IE Columnist: Arunshourie

Chasing that bank of votes again

arunshourie — Wed, 25 Jan 2012 18:31:59 +0000

Arun Shourie : Thu Jan 26 2012, 01:24 hrs

Uttar Pradesh goes to polls and the Congress is wooing Muslims again, promising 9% quota. Clearly, it hasn't drawn any lessons from its similar move in Andhra Pradesh. Thrice, the court turned it down but the government brazened it out. So who cares if the courts strike down the latest promise too? By that time those who have to be fooled, would have been fooled; what's to be won, would have been won. Exclusive excerpts from the expanded edition of Arun Shourie's Falling Over Backwards, to be published by HarperCollins in April 2012 are on The Indian Express website.

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Chasing that bank of votes again

arunshourie — Tue, 24 Jan 2012 18:31:58 +0000

Arun Shourie : Wed Jan 25 2012, 22:08 hrs

Uttar Pradesh goes to polls and the Congress is wooing the Muslims again, promising to set aside a quota of up to 9 per cent. Clearly, it hasn't drawn any lessons from its similar move in Andhra Pradesh — to reserve 5% for Muslims in jobs and educational institutions. Not once but thrice, the court turned it down, each time severely indicting the government for trying to push through a measure without any homework and once even riding on dodgy data. The government, however, brazened it out and has been able to park the case in the Supreme Court.

Is that cynicism in command again? Who cares if the courts strike down the promise later? By that time those who have to be fooled, would have been fooled; what is to be won, would have been won.

Exclusive Excerpts from the expanded edition of Arun Shourie's FALLING OVER BACKWARDS, to be published by HarperCollins in April 2012 are on The Indian Express website.

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Please read our terms of use before posting comments

Chasing that bank of votes again

arunshourie — Tue, 24 Jan 2012 18:31:57 +0000

13 May 2004: The Congress Government with Y S Reddy as Chief Minister is sworn-in as the new Government of Andhra Pradesh.

2 June 2004: The Chief Secretary holds a meeting. Secretaries of various departments attend. The Chief Secretary announces that the Government has decided to provide reservations for Muslims.

4 June 2004: So as to include them in the list of Other Backward Classes and thereby give them reservations in educational institutions and public employment under Articles 15(4) and 16(4), the Andhra Government issues an order directing a department of its own, the Commissionerate of Minority Welfare to submit a report recording the social, economic and educational backwardness of Muslims.

5 July 2004: The Commissionerate duly submits the report that the Government has asked for. It recommends that Muslims be given 5 per cent reservations in both educational institutions and public employment.

7 July 2004: The Government issues an order—5 per cent reservations are granted to the Muslim community.

The Government's order is challenged in the Andhra Pradesh High Court. The challenge is heard by a Bench of five judges. The Court strikes down the Government Order as wholly unconstitutional. The Court comes to this conclusion on several grounds.

Before a group can be accorded reservations in educational institutions under Article 15, it has to be established that the group is 'socially and educationally backward.' And before the group can be granted reservations in public employment under Article 16(4), the authorities have to establish both — that the group is 'backward' and that it is inadequately represented in governmental employment. The Government has decreed reservations for the entire Muslim community, but the Muslims are not a homogenous group: there are caste-like stratifications among them, the High Court noted, observing:

Non-Hindu religions like Islam, Christianity, and Sikh, do not recognize caste as such, but the existence of caste like social stratification among the Muslims is well recognized that in spite of egalitarian philosophy of Islam, which opposes all kinds of discriminations, almost all types of caste groups have emerged in the Muslims. The Muslims have developed different caste-groups at different places, but they call themselves as Jamat or Biradari and do not use the term Jat or caste e.g. Nadaf or Mansoori Jamat or Biradari, but in actual practice, they possess practically all the traits of caste structure such as endogamy, stratification, occupational monopoly, dress-code and their own different Mosques.'

Therefore, there can be a case for identifying specific groups from among the Muslims as being backward and thereby according reservations for them, the High Court said. But what has the Government and its Commissionerate done? This is how the High Court sets out what it finds:

The process of identification of Muslims as a group as socially backward by the Commissionerate of Minorities Welfare is totally vitiated since it did not determine any specific criteria for the purposes of identifying the Backward Classes and applied the same in order to find out as to whether the Muslims qualify to categorise them as socially backward and as well as backward for the purposes of Articles 15(4) and 16(4). The Commissionerate acted in undue haste. The Commissionerate failed to undertake any serious investigation and enquiry as is required before identifying the Muslim Community as a socially Backward Class. In the absence of laying down the criteria for ascertaining the backwardness, the entire report is to be treated as an exercise in futility. The approach adopted by the authority is improper and invalid. In the absence of any such finding as to the social backwardness, the Muslims cannot be classified as Backward Classes either for the purposes of Article 15(4) or Article 16(4) of the Constitution of India.

When, in the face of differentia within a religious community, the required investigation is not undertaken, and the entire community is proclaimed to be backward and reservations are decreed for that religious community, two fatal consequences follow:

* Unequals — the socially, educationally and economically advanced sections among Muslims, and those among them who are backward — get treated as equals. And equals—say, the advanced sections among non-Muslims and those among Muslims — get treated unequally: the advanced among non-Muslims do not get reservations and those among Muslims do. This strikes at the very root of the fundamental principle enshrined in Articles 14, 15(1) and 16(1), the principle of equality which, the Supreme Court has held times without number, is an essential ingredient of the Basic Structure of the Constitution.

* As no effort has been made to take account of differentiations within the Muslim community and as reservations have been made available to the entire community as such, the decision — of giving reservations to an entire religious community when in fact there is inequality between groups of adherents — is clearly based on religion per se, and this is expressly prohibited by the Constitution under Articles 15(1) and 16(2).

To not exclude the better off in a religious group, the 'creamy layer' as the Supreme Court had characterized them in Indra Sawhney, has the same effect that not doing so has in the case of a caste, and, in the light of judgments of the Supreme Court, is 'totally illegal', the High Court observes. 'Such an illegality offending the root of the Constitution cannot be allowed to be perpetuated even by constitutional amendment.'

Next, under the A.P. Commission for Backward Classes Act, which has been on the statute book since 1993, the Government can add a group to or take away a group from the list of Backward Classes only after the case for doing so has been examined by the state's Backward Classes Commission constituted under that Act. It turned out that the state had not sought the advice of the Commission at all in regard to the backwardness or otherwise of Muslims. Nor had the Commission examined the matter at all. Two earlier Commissions—the Anantaraman Commission and the Murlidhara Rao Commission—had examined the issue, and had come to the conclusion that as a class, Muslims are not socially and educationally backward, and that, except for a few sects, the other sects of Muslims enjoy equal status with followers of other religions. Those few sects that did suffer from social and educational backwardness—Dudekula, Mehtar, etc.—the Commissions had said should be included in the list of Backward Classes, and given reservations. This had been done.

The decision of the Government is 'entirely based' on the report of its own department, the Commissionerate, the High Court noted. And what kind of a report had this Commissionerate produced? This what the High Court found on examination:

* 'The report on hand, to say the least, is somewhat peculiar . . . The Commissionerate report does not contain the details of any investigation or enquiry as regards the social backwardness of Muslim Community,' the High Court noted. 'There is no finding recorded by the Commissionerate as to the social backwardness of the community.'

* 'The report, in our considered opinion,' the High Court held, 'is vitiated for the reason of not taking relevant factors into consideration. It is also vitiated for the reason of non-application of mind. This Court cannot help but observe that the Commissionerate acted in undue haste in submitting the report. The Commissionerate failed to realise the complex nature of investigation and enquiry that was required to be made. No scientific or reasoned investigation or enquiry has been made. In the absence of laying down the criteria for ascertaining the backwardness, the entire report is to be treated as an exercise in futility. The approach adopted by the authority is improper and invalid.'

The Government, as we just noted, was also duty-bound under Article 16(4) to determine that the Muslims as a community are inadequately represented in governmental services. This fact also cannot be ascertained mechanically for the expression that has been used in Article 16 is not 'proportional representation' but 'inadequate representation'. Hence, one cannot just look up the proportion that a group forms of the total population and compare that with the proportion of posts that its members have in governmental services. On this aspect also, the High Court concluded, the Government had been totally remiss in what it was required to do by the Constitution and the relevant judgments of the Supreme Court:

* 'In the instant case, there is no material that was available with the Government to form its opinion, which may be a purely subjective process to arrive at any conclusion that the Muslim Community is not adequately represented in the services of the State. The data collected from Kurnool District [just one of 23 districts in the state] and incorporated in the report in no manner reveals inadequate representation of Muslim Community in the services of the state. There were no material and circumstances on which the Government could have formed the opinion as to the adequacy of representation of Muslim Community in the services of the state. In fact, the impugned G.O. [Government Order] does not reflect any formation of opinion as to the adequacy of representation. The G.O., is therefore, vitiated on the ground of non-application of mind.'

Finally, the High Court noted that reservations under Articles 15(4) and 16(4) in Andhra already totaled 46 per cent. With another 5 per cent now being reserved for Muslims, the ceiling of 50 per cent was being breached. The state has not been able to explain the compelling reasons on account of which this ceiling should be allowed to be breached, the High Court concluded.

The response

As resounding a slap on the face of the Government as one could imagine. And how did the Government respond? It was headed by a committed secularist, remember, by a Chief Minister who was even then known as a go-getter—a reputation that would get reinforced in more ways than one in the ensuing years.

The High Court had given its judgment in Muralidhar Rao on 21 September 2004. On 18 November 2004, the Government wrote to the Andhra Pradesh Backward Classes Commission to examine the question of the backwardness of the Muslim community for assessing their eligibility for being given reservations in educational institutions and public employment. The Commission gave its report—we shall soon learn what kind of a report this was—on 14 June 2005. Within the week, on 20 June 2005, the Congress Government issued an Ordinance—again reserving 5 per cent seats in educational institutions and governmental jobs for Muslims.

The Ordinance was challenged in the Andhra High Court. When the judges gathered in Court to deliver their judgment, they were told that the Ordinance on which they had been hearing arguments and on which they were about to pronounce judgment had lapsed. It had been replaced by an Act. The Court saw that there was no material change in the provisions, and merely noted in its judgment that wherever the word 'Ordinance' occurs, it shall be taken to refer to the Act. Delivered by a five judge Bench, the second judgment of the High Court—in B. Archana Reddy v State of Andhra Pradesh—was an even tighter slap than the first one. The Ordinance/Act was struck down as unconstitutional and violative of Articles 15(4) and 16(4), the two Articles under which it had ostensibly made the reservations.

