kumar, our one-time colleague in Rajya Sabha, tweeted on his 89th birthday on December 11, even as the deaths of Dev Anand, Shammi Kapoor, MF Husain, Bhimsen Joshi, Bhupen Hazarika and Jagjit Singh continue to sink in. A void, difficult to fill, has been left behind. But we must end this
year in celebrating the life and work of these creative giants who, along with many others, moulded the collective consciousness of the country’s post-independent generations. The celebration lies in the resolve to carry forward their contributions in creating, what is popularly called, a national psyche.

In the 1970s, I remember the night-long recitations of Faiz Ahmed Faiz at the Jawaharlal Nehru University, and the enchanting singing of Bhupen Hazarika, which left everybody at the university recite or sing these for months on end. A Tamil student would be singing Bhupenda’s Asomiya and Bengali rendition of Paul Robeson’s ‘Old Man River’ or an Odisha student reciting Faiz saab’s poetry, melding revolutionary urge with a lover’s passion. Persuaded by us, the university also invited Balraj Sahni to deliver its convocation address. He chose to be cremated draped in a red flag.

Hindi cinema — I don’t like the term Bollywood as its origins lie in aping Hollywood — moulded a social consciousness that reflected the aspirations of a resurgent and an independent India. The hopes generated by Raj Kapoor through his characters achieving what appears impossible, Bimal Roy’s influencing the national agenda on issues like land reforms (Do Bigha Zameen), untouchability (Sujata), Dev Anand’s eternal romanticism or Guru Dutt’s nostalgia of a bygone era, among others, gave an expression to the concept of the ‘Idea of India’. These contributions created a common consciousness that wove together the bonds of commonality in diversity.

This, however, didn’t happen accidentally. The Progressive Writers’ Association (PWA) was formed in 1936 under the presidentship of Munshi Premchand in Lucknow. In the same year and in the same city, the All India Kisan Sabha and the All India Students’ Federation were established. Sajjad Zaheer, who was sent as general secretary of the Communist Party of Pakistan, after Partition, was its general secretary. The writers’ association brought together literary giants like Faiz Ahmed Faiz, Saadat Hasan Manto, Bhisham Sahni, Ali Sardar Jafri, Josh Malihabadi, Firaq Gorakhpuri, among many others, including Sahir Ludhianvi, Majrooh Sultanpuri, Kaifi Azmi and Shailendra, whose lyrics gave the most cherishable images of the actors that we recollect today.

A few years later, in the wake of the Bengal famine of the 1943 and the Quit India Movement, the Indian Peoples’ Theatre Association (IPTA) was formed, bringing together giants like Prithviraj Kapoor, Ritwik Ghatak, Utpal Dutt, KA Abbas and Salil Chowdhury, among others. It no longer mattered whether one was associated with the PWA or the IPTA. Every creative personality of those times was influenced by these movements, as Dev Anand himself said about Navketan Films and Vijay Anand in his last interview.

Premchand, in his presidential address, said that the PWA’s “purpose is to mould our thoughts and emotions and give them the right direction”. He summarised the duty of a writer by saying, “He becomes the standard bearer of humanity, of moral uprightness, of nobility. It becomes his duty to help all those who are downtrodden, oppressed and exploited — individuals or groups — and to advocate their cause. And his judge is itself — it’s before society that he brings his plant.” Both the PWA and IPTA carried forward the struggle to give expression to the changes taking place in Indian life and to assist “the spirit of progress in the country... discourage the general reactionary and revisionist tendencies on questions like family, religion, sex, war and society”.

It’s no secret that the Communist Party played an important role in catalysing these organisations and their works, in addition to the contributions made by the communists in bringing into the agenda of the freedom movement the issues of complete independence (a decade before the All India Congress Committee resolution of the ‘Purna Swaraj’), land reforms, the abolition of zamindari through the militant peasant movements and the linguistic reorganisation of the states. The communists, thus, carried forward the realisation of the Idea of India. It’s no coincidence that Mehboob Khan’s banner had a hammer and sickle, opening his magnum opus Mother India. The giants of Hindi cinema came from such ranks.

The generation of actors that gave expression to such a collective social consciousness are no more but have left behind their everlasting images for us to cherish. The content of these, however, were given by the lyricists and were expressed by the artists. It’s indeed ironic that while their words have been rendered into songs, many of these people never got their due. They virtually remain ‘unsung’ heroes. Hopefully, Parliament will give them at least some of their due by legislating the pending Copyright Act in the current session.

