Economic direction faulty?

Stimulus packages and bailouts have become household words. Sovereign countries like Greece are in the midst of getting bailed out by European Central Bank. Countries are facing mounting debts and unease economy, and bailouts by other countries in the Continent are a forgone conclusion. Corporate which were in the Forbes lists are looking to Banks to bail them out? Fortune 500 Companies, most powerful American banks, thriving industrial houses, one after another, went bankrupt, even though partial resurrected by the Government bailouts

India and its corporate sector is no better. Some banks were amalgamated with larger ones to save the smaller Banks from bankruptcy. Air India is in the deep red, and every year, the Government doles out tax payer’s money, yet it requires regular loans for survival. It is very near to bankruptcy. Kingfisher is moving ahead with financial woes and mounting liquidity problems. Government says that it is a private airlines problem, though they are keen to see Banks covertly extending support lest aviation sector become topsy turvy. The airline is in the brink of closure. There is another company that is on the threshold of bailout- which was hailed as a navaratna, today close to doldrums, Coal India Ltd.


With zero debt, nearly Rs 4.5 bn of cash reserves and consistent cash flows, it is unthinkable that the company would ever become a bailout entrant. After all it is the world's largest producer of coal and the demand for coal is not going to be affected by Law of diminishing returns. It is one of the raw materials for producing power (electricity) in India. Is CIL heading the Air India route?

There are reasons for this similarity. The biggest reason is none other than the government itself. Government sees no growth in growth areas. No pragmatic policy where required. Inaction when action should have been initiated, It has men of straw in their Policy and decision making ministries. Government is a big hindrance to the development of the Country. The company cannot increase its production. Production has in fact stagnated. It has no control over the price of its product. CIL already sells its coal at a highly discounted price because it is not allowed to sell at the import parity prices. But the employee strength is rising in Malthusian proportions. . The new mining policy desires that miners share 26% of their profits in the local communities- Corporate Responsibility.


Air India or Indian suffered the same treatment. . It milked the company till it dried up into a barren land. Capping revenues while consistently formulating policies that lead to higher costs is what destroyed the company. But history was not a good enough teacher and the government is all set to repeat the same mistake. This time it seems to have chosen the mulching cow. Government is testing Utopian ideas in the fragile Indian economic sectors. Time is not distant when Coal will become a red Company.

Coming to Kingfisher, Bank workers union are crying hoarse that no financial bailout should be provided to it. They claim that s 41 lakh Crores is locked up in the name of willful defaulters. SBI’s offer of Rs 1500 Cr to bail out the Company is one of the topics for the Bankers National wide strike on Feb 28, 2012. The same workers do not want smaller Banks to be merged with bigger Banks so as to reduce expenses. But even if the airline fails disrupting air traffic, throwing out many out of jobs, Bank unions feel that they can interfere in issues which are outside their pale of work!

King Fisher could have been allowed to get foreign investment by allowing 24% foreign funds in Indian airlines. FCCBs are no longer cheaper because of the grave uncertainty in the forex rates. Government advisors have no clue to solve problems. Problems created by them for short term advantages. A complete rehaul of government departments is called for.

Is culpability attach to every decision made in good faith?

The significance of Shri O P Saini's judgement on 2 G Case

Supreme Court prounced the judgement in the 2 G Case holding the 122 licences awarded were infrctious due to blatantly legal illgeality. It point out that CBI was doing a fine job, hence a Special Investigation Team need not be set up by the Supreme Court to monitor the case, and left it to the trial Court, CBI Special case of Shri O P Saini, to prounce whether the then Finance Minister and the current Home Minister Shri P Chidambaram be made an accused. In a sensational judgement delivered on 4-1-2012, the Special CBI Judge prounced a land mark judgement, giving detailed descriptions why he felt that it was unnecessary to drag Shri P Chidambaram into the accused list.

The judge after carefully vetting the documents produced by Subramanya Swami, categorically stated that it is not a dispute that the Finance Minister had permitted DoT to fixing the price of 2G at 2001 level prices. This was in adherence of the Cabinet note dated 31-10-2003 that the decision regarding Spectrum pricing be taken by the Finance Minister in tandem with Minister of Communication & IT. This was communicated by the then Finance Minister to the Prime Minister. The Prime Minister had accordingly informed the Lok Sabha.

If the Finance Minister takes a well intentioned decision facts on the basis of the note put up to him by another Ministry, and if he is bona fide convinced that the contention of the Minsitry is good for the Country, and having arrived at the conclusion without bias, mala fide intention, agrees with the implementing Ministry, does it amount to collusion, conclusion malafide and vitiated and actuated by criminal intention. Every decision, a public servant takes may not end in accumulation of wealth to the exchequer. The interest rate increase by RBI 13 times in 18 months caused distortion in the economy at the same time, could not tame inflation. Borrowing cost rose as a result, fiscal deficit also grew. For want of liquidity Industrial production slumped. Would you call it a criminal negligence?

Second dilution of equity in Swam Telcom (P) Ltd and Unitech Wireless(TN) Ltd. Firstly, the Spectrum licences are not transferable. Secondly, the Companies that acquired it, did not surrender their controlling stake. If they were to co-opt a new company without changing the basic structure of the Company that got allotted spectrum what is the criminality there. FDI is permitted. Bringing in more liquidity is permitted. Bringing a technical partner is permitted. If the Partner is not from a hostile country, the legal transaction is permissable. What Finance Minister gave was approval as per consitent policy decision of the Government of India. How can such an act be viwed culpable?

What ever was done byChidambaram in his official capacity did not attract any provision of the penal Code. However Raja, did not place TRAI recommendation dtd Aug28,07 before full Telcom Comm. Finance Ministry had written a letter asking Raja to auction, hence he did not refer any consultaions. Law Ministry's suggestio to refer the matter to Empowered Group of Ministers was rejected by Raja. Cut off date was arbitarily fixed. First-cum-First Serviced format was changed and put on public domain only on Jan 10,2008. A chosen few who applied in August,September 2007 were awarded Spectrum but those who applied in 2004,06 were not considered. The loss was pegged by CAG at Rs 1.76 lakh Cr, while CBI said it was Rs 30,984.55 while TRAI noted that there was a gain of Rs 3,000 Cr.

To prove criminality, mens rea, or guilty intent needs to be proved.