An even tighter slap

The first feature that made the Ordinance and the Act wholly unconstitutional was precisely the one that had made them so attractive to a Government so eager to pander to a vote-bank—the boon that it was conferring was based wholly and solely on religion! From the title of the Act—A.P. Reservation of Seats in the Educational Institutions and of Appointments or posts in the Public Services under the State to Muslim Community Act, 2005—to its Preamble, down to individual provisions, every bit of the text was designed to leave no doubt that it was intended for giving reservations to the Muslims as a religious community solely because it was the Muslim community. The classification of those who would get the reservations that were being provided and those who would not was based only on religion—something that is explicitly prohibited by Articles 14, 15(1), 15(2), as well as 16(1) and 16(2).

In any event, this single feature—of basing the discrimination, in this case between Muslims and non-Muslims, only on the ground of religion—was the one on which the High Court judges came down first.

The Ordinance is 'religion specific', the judges noted. It 'imposes illegitimate, discriminatory and grossly burdensome impact on citizens, on those belonging to the existing notified Backward Classes and on those who are not members of Backward Classes, as well,' they noted. 'The inference is therefore compelling that the entirety of the state action manifested in the provisions of the Ordinance, is a crude camouflage to shield what is clearly a naked and exclusively religion based programme of reservation in educational institutions and public employment,' they observed. The classification—of those who will get reservations and those who would not—is based exclusively on religion, they held.

In this round, the Government had indeed referred the question to the Backward Classes Commission for examination. But the Commission had just done a pro forma job. The Commission's report ought to have been of the standard of a commanding performance, the Court observed quoting the petitioners with approval, rather than a performance on command. This was made manifest by several facts.

The Commission had not published in advance the criteria on which it would be assessing backwardness—this alone would have given those who had objections or suggestions a chance to assist the Commission with their views. 'The prior non-publication of criteria and data collected by the B.C. Commission renders the report of the B.C. Commission illegal and contrary to provisions of B.C. Commission Act and principles of fairness.'

In fact, whereas 'an expert body like the Backward Classes Commission has to necessarily evolve absolutely relevant criteria for the purpose of caste test, occupation test and means test,' in the case at hand, 'the B.C. Commission did not evolve any criteria for identifying social backwardness and did not apply the three tests in a scientific and objective manner.'

And such criteria as it used, and such data-gathering as it did were inappropriate and worse. So that it may determine whether a group is eligible for reservations, the Commission had to identify those groups among Muslims who were socially, educationally and economically backward—only such groups can be given benefit of reservations. As had been the case with the Commissionerate in the first round, in this round the Backward Classes Commission too had 'totally ignored the existence of castes and communities and proceeded as if the entire Muslim community is a homogenous group without any visible divisions among the community. The entire approach therefore suffers from a fundamental flaw.' Treating Muslims of Andhra as a homogenous group thereby papering over the internal differentia among them, 'constitutes a fatal flaw in the conceptual foundation, adopted methodology and social survey of the Commission's exercise and introduces an irremediable infirmity to its conclusions and recommendations.'

And the Court gave a telling analogy to pronounce what the Commission had done as 'grotesque and unconstitutional'. It noted,

'Classes of Muslims already recognized and identified as backward classes constitute a dissimilar and distinct class from those Muslims who have not been so identified. Conceptually treating such dissimilar classes as one violates the established principle of classification, a doctrine underwriting the equality injunctions mandated by Articles 14-16 of Constitution. The equivalence of the Commission's endeavour and exercise, in the Hindu context, would be to take the entire Hindu collectivity including the several castes, groups and classes including the notified Scheduled Castes and Scheduled Tribes and other Backward Classes, and including the indisputable forward castes among the Hindus, like say the Brahmins, proceeding to survey, collect data, apply the criteria to such data and thereafter characterize the entire Hindu population including Brahmins as a backward class. Such an exercise would compellingly require to be characterized as grotesque and unconstitutional. This is what the exercise of the Commission is, but for the difference that the Commission's exercise involved the entirety of the Muslim collective.'

The consequence is fatal, the High Court noted: 'In treating the identified Backward Classes of Muslims in the State of Andhra Pradesh and the other Muslims as an integral homogeneous social class, as the basis for its entire exercise, the Commission was led into a fatal error from which there is no redemption. As a consequence its exercise is rendered an exercise in futility. For this error its report including the Recommendations therein must perish as must the Ordinance based exclusively on the Recommendations of the Commission.'

Several of the so-called criteria that the Commission had deployed—occupation, extent of poverty, access to medical services, low life expectancy, etc.—the High Court held, were neither germane to nor peculiar to the Muslims. Nor had the Commission made any effort to establish any causal relationship between these traits and belief in Islam or of belonging to the Muslim community. As such, the criteria that the Commission had used were 'defective, unscientific, unreasonable and absurd.'

In regard to several other indices and data that the Commission had brandished, examination showed that its conclusions in instance after instance were 'based on no relevant evidence or material,' that for them 'there is neither data nor details of the survey, incorporated on record,' that 'the Commission had no basis, in concept or fact to support the conclusion that Muslims are socially backward,' that 'the Commission's conclusions based on a composition of erroneous assumptions, are therefore unsustainable...'

The Commission had not just pronounced all Muslims of Andhra to be backward, it had also declared that none of the existing backward classes have attained levels of advancement that warrant any revision of the existing reservations—this it had done manifestly so as to make out the case for exceeding the 50 per cent ceiling. 'This conclusion,' the Court said of this business of no backward group having advanced, is 'extravagant and unfounded,' it is based on no reference, no evidence, is perverse, invalid and is accordingly declared.

In fact, the situation had been worse. Far from identifying and differentiating those groups among Muslims in Andhra who really were backward, in the reliance it placed on some data, the Commission had not even differentiated Muslims in Andhra from Muslims in the rest of the country! For instance, to show that a proportion of Muslims in Andhra were unemployed, the Commission had deployed what turned out to be aggregate National Sample Survey data for the country as a whole!

And in other instances, the Commission had deliberately shut its eyes to data that could be seen from a mile to be intrinsic to the question it was examining. To show that Muslims as a whole were educationally backward, it had used data regarding enrollment in only the general educational institutions—it had totally shut out data about students enrolled in minority institutions, when these are legion in the state!

'From the text and texture of the report of the Commission,' the High Court was compelled to conclude, 'it is apparent that the Commission considered that it had to record a conclusion regardless of whether time and organizational constraints permit a degree of exercise relevant to the goal obligated by the Constitution and the provisions of the 1993 Act.'

Such was the 'performance on command' that the backward Classes Commission of the state had turned in—and the state had justified its decision solely by the report of this Commission. But, the Court noted, the Government had gone one better!

While the Commission recommended 5% of reservation to all Muslims including those distinct classes/ groups of Muslims already included as Backward Classes (Laddaf, Dudekula etc), the Ordinance provided 5% reservation only in favour of Muslims excluding those already included in the list of Backward Classes. The existing Groups of Backward Classes A, B, C and D remain undisturbed.

As a result, Muslims would get reservations for more than the 5 per cent that the Ordinance/Act had provided!!

For these, and other reasons of the kind we encountered in the case of the first round, the 5-judge Bench of the High Court struck down the Ordinance/Act as wholly violative of the Constitution and wholly contrary to what the Supreme Court had laid down in its decisions.

The High Court handed down this stinging rebuke on 7 November 2005. The Government requested that it be given leave to appeal to the Supreme Court. Leave was granted.

That leave petition remains pending to this day. But how could that mere fact come in the way of that go-getter's Government?

The third slap

17 April 2007: The Andhra Government asked the Backward Classes Commission to do the exercise again, and, this time, identify the socially and educationally backward groups among Muslims. Incidentally, in making that request the Government quoted the wrong section of the relevant Act!

18 May 2007: Even as the Commission was ostensibly carrying out the exercise, the Government appointed a retired IAS officer, P.S. Krishnan as Advisor and asked him to identify the backwards among Muslims.

11 June 2007: A month had not passed, and Krishnan submitted his report to the Government.

11 June 2007: The same day, the Government sent Krishnan's report to the Backward Classes Commission.

23 to 26 June 2007: The Commission declared that it would conduct its own state-wide survey during these—all of three—days. Even on its own telling, this state-wide survey was to be done in—the easily accessible areas, chiefly towns—of just six of the state's 23 districts.

29 June 2007: The Commission completed 'the collection of the data, compilation of the survey material and discussion on the collected material.'

2 July 2007: That is, within two days of completing the collection, compilation and discussion of the data, the Commission handed its 204-page report to the Government!

6 July 2007: The Government issued an Ordinance—once again decreeing 5 per cent reservations for Muslims in educational institutions and in government services.

13 August 2007: The Andhra legislature passed the corresponding Act—The Andhra Pradesh Reservation in favour of Socially and Educationally Backward Classes of Muslims Act, 2007.

There was one manifest improvement! While the title of the 2005 Act had stated that the reservations were being made for the 'Muslim Community,' the 2007 Act maintained these were for 'Socially and Educationally Backward Classes of Muslims'!

The Act was challenged in the High Court. The case was heard by a seven judge Bench. By a majority judgment, the Court struck down the Act as 'unsustainable'. Apart from the other reasons which the Court set out in detail, and which traversed the grounds that we have already encountered, there were others. Among these was the basic one: the Act had proceeded to classify beneficiaries and non-beneficiaries in an unconstitutional way—that is, on the basis of religion only. To take just two instances, examination showed that the identification of backward classes among Muslims was both irrational and unsustainable, and thereby 'exclusively religion specific'; and, second, in a give-away, the Act had prescribed benefits for 'other Muslim groups'.

Apart from the fact that the Act was unconstitutional for this basic reason, the High Court drew attention to another consequence of this religion-specific identification of beneficiaries. The point is best considered by reading what the Court itself said:

If a person, who is not a Muslim and who belongs to a forward caste embraces Islam, then the question would arise as to in which group he would fall. If he does not belong to any of the groups specifically narrated in the Schedule appended to the impugned Act, he would be included in 'other Muslim groups' i.e. he would be in Item No. 15; but as he would not be in groups which have already been referred to in Item No. 15 (i.e. the excluded communities), he would be a member of 'other Muslim groups' and would be eligible for the reservation provided he is not a member of a creamy layer. In such an event, in our opinion, anyone can avail of the benefit of reservation under the impugned Act and that would be against the spirit of secularism and in equal measure subversive of the purposes for which the 2007 Act has been enacted as well. This is a significant aspect which has not been considered at all while enacting the impugned Act and this would have disastrous consequences. Not only unscrupulous persons embracing Islam would get the benefit of reservations, but that would result in depletion of opportunities of enjoying reservations by those Muslim groups who are otherwise entitled to the benefit of reservation in pursuance of the impugned enactment.

The other reason on account of which the judgment declared the Act to be unsustainable was that it was based exclusively on the report of the Backward Classes Commission, and this report, it turned out, was even more of a farce than the previous so-called reports on which the Government had ostensibly based its largesse.