The current domination of the Khan quartet over Hindi cinema and its content created by many distinguished, creative minds including our Rajya Sabha colleague Javed Akhtar, AR Rahman and others, must continue to nurture the building of such social consciousness in modern times that will further the realisation of the Idea of India, combating, as PWA had said, “trends reflecting communalism, racial antagonism and exploitation of man by man”.

With this spirit of celebration, as 2011 draws to an end, we wish Yusuf Khan saab and Hindi cinema that this ‘suhana safar’ continues towards the realisation of the Idea of India.

( Sitaram Yechury is CPI(M) Politburo member and Rajya Sabha MP )
(From "Hindustan Times")

Mergers and Acquisitions of telecom companies-Whether our policy makers will learn from this?

The AT&T Company of USA having market share of 27% in mobile services came to an agreement to acquire another mobile services company T-Mobile so that the combined entity will have 44% market share. The US Department of Justice filed a suit in the Washington DC District Court against this on the ground that it will lead to “higher prices, poorer quality of services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their every day lives”. Finally, the AT&T was compelled to cancel the acquisition agreement with T-Mobile.

But in India, the TRAI proposed for allowing mergers and acquisitions in such a way that the combined entity can have a maximum market share of  35% without approval and upto 60% with approval. This was almost approved by the Telecom Commission. When in America, the acquisition of T-Mobile by AT&T resulting in a total market share of 44% for the combined entity was opposed by the Government and finally stopped, why in India the maximum market share of 35% should be allowed automatically and upto 60% with approval?

The Government should ensure a fair competition in the telecom services sector by ensuring that no company will have more than 20% market share. Allowing upto 30% share in the market is allowing monopoly and hence should not be allowed

General Strike on 28-02-2012

The Central Trade Unions-BMS, INTUC,AITUC,HMS,  CITU, AI UTUC, AICCTU,UTUC,TUCC,LPF and SEWA-have called upon the workers and employees of all sectors to go on one day  general strike on 28-02-2012, throughout the country.  The Central Trade Unions having affinity to Congress, BJP and Left Parties and regional parties like DMK have all come together and gave this call unitedly. The trade unions/federations in various sectors which are not affiliated to any of these central trade unions(AIBEA and BEFI in Banking, Confederation of Central Government employees, BSNLEU and NFTE in BSNL, All India State Government Employees Federation etc have also given the call. In BSNL, since the BTEU and FNTO are affiliated to BMS and INTUC, they also will join the strike.

This strike is a continuation of the struggles being organized by the working class against the anti-worker policies of the Government. Earlier, on 8^th November 2011 a massive satyagraha/jail bharo/dharna programmes were organized throughout the country.  Despite several rounds of united protests by the entire trade union movement of the country, the Goveernment remained unresponsive to the major concerns of the working people. Rather, anti-worker moves are being taken up to further aggravate the prices through frequent hike in power tariff, petroleum prices etc. Existing labour rights including the right to form trade union, are sought to be curtailed. Social security and pension are under attack, through various legislative measures and administrative moves. Mass scale contractorisation of the regular work is taking place in all the work places including PSUs and Government Departments. Contract workers are not being paid statutory minimum wages in most of the cases. Disinvestment of shares of PSUs is being actively pursued by the Government to facilitate phased privatization of the PSUs. 

There is rampant corruption all round and huge black money generation in the economy. The Trade Unions have been demanding concrete legislative and administrative measures and change in the policies to prevent corruption and bring back the black money stashed abroad.

Since there is no response from the Government for settling the demands, the trade unions have decided for one day nation wide general strike on 28-02-2012 on the following demands:

1. Concrete measures to contain price rise
2. Concrete measures for linking employment protection with the concession/incentive package offered to entrepreneurs
3. Strict enforcement of all labour laws without any exception or exemption and stringent punitive measures for violation of labour laws
4. Universal social security cover for all unorganized sector workers without any restriction and creation of a national social security fund with adequate resources in line with the recommendations of the NCEUS(National Commission for Enterprises in the Unorganised sector) and Parliamentary standing committee on labour
5. Stoppage of disinvestment in Ceentral and State profit making PSUs
6. No contractorization of work of permanent/perennial nature and payment of wages and benefits to the contract workers at the same rate as available to the regular workers of the industry/establishment
7. Amendment of the Minimum Wages Act to ensure universal coverage irrespective of the schedules and fixation of statutory minimum wage at not less than Rs 10,000.
8. Remove all ceilings on payment and eligibility of bonus,provident fund; increase the quantum of gratuity
9. Assured pension for all
10. Compulsory registration of trade unions within a period of 45 days and immediate ratification of the ILO Conventions Nos 87 and 98(on right to association and right to collective bargaining)

It is necessary to make this strike a great success  to pressurize the Government for settling the demands.