To begin with, even the Advocate General admitted that 'in certain cases there was perhaps no justification for including certain Muslim groups in the list of Backward Classes, except for the reason that their Hindu counterparts were already included as SEBCs, and for this reason, the Commission, without any survey to ascertain their way of living, level of education and economic condition, had recommended certain groups to be included in the list of Backward Classes.'

And what of the cases in which the Commission had actually conducted a survey?

The Court found, to begin with, that in the overwhelming proportion of cases, the Commission had in fact not conducted any survey at all. It had just reproduced passages and narrative from the study by the Anthropological Survey of India and that report of P.S. Krishnan! And even in doing so, it had both mis-stated facts, and worse.

In regard to a group—'Atchukatlavandlu (Muslims)'—the Commission stated that it had conducted a survey in Kadapa and Adilabad districts of the state. But the Anthropological Survey study on which it was relying contained no discussion about this group of Muslims! What the latter had described was the Hindu counterparts of this group!

In regard to another group—'Faqir/Fhakir Budbudki'—the Commission had stated that they reside in certain areas, which it had listed, of the Rayalseema Region. But the staff of the Commission had conducted their survey of this group in the Telangana Region! And that survey, did not establish backwardness to boot.

As regards another group—'Siddi'—the only justification that the Commission could come up with for their being included in the list of backwards was that a group with the same name in Gujarat was recognized as a Scheduled Tribe, and one in Karnataka of that same name had been included in that state's list of backwards!

In regard to another group—'Garadi'—the Commission had indeed conducted a survey. It had surveyed all of seven households comprising 40 persons in one district, Medak! And, surprise of surprises, 'Of those who had been surveyed, 100 per cent of them had stated that they were not given any discriminatory treatment by the society and they were also not in their traditional occupation. Moreover, they had all submitted that they were treated as normal social beings by the other members of the society.' 'In spite of the above facts gathered by the Commission,' the High Court observed, 'it had recommended that "Garadi" community be treated as socially and educationally backward.' 'It is also pertinent to note,' the High Court continued, 'that the total population of the Garadi community was not known...'

In regard to the 'Gosangi' community which too the Commission had anointed as backward, 'data from only one family had been gathered by the Commission in Nizamabad district...'

Similarly, the Commission had recommended the inclusion of 'Chakketakare community' among backwards on the strength of having surveyed six households comprising 29 persons in one district.

As for the 'Guddi Eluguvallu' whom also the Commission declared should be recognized as backward, 'no survey whatsoever had been conducted and no data had been collected by the Commission.'

'Likewise,' the High Court noted in conclusion, 'with regard to other communities also, we find that the Commission had not conducted the survey objectively to justify its recommendations.' The Commission just could not have conducted a survey in the extremely short time between its being asked to examine the matter, and the date on which it submitted its report, the High Court noted. As already pointed out, the records of the Commission themselves showed that some of the so-called data had been gathered by it on 28 and 29 June 2007. And within two days the Commission had not just analyzed the data, and had discussions on it. The Commission had completed and submitted a written report covering 204 pages!

After a detailed analysis of the so-called survey that the Commission had claimed to have conducted, the judges concluded that the Commission had failed to evolve and spell out proper and relevant criteria for identifying those who were socially and educationally backward, and for those who were inadequately represented in public employment; that it had failed to obtain even the figures of total population of the groups it was ostensibly identifying; that it had failed to utilize any scientific and statistically rational method of sampling the groups—the size of the sample, the locations where it would be conducted, etc.; that it had failed to apply uniformly such criteria or even standards as it had alighted upon; and that, instead, it had relied on the study of the Anthropological Survey of India which 'had no relevance or nexus with the affirmation action/reservation under Articles 15(4) and 16(4); that 'no material' had been placed before the Court to prove that the classifications on which the Act was based had any nexus with the policy and objectives that had to be achieved; that, in the absence of such material, the state Government 'has utterly failed to discharge its onus of proof to establish that the reservations are for socially and educationally Backward Classes of citizens and that the enactment is based on sufficient material to support the classification . . .' And hence that the investigation carried out by the Commission 'is not sufficient, and the report submitted by it is not based on real facts, data or analysis and is without any proper survey...', and, therefore, that the report should be held to be mechanical, and perfunctory in nature and to have been prepared without application of mind . . .

A portent

Incidentally, before we move on we have to note one feature of the judgments in this case as it presages what is to come. In a case such as this, they were bound to examine the basis on which the legislature and the Government had acted, the judges pointed out. They had to subject the provisions of the law and the basis on which benefits under it had been assigned to 'rigorous' or 'strict' scrutiny, they pointed out, citing a number of Supreme Court judgments and even weightier reasons. One judge demurred. Such scrutiny is not warranted, he maintained. When the legislature passes an Act, we must proceed on the presumption of constitutional validity of the enactment. The others pointed out that 'All the judgments touching upon reservations consistently applied exacting scrutiny. In Indra Sawhney's case... the Hon'ble Supreme Court analysed the Mandal Report minutely, which, in our view, exemplifies application of rigorous and exacting standard of scrutiny.' They agreed that, yes, in the normal course, there should be a presumption of constitutionality, 'However, such a presumption of constitutionality of a statute is not available if it can be shown that facially [sic.] the law or the surrounding circumstances on which the classification is based did not warrant such a classification and the statute made an invidious discrimination among citizens similarly situated . . .' And when the constitutionality is challenged and a prima facie case is made out regarding the defectiveness of the statute, the burden of establishing constitutionality shifts to the state . . .

Both the fact that the classification in the Act was based on religion only, as well as the cavernous lacunae in the survey on which the list of backwards had been drawn up established the infirmity of the Act prima facie. But that judge's response was astonishing.

As for the identification of groups being religion-specific—something that is expressly forbidden by the Constitution—the judge held, that is no flaw, in fact it is justice being done at last! Here is how he put his conclusion:

When the state of A.P., holds the view that coverage under Articles 15 and 16 of the Constitution in respect of certain social groups among Muslims have [sic.] been missed until the impugned Act even while the same coverage in respect of other religious communities have [sic.] been in existence since long time, the Court cannot accept any challenge to the Act on the ground that it is religion-specific. On the contrary, the impugned Act is an act of delayed rectification of injustice done to them all along and extending justice to the now included social groups who have been identified not on the basis of their religion but on the parameters of social and educational backwardness...

And as for the gross infirmities in the 'survey', as for the Commission having relied—to the extent of having reproduced verbatim—reports that had no nexus with the question it had to examine and the identification it had to carry out, the judge was equally large-hearted! He declared,

Irrespective of any inadequacies or deficiencies in the APCBC [Andhra Pradesh Commission for Backward Classes] report and other materials

In the light of what we have seen were the facts regarding the report of the Commission and its 'survey', how tender are the words the judge had chosen, 'inadequacies or deficiencies'!

once a legislation is enacted the judiciary has to take into account the principle of presumption of constitutional validity of any legislation under the Indian Constitution and set it aside only if there is anything in the legislation which strikes the conscience and strikes the eye as totally unreasonable. This is not the position in the present case.

If only such large-hearted judges were an exception.

The second, and even more ominous portent came from the way the matter moved in the Supreme Court itself.

The Andhra Pradesh Government had accepted the judgment of the High Court in the first round. In the second round, when the High Court struck the Ordinance and Act down as unconstitutional, it sought leave to appeal. As we noted above, the appeal was granted.

The Government went to the Supreme Court and asked that the judgment be reviewed and in the interim its operation be stayed. A three-judge Bench of the Supreme Court, headed by the Chief Justice, directed that, in view of the substantial questions of public importance that are involved, the matter be placed before a Constitution Bench. It turned down the Andhra Government's request to stay the operation of the judgment of the High Court. From the order of the Supreme Court, you will see the sort of specious arguments that are advanced.

The Government said, in effect, identification of social and educational backwardness is a precondition only when it comes to giving reservations in educational institutions under Article 15(4). Article 16(4) allows us to make reservations in public employment for classes that are not adequately represented. So, we should be allowed to proceed at least with the latter, and the High Court judgment should be stayed.

Of course, Article 16(4) lays down two conditions: not just that the classes for whom reservations are being made in government services are inadequately represented but also that they are `backward'. Hence, determination that the classes for whom reservations are being made are backward is as essential in the context of Article 16(4) as it is in regard to reservations being made under Article 15(4). The Supreme Court focused on another telling point. The Ordinance which was in question itself stated the objective for which the reservations were being made. In doing so it referred to "social, educational and economic backwardness" of the members of the Muslim community residing in Andhra. Hence, identification of the groups that are actually backward was of the very essence of the exercise in this instance also.

"Having heard the learned counsel and having perused the Constitutional provisions and the report [of the Andhra Pradesh Commission for Backward Classes] as also the impugned judgment, we are not inclined to stay the operation of the impugned judgment and make operational a law which has been invalidated by the High Court, as an interim measure."

That was the second round -- the appeal of the Andhra Government has remained where it was, pending before the Supreme Court for the last five years.

It is the third round in which the portentous thing happened. As we have seen, the High Court had again struck down the 2007 Act as unsustainable and unconstitutional. The Andhra Government went to the Supreme Court in appeal-it requested that the High Court judgment be reviewed, and that pending the review, it be stayed. The Bench headed by the then Chief Justice K.G. Balakrishnan, did the opposite of what the Bench headed by the then Chief Justice of the same Supreme Court had done earlier. It referred the case to a Constitution Bench all right, but, even as it did so-that is, even as it concluded that the constitutionality of the Act had to be determined and "several constitutional issues are involved" -- it stayed the judgment of the High Court: thereby, to use the words of the earlier Bench, making operational a law which the High Court had found to be wholly unconstitutional. "As an interim measure," it said, the 4 per cent reservations that have been given to Muslims listed in the Schedule of the Act shall continue-save that they shall not be extended to "Other Muslim groups." "This is a temporary measure," it said, "till the matter is decided.'

The order of the Supreme Court concluded with the words, "These matters are referred to the Constitution Bench to be listed in the 2nd week of August 2010 along with C.A. 7513/2005 for appropriate directions."

We are in January 2012 as I write this -- hence, a two-year-long foot-in-the-door! And the argument will be that, reservations having been available to Muslims now for over two years and their having got accustomed to availing of them, reversing course now will inflict great injustice and lead to massive resentment and backlash...

For the present, it will be enough to bear two points in mind.

First, The prohibition against basing largesse and classification on religion alone is so stern and so patent, it has been reiterated by the courts so very often that one is left wondering as to what the Andhra Government was doing, and that too repeatedly. Was it just being audacious and proud—'I am the State. Who can come in the way of what I decree?' Or was it being cleverer than we imagine? Was it the case that it did not really care whether or not it lived up to its promise of giving reservations to Muslims and, therefore, did not care that it was going about the matter in a way that was certain to be struck down by the courts?

Second, the same question arises with the new announcements that have been made on behalf of the Congress now. The occasion speaks volumes: elections in U.P. are round the corner, and the Congress is wooing the Muslims again. Similarly, while the largesse will be camouflaged in the well-known ways, the fact is under the promise the Congress has made nine per cent reservations are to be set aside for the Muslims. That is clearly based on religion—something explicitly prohibited by the Constitution. Is the Party again counting on amenable judges? Or is cynicism in command again? Who cares if the courts strike down the promise later? By that time those who have to be fooled, would have been fooled; what is to be won, would have been won.

(Extracted from the expanded edition of Arun Shourie's FALLING OVER BACKWARDS, that is being published by HarperCollins in April, 2012)

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The Weight of Love

arunshourie — Sat, 09 Jul 2011 18:31:56 +0000

Arun Shourie writes about bringing up his son Aditya, afflicted with cerebral palsy for many years now, in his new book, Does He know a mother's heart? (HarperCollins). Adit's pain and that of the author's wife Anita, who suffers from Parkinson's disease, leads him to ask: how can there be extreme suffering if God exists? Suffering, he says, refutes religion. Exclusive excerpts:

Your neighbours have a son. He is now thirty-five years old. Going by his age you would think of him as a young man, and, on meeting his mother or father, would ask, almost out of habit, 'And what does the young man do?' That expression, 'young man', doesn't sit well as he is but a child. He cannot walk. Indeed, he cannot stand. He cannot use his right arm. He can see only to his left. His hearing is sharp, as is his memory. But he speaks only syllable by syllable...

The father shouts at him. He curses him: 'You are the one who brought misery into our home... We knew no trouble till you came. Look at you — weak, dependent, drooling, good for nothing...' Nor does the father stop at shouting at the child, at pouring abuse at him, at cursing the child. He beats him. He thrashes him black and blue... As others in the family try to save the child from the father's rage, he leaps at them. Curses them, hits out at them.

What would you think about that damned father? Wouldn't you report him to the police or some such authority that can lock him up? Wouldn't you try everything you can to remove the child from the reach of the father?

But what if the father is The Father — the 'T' and 'F' capital, both words italicised? That is, what if the 'father' in question is 'God'?

Why does the perspective of so many of us change at once? Suddenly, they exclaim, 'There must be some reason God has done this.' Suddenly, they shift the blame to that poor child: 'Must have done something terrible in his previous life to deserve such hardship . . .'

And yet the child loves. He laughs. He is filled with joy at the littlest things — a tape of Talat Mahmood, lunch at a restaurant, the visit of an aunt or a cousin... What are we to conclude? That the cruelties rained upon him by his father have 'built his character'? That they have instilled forbearance? Are we to infer, 'See, while to us the father seems cruel, in fact he never inflicts more hardship on the son than the son can bear'?

Were we to say and infer as much, that would be not just obnoxious, it would be perverse. And yet those are the exact things that, as we shall see, a revered religious text says about God: He inflicts hardship upon us to build our character; He never imposes more hardship on a person than the latter can bear.

But that child is our son — Aditya, our life. Adit is thirty-five now. He cannot walk or stand. He can see only from the left side of his eyes. He cannot use his right arm or hand. He speaks syllable by syllable. Yet he laughs — you can hear his laughter three houses away. He enjoys going out to restaurants. He loves the songs of Talat Mahmood, Mohammed Rafi and Kishore Kumar. There are some songs, though, the moment they commence, we have to rush and turn off the tape — he is so moved by them that he starts sobbing. There are others which he identifies with himself:Tu aake mujhe pehchaan zaraa Main dil hoon ik armaan bharaa . . .. . .Muskaan lutaataa chal Tu deep jalaataa chal Khud bhi sambhal Auron ko bhi raah dikhlaa...

'Mere baare mein,' he declares with joy — and laughs even more as in our rendering the last line has been altered to 'Papa ko bhi raah dikhlaa...'

He loves these singers and their songs. He loves even more the tapes that his grandparents made for him, and the tapes that his uncles and cousins make for him now. He doesn't watch television — moving images bother him. But he does listen to the news over the radio. The newspaper is read to him — among the things he calls himself is the 'ghar kaa samvaad-daataa'. He loves poems being read to him. Seeing Adit's spirit, and how many of his poems Adit knew by heart, Ashok Chakradhar has gifted him many of his books, and even dedicated one to him. Every time you read the books, you have to begin at the very first page, not just the title page, but the very first, blank page — for on them Ashok Chakradhar has written many an endearment —'Pyaare, ati pyaare Aditya ke liye . . .' And if, while reading the poems, you pronounce even a syllable wrong, he hoots with joy, 'Galti'. That was one of my father's favourite games with Adit. He would deliberately make a little mistake, and Adit would catch him out — hoot, and laugh, beaming with triumph... He loves everyone. Everyone in the family loves him. His maternal grandmother, Malti Shukla, was his life. He is ours.

And that God just does not stop pounding this helpless, defenceless child...

ADIT COMES

...A premature child. Barely four pounds. In distress. Placed in an incubator. As they could not locate a vein in his tiny arms, the doctors had stuck needles through his scalp... A horrible sight for us... His sugar level is not stabilising, some nurse came and said to us. 'Will you please sign these forms for a blood transfusion?'...

Three days went by. A Pakistani lady doctor used to visit Anita to check up on her. I am not supposed to tell you, she said, and I will lose my job if they come to know I have told you, but something has happened. Insufficient supply of oxygen in the incubator...

Anita came back to our home in Alexandria. Adit stayed on in the incubator. For an entire month. A horrible month.

'The child will finish your life as you have known it, may finish your life altogether,' a senior at the World Bank said to me one day. He was a cheerful, warm-hearted person, but was speaking from first-hand knowledge as he had been bringing up a mentally handicapped son. 'The doctors may well tell you, "We can do little more for the child." And ask you, "Are you desperate that he lives?" When they do so, don't let your emotions come in the way. Do you know what you will have to go on doing for the boy — not just now or for a few years but as long as the child lives?...'

That evening I reported the conversation to Anita and my mother-in-law. A person of iron-will, my mother-in-law said, 'That is just not the case. Handicapped children live perfectly useful lives these days...'

Three months later we were advised to take the child to the head of paediatric neurology at the Georgetown University Hospital [in Washington]. We were exhausted, felled. The doctor was a kind, elderly gentleman. 'I am going to use a word that you would have heard — it is used a lot these days to raise money. The word is cerebral palsy. It only means that the baby's brain has suffered injury...'

We were too stunned to ask what exactly this was going to mean for our Adit's future. I told the doctor, 'We had planned to return to India. But if you feel that, for the sake of the child, we should stay on in Washington, of course we will. I will take back my resignation from the World Bank.'

'I have not been to your country, young man,' that kind doctor said. 'If you are here, all that we will be able to do will be to tell you how your son is faring against the milestones. But as observant parents you will notice that yourselves...'

'I have not been to your country, as I said,' he continued. 'But from what I have heard, you have strong, well-knit families there. That is what this child will need as he grows up — a net of love and security. So, if I were you, I would stick to your decision, return to your country, and bring him up in the embrace of your family.'

Among the wisest bits of advice we ever received.

We returned to India. We stayed with our parents. Soon, Anita's mother came to stay with us...Adit became the centre of many lives.

THE SCHOOL

Adit was growing up. Shanti-amma, his maid, would sing to him, tell him stories, take him to the park. She was ever so possessive of him — always ticking off anyone who expressed the slightest doubt about Adit's condition, or who uttered a word of pity or condescension. My mother-in-law would teach him — from news, to stories, to rhyming games, to poems, to arithmetic. 'But why arithmetic, Mummy?' I would remonstrate. 'Why make him do sums? Why make him learn tables? He is never going to use them.' 'But just see his sense of achievement when he gets the answer right,' she would teach me. 'And he learns fast. He has excellent memory.'

….One day, as Anita was driving Adit and herself to school, a jeep coming in the opposite direction lost control. It rammed into Anita's little Fiat. She and Adit were tossed inside the car. They were shaken, of course, but neither seemed to be badly hurt.

Soon after the accident, however, Anita began to feel peculiar sensations on her left side. We thought the problem was a 'frozen shoulder'. But soon, the stiffness and pain developed into tremors... One doctor after another... Eventually she was diagnosed as having developed Parkinson's disease. She was just about forty-two at the time — another one of those 'one in ten million' blows.

By now the tremors have spread to the right side also. Every time Anita does something with her hands — for instance, when she eats — her legs flail uncontrollably. That is dyskinesia, another one of those words with which our circumstances have enlarged our vocabulary. The symptoms became worse every winter. This winter — of 2009, in which I begin working on this book about Adit and her — Anita has fallen four times...

With my parents having passed away, with Maltiji also having gone, I am now the servant-in-chief, not just of Adit but of the two of them. The help of many friends and relatives sees us through the day. But more than anything, Anita's strength and equanimity keep us afloat. 'I had another toss today,'

I heard her tell her sister the other day, describing a fall so bad that we were lucky she had not fractured her skull. And so helpless and shocked was she that, while there was an alarm bell next to where she lay, she could not reach out to it. She now wears another alarm on her wrist... Even though this is her own condition, she manages the entire household; she husbands our savings; she runs everything so that every need of Adit is met — at once; and so that I am absolutely free to do my work.

'We have to be thankful for an ordinary, boring, eventless day,' Anita taught me long ago.

Her fortitude is a daily, ever-present example of another one of the lessons she taught me once: 'You have to remember, there are many types of courage.'

My father's courage as he evacuated Hindus in July-August 1947 out of Lahore — where he was City Magistrate at the time. The courage with which he settled, comforted and on occasion quelled the raging refugees in camps across Punjab. My mother's courage as she comforted her mother and father when they lost a young son, as husbands deserted two of their daughters. My mother-in-law's courage as she went on looking after all of us even as rheumatoid arthritis twisted and turned and crippled her hands and feet.

Malini's courage, Veena's courage evident in the dignity and fortitude with which they have borne blows of unimaginable severity, faced life, brought up their children single-handed, and, on top of it, continued working... Here we are: we get so puffed up just because we have stood up to some authority-of-the-moment. And here are these girls: they have stood up to life itself.

'But I will never get over what God has done to Adit,' Anita says. How true:Ghaayal ki gati ghaayal jaane Jauhar ki gati jauhar...

Copyright@Arun Shourie 2011

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My publicity agent

arunshourie — Wed, 23 Mar 2011 18:31:55 +0000

Another scam . . . Inquiry into disinvestment of VSNL" — the papers proclaim. The announcement has been preceded by stories along similar lines in two magazines, a planned build-up to the announcement.