Prices Controllable If Govt Takes Three Steps

Here we reproduce a slightly edited version of the intervention made by Sitaram Yechury, leader of the CPI(M) group in Rajya Sabha, on December 7, 2011, during a discussion in the house on the issue of price rise. Subheadings have been added.

HERE I would like to point out that this is the third time that there is a discussion on price rise, i.e. in the third session in a row. There was a discussion first when the honourable chairman moved a resolution --- and we all supported that resolution --- where it was said in the last sentence that the government would take some steps to protect the people from inflation. Thus the people were supposed to be given some respite from inflation, but they didn’t get any. There was again a discussion in the next session when the opposition moved a resolution, and we wanted some amendments to it. There too it was said that the government would take all possible steps to curb inflation, but none were taken. This time we wanted a discussion under Rule 168, so that there is a voting on it, and thus there is some pressure upon the government. But the sad thing is that there is no such pressure today. However, I think that the government must take some steps on moral grounds, because of the commitments it has made to the people.

SORDID

REALITY

In this regard, I may suggest three solid steps which the government may take, but before it some discussion on the existing reality is needed. The food inflation crossed 20 per cent mark during the last two years; even today it is above the 12 per cent mark. Vegetables are costlier by 26 per cent today, pulses by 14 per cent, fruits by 12 per cent, eggs, fish and meat by 13 per cent and milk by 12 per cent. But when comes the question of why it is happening at all, we are told that the income of the people has gone up. The finance minister said so; the prime minister too said so when he was returning after taking part in the G-20 meeting. I quote what he had said, “If the economy is growing at 8 per cent and the population at 1.6 per cent, the per capita income must be growing at 6.5 to 6.7 per cent.” And what did the finance minister say when he made an 11-page statement at the beginning of that session? He said, “The steady rise in the incomes of our people is creating an excessive demand and that is the reason for this price rise. There is a mismatch between supply and demand.”

Now, what is the reality? The Economic Survey informs us. I quote, “The growth of private final consumption expenditure fell from 8.6 per cent in 2005-06 to 7.3 per cent in 2010-11.” And what is the other reality before us? You say that the actual incomes have grown. But what does today’s Times of India say? It tells something on the basis of the Organisation of Economic Cooperation and Development (OECD)? This OECD is a holy cow for globalisation and a mantra for all the PPPs. Its report about India has been published today, and I quote, “The top 10 per cent wage earners now make 12 times more than the bottom 10 per cent, up from a ratio of 6 in the 1960s.” It further says, “The top 10 per cent earners make 5 times more than the median 10 per cent but this median 10 per cent makes just 0.4 times more than the bottom 10 per cent.”

What is happening? If the income has increased, it is going to a few hands and thus “two Indias” are being created. We have said here many times that there is one shining India and there is another suffering India. The suffering India is growing in number and the more its suffers, the more the other India shines. Our Rajiv Shukla is not here, otherwise I would have said to his liking --- he is a great avid cricket fan --- that there is an IPL India and the BPL India. These are the two Indias that have been created.

Therefore the question is: If the incomes are growing, whose incomes are growing and by what methods? We need to note that the common people’s income is not growing, but yet they are suffering because of the rising prices. What needs to be done for them? I hope the finance minister, having been associated with the finance ministry for a long time, will understand that inflation is a classic mechanism of income redistribution, as any economist would tell you. It is income redistribution from the wage earners to profit earners. That is what exactly is happening in our country today. You are creating a chasm between “two Indias” and on top of it there is this price rise of the dimension that I was telling you. That is creating agony for the aam aadmi today.

So what the common man wants is relief. We need not make the shining India more shining. Rather, India cannot shine until the common man begins to shine. Otherwise, India would shine but not the Bharat.