The government does seem to have surrendered its judgment to a bully. And it will be sorry for it. But I will come to that in a moment. The charge is that as the minister of disinvestment in the NDA government, as part of disinvesting government equity in VSNL in 2002, I "gifted" 774 acres of prime land in four cities to the Tatas.

The facts are the exact opposite.

During due diligence of VSNL, it was discovered that the company had been buying land over the years. Technology had changed. It was now possible to provide the same services with infrastructure spread over significantly less land. VSNL, working with advisors, identified 774 acres of land as "surplus", in the sense that it would not be needed in the future to provide the services for which VSNL had been constituted.

Accordingly, in the agreements governing disinvestment, it was provided that whoever won the bid for the company would not get this land. The company was valued by excluding this land. Indeed, the article in the agreement was framed in such extreme terms that at one stage the potential bidders said that they would not go through with the bids at all. The officer who was handling the disinvestment — one of the strongest officers I had the good fortune to work with, P.K. Basu (now agriculture secretary) — told them to go home, and forget the disinvestment. The article would not be diluted one bit, he told them, disinvestment or no disinvestment.

Eventually, they came round and the disinvestment went through. It was one of the most hotly contested cases. On the one side was Reliance — Dhirubhai Ambani was still alive, and was calling the shots. On the other side were the Tatas. The Tatas won, by a whisker. That outcome firmly established the credibility of the disinvestment process. "Even Dhirubhai Ambani could not find out what was going on in your ministry," observers told us.

The article that Basu and his colleagues incorporated is worth reading. It is a short one. It could have been accessed by anyone from half a dozen sources — but by now it is no surprise that sections of the media will deliberately not read!

Please read the article, and then I will set out its implications. Here it is:

4.7 LAND

(a) (i) The strategic partner confirms that it shall cause and procure the company to hive off or demerge the land into the resulting company pursuant to a scheme of arrangement in terms of the provisions of Section 391 to 394 of the act.

(ii) The strategic partner confirms its understanding that it will transfer all such shares in the resulting company to the government as it may acquire as a consequence of this transaction, that is a minimum of 25 per cent of the resulting company's issued equity shares or a higher number which shall include shares in the resulting company that it may further acquire as a consequence of any further sale of the equity shares in the company by the government to the strategic partner, prior to the demerger, as part consideration of transfer of the transaction shares and any subsequent sale of the company's shares by the government to the strategic partner, pursuant to this transaction.

(b) The strategic partner confirms that:

(i) it shall do and cause to be done all and any such acts, matters, deeds and things as are necessary, usual or expedient including voting in favour of the item of business relating to the approval of the scheme of arrangement to implement the hiving off or demerging of the land into the resulting company;

(ii) it shall not directly or indirectly do or cause to be done any acts, matters, deeds or things which may adversely affect or delay the hiving off or demerging of the land into the resulting company.

(c) (i) If for any reason the company cannot hive off or demerge the land into the resulting company then, subject to Article 5.6 (b) (iv) and (xiv) hereto at any time when the company sells or transfers the land or agrees to sell or transfer or otherwise develop the land, the strategic partner shall pay to the government within seven days of the sale or transfer of the land an amount equivalent of 25 per cent of the benefit accruing to the company pursuant to such sale or transfer or otherwise development of the land, as determined by the appraiser, after taking into account any impact under the Income Tax Act, 1961.

(ii) Subsequent to this agreement and the share purchase agreement, if the government sells more than 25 per cent of its equity shareholding in the company to the strategic partner, then the percentage of amount to be paid to the government by the strategic partner on account of sale or transfer or otherwise development of the land under Article 4.7(c)(i) shall increase in proportion to the percentage of such further sale of equity shareholding in the company by the government to the strategic partner. For the purpose of this article the term "transfer" shall include sale, lease, licence, grant of development rights or the parting of physical possession of the land or transfer of any interest, whatsoever, in the land.

The article provides, first of all, that whoever wins the bid — and there could have been no plan to pass on a favour to the Tatas, etc, for no one knew who would win the keenly contested bidding process — shall not get the surplus land. The excess land would be detached from VSNL. A new company would be formed, and the land would be transferred to it.

Second, that the shareholding of this new company would be what the shareholding of VSNL was before disinvestment. That is, the bidder who won would have no share in it at all. The government would have the proportion that it had before disinvestment — about 52 per cent. Employees would have the proportion they had. The rest — about 47 per cent — would be with the general public that held shares of VSNL, the company was listed in both India and the USA. In a word, a government company would be set up. And this government company would acquire the land.

Third, in case such a company could not be formed and the disinvested VSNL decided to part with the land, it would be able to do so only if the government agreed to the proposal. The reason for this was that, even after disinvestment, the government would continue to hold 26 per cent of VSNL's equity. The sale of land, or disposal of any rights in an asset such as land, can only be done by a special resolution of the board and that resolution cannot go through unless the party that holds 26 per cent of its equity agrees.

Fourth, if that new company could not be formed for some reason, and if the government approved the proposal of VSNL to sell the land, the entire proceeds would be distributed in accordance with the pattern of shareholding that prevailed before disinvestment — that is, the winner would get absolutely nothing; the proceeds would be divided between government, employees and the general public in the proportions in which they held the shares before disinvestment.

There was a fifth factor which was especially important, as it caused the greatest heartburn among potential bidders. This is contained in clause (c) (ii) reproduced above. This clause provided that if government shed more than 25 per cent of the equity it was holding of VSNL, then the share of the proceeds that the disinvested VSNL and the winning bidder would have to pay to government out of any sale or transfer of land or rights in it would increase proportionately.

Sixth, the hands of the prospective bidders were tied tighter by incorporating a very comprehensive definition of "transfer". The article had used the term "transfer" of land, etc. In the last sentence, it was provided that "for the purpose of this article the term "transfer" shall include sale, lease, licence, grant of development rights or the parting of physical possession of the land or transfer of any interest, whatsoever, in the land." All proceeds from any form of transfer would go to the government and the original shareholders and not a penny would go to the successful bidder.

Finally, a series of interlocking clauses tied the prospective winner in perpetuity! Privatisation agreements have "call" and "put" options. That is, after a specified period — say, three years — the winner can "call" on the government to sell its residual shares. Similarly, the government has the right to "put" its shares for sale. But in the VSNL agreement, we provided that even if the government parted with all its shares through either option, it would always retain one share — known as "the golden share"; and that by virtue of this single share, all the rights it had in regard to the surplus land would remain with the government!

In other words, the agreement provided that neither the surplus 774 acres nor any right in them whatsoever shall go the bidder who succeeded in winning the contest. So, where does the minister get this notion, parroted by some magazines, that 774 acres were gifted to the Tatas?

"But why was the land not just taken out of VSNL before disinvestment?" the innocent ask. VSNL was a listed company — it was listed both in India and the US. If such a substantial asset was taken away, any shareholder could have gone to court and halted the whole process on the charge that his interests had been harmed. On the other hand, if it was not taken away, the government would be accused of making "priceless" land over to whoever succeeded in winning the bid. Hence a solution was devised: the land would be taken out of VSNL, but the interests of pre-disinvestment shareholders would not be impaired. The land would be turned over to a new company in which the shareholding pattern would be what it was before the disinvestment of VSNL. That was an excellent solution that Basu and his colleagues devised, and it has stood the test of time. The winner did not get the land. The shareholders did not go to court!

"But didn't VSNL have enormous amounts of cash? Wasn't this just handed over to the Tatas?" Yes, VSNL had a cash reserve. The fact is that this cash was drawn down before the company was disinvested. The government had VSNL declare a special dividend of 750 per cent! As a result, the winning bid along with this dividend secured for government a P/E ratio of 11 as against the measly 6 at which VSNL shares were trading before disinvestment.

When no other tack is left, critics are led to ask, "But why has the new company not been set up even though nine years have passed since VSNL was disinvested?" The fact is that the government and the winners — the Tatas in this case — tried to work out a solution. The attempts couldn't get past disagreements. For instance, the Tatas said that as the land did not belong to them, and as it was to be transferred to a company that would in essence be a government company, the government should pay the stamp duty that would be incurred in such transfer. Similarly, as the monopoly of VSNL in regard to international calls had been curtailed by two years, a compensation package was announced by the government. They felt that this was inadequate. As the issues could not be resolved, they proposed that the matter be referred for arbitration. I had no problem with that proposal, but my colleagues in the ministry correctly counselled that as the proposal had revenue implications, we should send it to the finance ministry. That is what was done.

The government changed. Since then, I see from what has appeared in public that the Tatas kept writing to the government requesting the latter to settle the matter. They wrote that there were three alternatives, and that any one of the three would be acceptable to them. The government — the UPA government, that is — kept saying that it was examining the issues and would get back to them. It did not.

Kapil Sibal says this delay has been very costly to the people of India, and that is why he has ordered an inquiry. I say — "Bravo! Excellent!" He should institute an inquiry into the conduct of ministers whose negligence has cost the country so much.

The ministers? P. Chidambaram and Pranab Mukherjee, the finance ministers of the UPA governments! For, remember, the department of disinvestment has been under the finance ministry since the UPA formed its government in 2004. Maybe they are the real targets of this buccaneer? No?

Why else would Kapil this time round entrust the inquiry not just to a handpicked judge but to a handpicked officer working directly under him?! As for me, far from being my inquisitor, Sibal is my publicity agent! He keeps me in the news. And gratis!

The writer was Union minister for telecom and for disinvestment in the NDA government

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The Great Telecom Fudge

arunshourie — Wed, 09 Mar 2011 18:31:54 +0000

'Taan Shourie Saab, hun ki karn da irada hai?' Giani Zail Singh asked. So, what do you plan to do now?

There had been another turn in my life. I had gone to call on Gianiji.

'Sir, ki karana? Kitaabaan hi likhniyan. Kitaabaan likhanga' — Sir, what is there to do? I will write books, I said.

'Naeen, naeen,' No, no, Gianiji said, 'Tuseen samjhe hi naeen' — You haven't understood. 'Siyaasat badi kutti cheez hai' — Politics is a real bitch. 'Jadon audaa hoye, taan yaar naeen chchadan dinde' — When one has a post, one's friends don't let one leave it. 'Jadon audaa hathon nikal jaave, taan dushman naeen chchadan dinde' — And when one loses the post, one's enemies don't let you leave it!

I have been reminded of Gianiji's prescience in the last few months. For the last year, I have been living far away from Delhi, immersed in religious scriptures for a book that I have completed. Telecom has been as far from my concerns as any other gutter in Delhi. It is the spate of lies which has been let loose that has compelled me to return to it.

The falsehoods have been spread to divert attention from what are the two central issues. Who made the money? What were the heads and controllers of the Government doing when this loot was going on? Hence, 'NDA', 'first come first served', 2003, 1998... And, given the fact that media, etc. do not read documents, given that few would today remember what the condition of the sector was at that time, the Government has all but succeeded: 'there has been no loss'; 'in any case, it was only Raja who was doing something wrong, and we have already removed him'; 'in any case, he was just following NDA policies' ...

As fabrications have been put out, I will set out the facts that relate to the time that I was in charge of the Communications Ministry — from early 2003 to April 2004.

The sector at that time

When I was put in-charge of the Ministry, the sector was marred by the following features:

[A] The sector had all but collapsed after the excessive bids; the decision to shift to a Revenue Sharing Model had rescued it from collapse; but the sector was yet in a very precarious condition.

[B] Today, there is a rush for licenses; at that time few were coming forward to enter the sector or to extend the coverage of the services that they were providing. This is evident from the following table:

Click to look at table 1>>

Hence, one of the principal objectives of Government was to steer the sector on to a growth path.

[C] Such services as were being provided were concentrated in the relatively well-to-do parts of the country. This had led to a lot of acrimony in the ill-served areas and to criticism in and out of Parliament — namely, that telephony was being converted into a service for the elite and the rich living in just some favoured parts of the country. It had also reinforced deep resentment in areas such as the Northeast and J&K — in these areas the lack of service was taken as further proof that the Centre did not care for them and was actively discriminating against them. In fact, apart from BSNL, no Operator had come forth to provide services in the J&K circle. In some circles (like Assam, Bihar, North East, Orissa, MP), there was only one licensee or the second Operator had taken the license but was providing next to no service. There was not much growth even in Kolkata. Circles like Bihar, Haryana, Rajasthan, Punjab, UP (East), were also suffering from slow growth.

One of the principal concerns of Government, therefore, was to extend communications services to these under-served areas.

It is in this context that the figure that is being touted about — that 28 licenses were given by the NDA in 2003-04 — should be seen: not one of these 28 licenses was for lucrative circles or metros. The distribution of the licenses was as follows:

Click to look at table 2>>

[D] The sector was paralysed by litigation: the CDMA Operators and the GSM Operators were at each others' throats. Almost nothing could be done and it would be challenged by one side or the other in TDSAT, the High Courts and the Supreme Court. The Operators would file cases not just against each other but also against the Government. Indeed, even the expectation that Government was considering a course of action would trigger one side or its rival to rush to the courts and obtain a stay. Two examples will suffice. A Group headed by the then Minister of External Affairs and Electronics, Mr. Jaswant Singh, had been constituted in the late 1990s to make recommendations for a New Telecom Policy. It had to get a special study done on 'Possible Litigation Scenarios'. The exhaustive paper was considered by the entire Group in its sixth meeting held on 22 March 1999. Similarly, no sooner had the Cabinet decided to integrate the Limited Mobility and Full Mobility services, the GSM Operators had moved the Supreme Court to stay any order that the Government may issue in this regard.

A major concern of the Government, therefore, was to lift the sector out of this quagmire of litigation. Telecom service providers should compete for the goodwill of the customers rather than trying to block each other in courts, or by suborning ministers and civil servants in Delhi — that was the objective.

[E] One of the reasons for this litigious and paralyzing situation was the complexity of the licensing system at the time. The plethora of licenses had grown as a coral reef over the decades. They differed by the date on which they had been obtained; the type of service the Operator provided; the location at which the service was provided; the distance over which the service was provided; the technology that was being used to provide the service; the type of customer to whom the service was being provided . . . This had two consequences: (1) It triggered litigation; (2) Every decision was seen by one side or the other as discriminating against it. [In a lecture that I delivered at the time, and which the Indian Express published, I described the situation in regard to the licensing system as I found it. The text can be easily accessed today as it is reprinted in my book, Governance, The sclerosis that has set in, ASA, Rupa, 2004, pp. 69-92.]

On the other hand, it was becoming clear by the day that the licensing system was being rendered obsolete by the advance of technology. This was specifically noted in the 1999 Telecom Policy. In its Paragraph 1.3, the Policy had stated, inter alia,

'In addition to some of the objectives of NTP 1994 not being fulfilled, there have also been far reaching developments in the recent past in the telecom, IT, consumer electronics and media industries world-wide. Convergence of both markets and technologies is a reality that is forcing realignment of the industry. AT one level, telephone and broadcasting industries are entering each other's markets, while at another level, technology is blurring the difference between different conduit systems such as wireline and wireless. As in the case of most countries, separate licenses have been issued in our country for basic, cellular, ISP, satellite and cable TV operators each with separate industry structure, terms of entry and varying requirement to create infrastructure. However, this convergence now allows operators to use their facilities to deliver some services reserved for other operators, necessitating a relook into the existing policy framework. The new telecom policy framework is also required the facilitate India's vision of becoming an IT superpower and develop a world class telecom infrastructure in the country.'

This is why the Government set up the Group on Telecom and I.T. Convergence in 2001. The way that technological advance was cutting the rationale of the licensing system, and also the way that the licensing system, in turn, was holding back the adoption of newer technologies and thereby harming the interests of consumers and the country were the major themes of the TRAI report of October 2003. These were also among the principal reasons on account of which TRAI recommended that Government should replace the plethora of licenses with a Unified License.

Three further facts should be borne in mind.

[F] First, in those days, spectrum was given as a part of the license: the licensee got the license, and the Government in turn undertook to allow him use of a start-up quantum of spectrum to provide the services for which he had got the license. Subsequent tranches of spectrum were to be released when the subscriber base crossed certain specified limits.

[G] Second, while we had been able to establish the bidding route firmly in Disinvestment, and for which reason I was keen to introduce it in the Telecom sector also, the experience with bidding in the latter had not been altogether a happy one:

* When the sector had been first opened up and private Operators had been invited to bid, they had filed grossly excessive bids as a result of which the sector had all but collapsed, and had to be rescued by abandoning altogether the obligations that ensued as a result of the bids.

* The fourth Cellular Licenses were given as a result of multi-stage bidding process in 2001. By 2003, the teledensity had not changed much since the bids in 2001.

* As several areas of the country had not been taken up by any Operator when the bids were invited for the 4th Cellular Operator, in March 2003 bids were again invited for these areas. But it became evident that not a single bid was going to be received. At considerable discomfiture, the Government had to call off the entire exercise.

[H] Terrorism had become a major problem. Grave apprehensions had developed among intelligence agencies that the spread of mobile telephony will enable terrorists to carry out their plots even more readily.

Government's strategy

In view of these circumstances, the Government's strategy became:

* Accelerate growth;

* In particular, in the under-served areas;

* But at the same time, meet the concerns of the intelligence agencies;

* Once telephony grows, spectrum will become a scarce resource; for this purpose

* Take measures that will make more spectrum available for civilian use;

– Devise a fair and transparent modus for distributing spectrum for the time it would have become scarce;

– The modus adopted should also ensure optimal usage of the spectrum;

* Pull the sector out of the mire of litigation and allegations. Operators should compete in the market not in courts and government offices.

* The licensing system should be simplified. In particular, it must be service and technology neutral, and it should spur the adoption of the best and latest technologies that would benefit the consumer.

Means for implementing the strategy

We decided to use a series of instruments to achieve these objectives:

* Unleash and enable BSNL/MTNL to provide intense competition to private Operators: in particular, (i) to spur them to extend coverage to under-served areas; (ii) to offer new services; (iii) to lower the exorbitant tariffs they were charging;

* Lower the Revenue Share being taken by Government;

* Unify licenses, eventually instituting a single unified license:

– To ensure competition, this should be given quasi-automatically: TRAI came to use the expression 'automatic authorization';

– Keep the entry fee at a minimum;

* Anticipate the situation when spectrum will become scarce. Hence,

– Commence work that is required for eventually delinking licenses from spectrum, and auctioning the latter;

– Allocate Rs. 1400 crore to Defence Forces — this was their estimate of what they needed — so that they may modernize their signaling equipment, and thus free excess spectrum for civilian use;

– Devise incentives for optimal use of the spectrum and penalties for its inefficient use: existing inefficient use of what would become a scarce resource if the growth that it was projecting would materialize, was 'of utmost concern' TRAI observed, and hence it emphatically recommended that these incentives and penalties be devised. [See, for instance, Para 7.30 and Annexure IV of its Report of October 2003. These reports are all available on the website of TRAI.]

* Ensure that every thing is done so openly and with such manifest fairness that litigation ceases.

It is a matter of great pride that these steps indeed more than fulfilled the objectives that Government had sought to pursue:

a) From a situation of near collapse, the sector set on to a course of massive growth: this has made a major contribution to growth — could the IT sector have become what it is today without the growth that we have recorded in the telecom sector?; it has generated large employment; it has helped integrate the country further;

e) From being a rich man's toy, the mobile has become an adjunct of everyman's daily life. It has enabled the poorer craftsmen to improve their businesses. It has enabled migrant labour to keep in touch with their families. In a word, it has been a boon to the poor as much as to anyone else.

f) At that time, Operators used to charge Rs. 28 to 32 per call — both the caller and the person called had to pay. Today, our rates are the lowest in the world.

g) At that time, our teledensity was far below the world average. Today, the Indian telecom network is the second largest network in the world, and the fastest growing network in the entire world. In 2002, the mobile density was 1 per cent. Today it is 70 per cent. In 2002, the country was adding 2 lakh subscribers a month. Today, it adds close to 20 million subscribers every month. This is one sector in which targets set by Government have been exceeded manifold: the Plan target for 2010 was exceeded by 300 to 400 per cent; rural connectivity targets were exceeded by 400 to 500 per cent. This happened because of bold decisions of Government, the growth-oriented approach of the Regulator, the alacrity with which Indians adopt to new ways and things; most of all, it happened because of the entrepreneurship of several Operators, an entrepreneurship which the policy decisions of those days unleashed. Contrast the way the country has always fallen woefully short of targets in the power sector, a sector in which corresponding decisions have not been taken and implemented.

h) At that time, the sector was mired in a host of legal cases — with private Operators fighting each other, with all of them challenging every decision of the Government; litigation was brought to an end.

i) The Government used to spend an amount close to Rs. 20,000 crore every year for growth of telephone services in the country. Now, the telecom sector is contributing to the Exchequer more than Rs. 50,000 crore every year by way of licence fees, spectrum charges, service tax and other corporate taxes.

That this entire transformation is the result of policies adopted during the NDA period is evident from the repeated affirmation of the current Minister of Communications, and none other than the Prime Minister that the UPA has just followed policies of the NDA Government!

How people are sought to be misled

'It is Arun Shourie who introduced the first-come-first-served principle. Raja merely followed it,' Government spokesmen have been declaiming again and again.

Typical of the devices that these people specialize in deploying, it is a red-herring that has been thrown in the way to lead everyone away from the central fact: Raja followed no principle, no procedure, no policy. He certainly did not follow the first-come-first-served procedure:

* There were 167 pending applications. Under first-come-first-served norm, these are the ones that would have been dealt with first. He just discarded this norm, and called for new applications.