NEED TO BAN

FORWARD TRADING

So, what are the three steps needed? First, we think it is speculative trade which is worsening the situation of inflation. And let me add that today it is only rice and urad in which forward trading is prohibited. What do the latest data from the Commodities Exchange, from the Forwards Markets Commission headquartered at Mumbai are telling? That in the period from April 1 to October 31, 2011, the cumulative value of trade has gone up by Rs 1,06,36,960.76 crore. That means it has grown by 72.63 per cent in a few months. But if you take the agricultural commodities as a whole, the trade has grown to more than Rs 10,83,000 crore; in percentage terms, forward trading in agricultural commodities was nearly 54 per cent during this period. If there is so much of growth in the value of forward trading, what does it mean? Nobody will invest in forward trading unless there is profit. But if the prices do not rise, those who speculate in forward trading do not make any profit. So the pressure for prices to rise is automatically there when you have this sort of a cumulative value in this forward or speculative trading.

Thus the first needed step is that you ban all forward trading, all speculative trading in agricultural commodities, and ban it for every single commodity. There will be some problem, as foreign finance capital will start shouting as to what you are doing. But this would be in the common man’s interest. The government can check the efficacy of this step by suspending the forward trading for six months. If the prices don’t come down, we are prepared to accept your word.    

Corruption has a link with forward trading. Where all this money comes from? Where is it going? How much black money is being generated? All this is related to speculation.

PETRO-PRODUCT PRICES

ILLOGICALLY RAISED

Secondly, you say that the rice of petrol has been reduced by 2 rupees while the crude price has gone up by 3 dollars a barrel. The logic up to now was that petro-product prices were going up because the crude prices were going up. Now you have reduced it while the crude prices abroad are going up. Yet you are not prepared to accept that the two sets of prices are unrelated. You say that oil companies are suffering from under-invoicing of Rs 1.32 lakh crore. But you don’t decide the prices on the basis of the production cost; in fact you show under-invoicing by linking the petro-product prices to international crude prices. On the basis of this supposed under-invoicing, you say that oil companies are facing losses. But, according to the audited accounts till March 31, 2010, the net profit of the Indian Oil Corporation was Rs 10,998 crore. It is the net profit after paying taxes. The reserved revenue surplus of the India Oil Corporation was Rs 49,472 crore. During April to December 2010, two other major oil companies, the Hindustan Petroleum and the Bharat Petroleum, earned profits of Rs 544 crore and Rs 834 crore respectively.

But if these companies are earning profits, the people must get some relief, or not? Nobody understands why you are raising the prices of petro-products. On the other hand, you say you are giving a subsidy of Rs 40,000 crore on petro-products.

What is the amount of money earned by the government of India in 2010-11? The reply given by the finance minister to a question in parliament on November 22 was that in 2010-11, the total amount, through indirect taxes collected and realised, was to the tune of Rs 1.02,827.77 crore. In addition, they got a dividend and royalties from oil companies to the tune of Rs 22,240.47 crore. As the finance minister says, sector-wise data of direct taxes, personal tax and corporate tax, are not maintained centrally. But if you add that too, the revenue would go up to more than Rs 1,30,000 crore. The subsidy you are giving to the people, you say, is Rs 40,000 crore. But in fact the people are subsidising the government. You are making a profit of Rs 90,000 crore from the petroleum sector, and still you claim that raising the prices is necessary. Is it justified? We say: the simple solution is that you roll back the prices.

It is good that the government has retraced its step on the retail trade issue, otherwise this winter session would have gone waste, just as the last year’s winter session went waste.

NEED TO STOP

SUBSIDISING THE RICH

The third step needed is related to foodgrains. Today, our central godowns have a stock of more than 600 lakh tonnes. This is more than two and a half times of the stock needed according to the buffer norms. Why? For the mice? I ask: why don’t you give these grains to states at BPL prices? In that case, they would be distributed through the public distribution system, which would have some impact on the price situation.    

These are the three steps needed. First, impose a total ban on speculative trading. Second, roll back the petro-product prices. Third, release the excess foodgrains for distribution through the public distribution system. We think there would be some control on escalating prices if the government takes these three steps.

Right now, there is no pressure upon the government as the discussion would be without any voting. But we want that the common man must exercise pressure upon the government.

In the end, I would only say that the tax concessions given to the rich in the last budget were 5.12 lakh crore. But if only that were not given, there would have been no fiscal deficit in the country. However, amusingly, the concessions to the rich are called incentives and those to the poor are called subsidies! And they say that subsidies are bad for the economy while incentives are good!! Is it a government of the aam aadmi or of the khaas aadmi? We say: give concessions to the people rather than to the rich. I only urge the government to seriously consider these three measures, even if there is no voting today, and start implementing them in the interest of the people of this country.

(Reproduced from "People's Democracy" 18th December 2011 issue)