* On 24 September, 2007, he announced that the deadline for receiving the applications would be 1 October, 2007. There was a spurt of applications: 408 were received.

* Under Raja, the DoT announced that these would be considered on a first-come-first-served basis.

* Months later, he arbitrarily changed this to 25 September and thus eliminated a slew of competitors. This edict cut out the applications from 575 [the 167 that were pending and the 408 new ones that were received] to 232.

* Next, he changed the basis of adjudging the order in which applications would be considered: the basis was to be the date and time of receipt of application; he now ruled that it shall be the date and time of fulfilling the conditions that were being specified in the Letter of Intent. Among these conditions, as the CAG has pointed out, was the condition that the applicants bring a banker's draft of Rs. 1650 crore within 41 minutes. The favoured companies had prior knowledge that this would be one of the conditions, and hence had come with the drafts. Others were physically assaulted and prevented by musclemen from accessing the office.

* As even these manipulations did not secure for Swan and other favourites the quantum of spectrum which had been agreed upon, Raja changed the priority list in circles like Punjab and Maharashtra.

Is this the way the first-come-first-served principle is adhered to? Indeed, does this sequence betray that he and the UPA Government were adhering to any principle at all?

The first-come-first-served principle has been in vogue for long, certainly before the time when the Ministry was put in my charge — in fact, I would be surprised if the Prime Minister with his intimate acquaintance with the license-permit raj does not remember that there was a time when such norms were used to allocate licenses for a host of things: from railway rakes to imports. Here are just three examples of documents in the telecom sector that refer to it:

* Guidelines for Issue of Licence for Basic Service [No. 10-2/2000-BS-II, Ministry of Communications, Department of Telecommunications , Licensing Cell (Basic Service Group), Sanchar Bhavan, New Delhi, dated 25th January, 2001.] Clause 26 of this document reads in part: '. For Wireless Access Systems in local area, not more than 5+5 MHz in 824-844 MHz paired with 869-889 MHz band shall be allocated to any Basic Service Operator including the existing ones on first come first served basis. The same principle shall be followed for allocation of frequency in 1880-1900 MHz band for Micro cellular architect based system.'

The title of the next document itself is Procedure for Allocation of Spectrum on First Come First Served Basis, [No: 10-2/2000-BS-II, Ministry of Communications, Department of Telecommunications, Licensing Cell (Basic Service Group), Sanchar Bhavan, New Delhi, dated 23rd March, 2001]. Apart from the title itself, Para 1 of this document states, 'As per Guidelines issued for Basic Telephone Service providers, the spectrum for WLL service in the frequency of 824-844 MHz paired with 869-889 MHz is to be allocated on first come first served basis.'

And, remember that, at that time licenses and spectrum were joint-twins: so it is not that this principle was confined to spectrum and had nothing to do with licenses.

Later that year, The Group on Telecom and IT Convergence submitted its 'Report on Limited Mobility'. The Group was headed by the then Finance Minister, Mr. Yashwant Sinha, It elucidated the meaning of the principle 'first come first served' in regard to allocation of spectrum. Para 25 of this Report stated as follows:

'25. The Group noted that the description of "first-come-first-served" used in the Guidelines of January 2001 was not an accurate description of the content of policy as announced and as implemented with reference to existing Fixed Service Operators. It does give the impression that immediately on application the applicant would become eligible for a spectrum license, whereas in fact the Guidelines — especially when read with the spectrum allocation procedure of 23rd March 2001, which stipulates the conditions under which the spectrum would be allocated — clearly require that the Operator seeking spectrum must have established a Point of Presence (POP) in an SDCA in order to be eligible for the first tranche of spectrum; further installments of spectrum being given subject to fulfillment of roll out obligations which would include the obligation now mentioned in this advice, and to ensure that the spectrum already given has been optimally utilized. The 23rd of March, 2001 Procedure also stipulates that in the event of roll out obligations not being fulfilled the spectrum allocated would revert back to the Government. Hence, "first-come-first-served" on a true interpretation only means that allocation of spectrum is and must be considered inextricably linked to performance. The Group noted that the quantum of spectrum to be allocated to the fixed service providers for WLL with limited mobility is in accordance with the recommendations of TRAI.'

Each of these documents is from 2001 — two years before I was given charge of the Ministry. In a word, 'first come first served' was a well-established and recognized method of processing applications.

Here is another example — this one from TRAI whose recommendations everyone are always holding up as if we violated them. In the Report, Recommendations on Unified Licensing, that TRAI submitted in October 2003, in Para 7.29, it stated, inter alia, '... The allotted spectrum varies from 4.4+4.4 MHz to 10+10 MHZ depending upon the number of subscribers in each service area. Existing BSOs [Basic Service Operators] shall be allocated 5+5 MHz in 824-844 MHz paired with 869-889 MHz bands on a first come first served basis. The same principle shall be followed for allocation of frequency in the 1800-1900 MHz band.'

[E] In contrast to what happened during Raja's time — when the Finance Ministry repeatedly objected to what he was proposing to do — during the time that the Ministry was under my charge, no objection was ever raised by the Finance Ministry. In particular, the record on file establishes that the Member (Finance) — who represents the Finance Ministry on Telecom affairs — specifically approved the decision that the first-come-first-served principle shall be observed. By contrast, during the UPA tenure, the then Member (Finance) was so outraged by what Raja was doing that she sought premature retirement and left Government service all together.

And it was a perfectly reasonable principle. Two points are noteworthy. As will be obvious, for instance from the extract given above from the Group headed by Yashwant Sinha, it was never the sole criterion: the applicant was to have fulfilled a number of other requirements. Only after the competitors had fulfilled these criteria, would the first-come-first-served criterion come into play. And these requirements were known to all at the time they submitted the applications. They were not injected ex post facto as in Raja's tenure. Second, it was a necessary and entirely open and fair criterion: consider a situation in which two operators have fulfilled the requirements — for instance, regarding establishing Points of Presence, and getting the specified number of subscribers; but Government has at that moment spectrum that is sufficient to meet the operational requirements of just one of them. How would it choose between the two? On the basis of which of them came to it with evidence of having fulfilled the other criteria first. What could be fairer? What could be more open?

Cabinet decision and what DoT did

One of the fabrications that has been put out is that during the time the Ministry was in my charge, it exceeded what Cabinet had authorized us to do. Forget my personal temperament, the fools who put out such a lie should remember that that was not the Cabinet of Manmohan Singh. It was the Cabinet of Atal Behari Vajpayee — the slightest excess would land one out of the Government. And he had as his Principal Secretary, Mr. Brajesh Mishra, one of the most powerful and most effective Principal Secretaries that any Prime Minister of India has had. He kept a hawk's eye over whatever was happening in departments of Government. It is beyond imagining that a decision of Cabinet would be violated — and that too in such a contentious sector — and the contenders — the private Operators who were always rushing to court — would not raise Cain; that Mr. Mishra would not know; and that Mr Vajpayee would condone the transgression.

The Cabinet decision is clear as can be. In its meeting on 31 October 2003, the Cabinet had decided as follows:

'The recommendations of TRAI with regard to implementation of the Unified Access Licensing Regime for basic and cellular services be accepted.

'DOT be authorized to finalise the details of implementation with the approval of the Minister of Communications & IT in this regard including the calculation of the entry fee depending upon the date of payment based on the principles given by TRAI in its recommendations.

'The recommendations of TRAI in regard to the course of action to be adopted subsequently in regard to the implementation of the fully Unified Licensing-Authorization Regime be approved.

'DoT be authorized to finalize the details of implementation with the approval of the Minister of Communications and IT on receipt of recommendations of TRAI in this behalf.'

The Cabinet decision clearly recognized that, as recommended by TRAI and by the Group of Ministers, the process of implementation would be in two phases. In the first phase, the Unified Access Licensing Regime would be introduced: that is, the licenses that had been differentiated by technology — CDMA vs. GSM — and range of service — limited or full mobility — would be unified. In the second phase, after recommendations of TRAI in regard to a fully Unified Licensing Regime had been received and approved by Cabinet, that Regime would be introduced. In both phases, the details of implementation of the UASL regime and of the fully Unified Licensing Regime were to be worked out by the Department of Telecommunications with the approval of the Minister of Communications and IT.

2. The implementation action was taken in the background of the following aspects of the TRAI recommendations which had also been accepted by the Cabinet [Para numbers in the following refer to the TRAI Report of October 2003, which can be readily accessed on its website]:

(i) Within six months 'Unified Licensing' regime should be initiated for all services covering all geographical areas using any technology. (Para 7.1)

(ii) Unification of access services at circle level [a 'circle' roughly coincided with a state] should be taken up forthwith: for this consultations with various stakeholders had already been completed. This should be without delay followed up with steps to set out the guidelines and rules for Fully Unified Licensing/Authorization Regime by gathering details of international practices and through the consultation process. (Para 7.6)

(iii) To determine the benchmark of the entry fee for the UASL regime — that is, the interim period before the fully unified licensing regime is ushered in — TRAI had considered the option of inviting bids from existing as well as new prospective players. It had concluded explicitly and emphatically that this option should not be adopted. TRAI had advised that this option would be time consuming and that it would delay the implementation of Unified Licensing. TRAI recommended that instead the existing entry fee of the Fourth Cellular Operator be accepted as the basis for fixing the entry fee for migration to Unified Access Licensing regime for Basic and Cellular services at the Circle level. (Paras 7.16 to 7.20) This was an eminently logical proposition: the mobile density in 2003 was just about the same — a miserable 1 per cent — as it was in 2001 when that price had discovered through multistage auctioning.

(iv) TRAI had stated that it would give its recommendations on efficient utilization of Spectrum, its pricing and Spectrum allocation procedure in the near future. DoT was to issue spectrum related guidelines based on the recommendations of TRAI after receiving those recommendations. (Paras 7.28 & 7.29)

(v) TRAI had stated that it was not in favour of high spectrum pricing since such a regime would make the services more expensive and the desired growth would not take place in telecommunications. (Para 7.33)

(vi) It had advised that the formulation of an appropriate environment for growth, regulation and strategy had to be based on the single priority of the moment, viz. increasing the availability of phone connections at affordable costs and tariffs and ensuring a rapid roll out of services. Growth of teledensity, it said, revolved around developing access networks and making access to them available at low cost. (Para 6.2)

(vii) To achieve 100 million wireless subscribers, TRAI estimated that an investment of the order of Rs. 50.000 crores would be required. It said that for investment of this order to come forth, the prerequisite was that the sector be freed from litigation. (Para 6.5)

(viii) TRAI recommended that induction of new cellular mobile operators should preferably be done under the 'Unified Licensing Regime' which it expected to come into being soon after it finalized its recommendations on the matter. (Para 7.37)

(ix) Yet two paragraphs later, TRAI recommended that, if adequate spectrum was available, then in the existing Licensing Regime, Government may introduce additional players through a multi-stage bidding process as was followed for the Fourth Cellular Operator. (Para 7.39)

The words 'existing regime' referred to the pre-UASL regime — for that was the regime that was existing at the time that the Report was submitted in October 2003.

3. Thus, as will be evident from both — the recommendations of TRAI and the decision of the Cabinet — the UASL regime was a transitional phase. It was to be the first step towards putting in place a fully Unified License Regime.

4. During this transitional phase, the DoT was to proceed with its usual duties using the price paid by the Fourth Cellular Operator as the benchmark.

5. The Cabinet never intended that the Department should halt all expansion of services and, to take one instance, leave the under-served and unserved areas of the country in a state of neglect. Nor did the Cabinet, to take another instance, put any bar on giving Basic Service licenses. What happened as a consequence of its decision was that an addendum was added — nothing was subtracted from the NTP of 1999 — and two additional categories were introduced: henceforth, the DoT could issue licenses not just for Basic Services, NLD, ILD, etc. It could in addition issue UASL and Unified Licenses.

6. Subsequent events showed the wisdom of this decision — for, in the event, TRAI took not six months but one and a half years to finalize its recommendations regarding a fully Unified Licensing Regime: by that time the NDA Government had long gone. And in the Report that TRAI eventually gave in 2005, there was no recommendation for multi-stage bidding at all. Had the Cabinet directed the DoT to stop all further steps for extending services, the sector would have been per force frozen for over a year and a half — and that on the basis of an imagined recommendation that TRAI itself did not reiterate in its subsequent Report on the matter.

7. No sooner had the Cabinet decided to introduce unification of licenses, the Cellular Operators filed an application in the Supreme Court seeking a stay on the implementation of UASL regime. This application became part of the Appeal that had been filed earlier by the Cellular Operators against the TDSAT order of August 2003 in the Limited Mobility Case. Implementation of the Cabinet decision therefore required careful handling of the litigation before the Supreme Court. DoT accordingly proceeded with the following objectives in mind: (a) ensure that the decision of the Cabinet regarding the UASL Regime is not stayed as a result of the petition of the Cellular Operators; and (b) implement the UASL Regime in so transparent and fair a manner that the sector indeed becomes litigation-free. Through the Law Ministry, the services of the then Solicitor General were availed of by the DoT for handling this matter.

8. Implementation of the Cabinet decision then proceeded as follows:

(i) Since there were pending applications for Basic Service Licenses, these were dealt with in accordance with the usual procedure. Tata Teleservices had applied for providing Basic Service in four service areas in early September 2003. Letters of Intent were issued against these applications in the normal course for Basic Services on 7 November 2003.

(ii) On legal advice, including that of the Solicitor General, in the Guidelines for issue of UASL's resulting from migration, it was provided that all new applications for Access Services would be in the UASL Category. The rationale for this was manifest: issuing of Service based licenses, as was the practice till then, would have perpetuated the very aberrations which were sought to be corrected by the UASL Regime that the Cabinet had directed the DoT to implement. These Guidelines were issued on 11/11/2003. This meant that henceforth neither applications for Basic Services nor from new cellular mobile Operators would be entertained. The new operators for access services could only be of the UASL category. Going in for bidding for the new UASL's would have required determination of slots for auction in each service area in the CDMA technology and separately for those involving GSM technology. The bidding process would have been time consuming. Government also had before it the fate of the bidding process that it had initiated as recently as March 2003 when bids had been invited for the vacant slots for the Fourth Cellular Operator, based on GSM technology, no bids had been received and the process had to be cancelled at the last moment. The main reason for this lack of response was evident to Government: the Telecom Sector had got entangled in litigation and, except for the existing lot of Service Providers, new entrants were not forthcoming.

(iii) There was another very important aspect which could not be ignored. Had all further permissions been stopped, and Reliance had proceeded to migrate on the basis of the Cabinet decision of 31/10/2003, Government would have been opened to the charge that it had favoured Reliance by blocking its competitors. Apart from being manifestly unfair, such an outcome would have definitely resulted in the Courts staying the UASL Regime.

(iv) Para 7.39 of the TRAI Report regarding multi-stage bidding process related to the introduction of additional cellular operators under the pre-UASL regime. If it had been intended for new UASL operators, it would have been worded differently and the words 'existing regime' would not have been used. Thus there was no violation of the Cabinet decision in this regard.

It is in this background that clarification was sought from TRAI by the then Secretary DoT about how pending applications, applications from existing Operators who may opt to migrate, and new applications for UASL's were to be dealt with. Chairman TRAI and the Regulatory Authority as a whole put the position beyond doubt.

The entry fee recommendation which was benchmarked to that paid by the Fourth Cellular Operator and which had been adopted for the purpose of migration in November itself, had to be used for others also — otherwise the latter would at once get a ground for charging the Government with tilting the playing field in favour of one or some Operators. This was a very important consideration. Even the majority of TDSAT in its judgment delivered as recently as August 2003 had held that, while the introduction of limited mobility had been legal, it had upset the level playing field. Tata-Teleservices were the major competitor of Reliance, and the Cellular Operators, namely Bharti and Hutch, who had applied for new UASL's. Neither set would, and with eminent justification, have reconciled to anything which would have put them at a disadvantage vis-a-vis Reliance. On this basis, in accordance with the recommendations of TRAI, a procedure was adopted for dealing with applications for new UASL's, and the new applications, which were few in any case and which were from Operators with great experience in the sector. TRAI had made it clear that this procedure was to be followed for an interim phase, till Guidelines for spectrum were finalized in the future.

That TRAI recommendations covered applications from both existing limited mobility Operators who were migrating as well as new applications is evident from the repeated references in the communications of TRAI to both categories. Similalrly, consider the last exchange on this subject — about the application for West Bengal and Andaman and Nicobar Islands: this was to be a new license. TRAI reiterated its recommendation.

And the communications were from the Authority as a whole. By no stretch of imagination can they be dubbed as private letters from the Chairman in his individual capacity. This is evident from the Agenda item dated the 17th November 2003 for the meeting of TRAI. It is evident from the communication of the Secretary and Principal Advisor of TRAI dated 19 November 2003. And it is evident from the communication of TRAI dated 5 December 2003 in regard to West Bengal and Andaman and Nicobar Islands. I have just not been able to fathom how responsible persons — who have had access to these communications — have suppressed them from public knowledge and made out that the Chairman of TRAI and the Secretary of Telecom Department entered into some surreptitious, private conspiracy to grant licenses to TATAs or Bharti or someone else.

The procedure adopted and the decisions taken were so manifestly fair and transparent that there was no controversy or allegation by anyone of any discrimination. No one challenged the approach or decisions in any Court. There was no criticism in the media.

All this in a sector that had been marred by acrimonious allegations and litigation.

And who got the licenses and for which areas? Some Swan? Some real estate racketeer?

The licenses

The procedure adopted for grant of new UASL's was simple and straightforward. The entry fee payable was based on the same principles as were followed for migrating from Basic Services to a UASL. In November itself, Reliance migrated in 18 Service Areas; Tata-Teleservices in 6 areas; Bharti, HFCL and Shyam in one area each.

Tata-Teleservcies surrendered the Letters of Intent for Basic Service Licenses that had been issued to them on 7/11/2003. They applied for UASL's for providing services in Haryana, Kerala, Punjab, and UP (West).

Tata-Teleservices applied for UASLs in 8 service areas on 12/11/2003. These were Bihar, Orissa, Rajasthan, Madhya Pradesh, Himachal Pradesh, Kolkatta and UP (East). These were all underserved and unpopular areas with very low tele-density.

Bharti applied for UASLs 6 service area — namely Bihar, Orissa, Rajasthan, UP(East), West Bengal including Andaman and Nicobar Islands, and J&K. Once again, all these were underserved and unpopular areas with very low tele-density. Out of these service areas:

* In the Jammu & Kashmir circle, apart from BSNL no other Operator had ventured forth to provide services.

* While, Bihar, Orissa & West Bengal circles were offered during 2001 auction, no bidder had expressed any interest.

* In March 2003, DoT had again tried to auction these service areas. As it became evident that there would be close to nil response from possible Operators, the auction process was abandoned at the last moment.

* A glance at the teledensity in the circles for which licenses were given will show how the situation that prevailed then compares to 2010:

Click to look at table 3>>

As noted above, it is a matter of pride that the decisions of Government were implemented with such fairness and transparency, and the migration and other licences were given with such fairness and transparency that not a single objection was raised by any party — and this in a sector in which every step of Government had hitherto been challenged and denounced by one side or the other. When they saw the fairness and openness with which Cabinet decisions were being implemented and licences being granted, the petitioners who had filed a petition in the Supreme Court to stay the implementation of the UASL licensing regime withdrew the petition.

There are several other fabrications that the spokesmen of this Government have put out to deflect people from the issues at hand: who got the money? What were the seniors doing when this loot was going on? But they are at par with the fabrications that I have listed above.

In addition to attending to the routine tasks that had to be implemented during the interim period, as directed by the Cabinet, we began exchanging views about elements of the Unified Licensing regime. Should the bids be single-shot bids — as was the case in disinvestment? Or should the bidding be multi-stage — as had been the case, for instance, in selecting the Fourth Cellular Operator? Should the bidding process be conducted by the DoT — a Department that had itself been dragged into much litigation, and was the object of strident allegations — or should they be conducted by an independent agency? How should incentives be built into the bidding process to induce optimal use of the spectrum, and penalties for hoarding or inefficient use? What should be the stance of Government if, once again, the competitors overbid and then cannot sustain their operations at the high prices they have paid? Should they be rescued as had to be done when the sector was first opened up? Or had the sector become mature enough by now so that firms that overbid should be allowed to go under?

These were the sorts of questions on which we had begun work in the wake of the six-month framework suggested by TRAI.

The Government changed.

No one could have imagined that the advance towards the Unified Licensing regime would be halted. And that what had been the procedures to be followed for the interim period of six months would be made permanent. And that without any authorization from the Cabinet.

That is one reason on account of which the current problems have arisen. Another one is that in UPA-I lines were slipped into the Guidelines without recommendations of the Regulator, without any reference to Cabinet. In UPA-II, the terms of reference of the Group of Ministers were altered without reason or authority. On matters on which the Government is bound by law to seek TRAI's recommendations, TRAI was specifically told that it had no business to seek to advise Government . . . But the main reason, as stated above, is that in Raja's case, he followed no procedure, he followed no policy, he adhered to no norm at all. And, even though his misdeeds were known publicly, he was allowed to continue to make a business of his office. In what way does this represent a continuation of anything done during the Government led by Mr. Vajpayee?

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