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Monthly Archives: January 2014

the upa puts dbt-lpg on hold

out today, this story by my colleague yogima seth and me on a surprise decision by the upa to pause its DBT programme for LPG.

The government’s decision to put the Aadhaar-based direct benefit transfer (DBT) for cooking gas on hold could be a blow to the Unique Identification Authority of India (UIDAI), set up as one of the United Progressive Alliance’s flagship initiatives and aimed at ensuring that subsidies reached the right beneficiaries without fraudsters and middlemen ripping them off.  Ahead of elections, the government is at pains not to risk alienating any constituency, having already sustained heavy defeats in recent state elections, some of these in areas where the programme has been rolled out. Oil minister Veerappa Moily attributed the decision on Thursday to complaints about implementation of the scheme.

 

Dudu. Redux.

in october 2012, i had travelled to a tehsil in rajasthan called dudu where the congress formally announced that direct benefit transfers would be its magic bullet for the coming elections — in the state and nationally.

well, i just reported for a story by my colleague akshay deshmane on the role of DBT in the rajasthan elections. and this is what we concluded.

no easy way to clean up the upa’s coalgate mess

last week, the supreme court finished hearing all arguments on whether the coalblock allocations should be cancelled or not. in the coming weeks, we will know india will find a sensible conclusion to the whole #coalgate saga or not. based on what we have reported so far, this can still go either way. the government wants it to be allowed to do a partial deallocation — take back some of the coal blocks it gave out. others want a full deallocation.

the story today argues that both these options come with a large set of pain. which, by itself, stands testimony to the irresponsibility of the upa government.

The hearings are over and an order is expected from the country’s highest court soon. The fate of 218 coal blocks given to companies for captive use will be secured or sealed. At present, it is uncertain whether all allocations will be scrapped on account of an allegedly flawed process adopted by the government—as the Supreme Court ruled for mobile telephony licences given in 2008 —or only select blocks will be taken back. Either way, both outcomes will be messy, for different reasons.

as things stand, this is the fifth in a series of stories on how the attempts to fix coalgate were coming along. am appending links to the preceding ones.

4. the previous one looked at the UPA’s claim that over Rs 200,000 crore was at stake.

Last week, defending the Centre in its coal-block allocations, Goolam Vahanvati, the government’s top law officer, told the Supreme Court that companies had invested Rs 2,00,000 crore in their captive blocks. Some industry players have been citing this figure as the financial cost of a complete cancellation of licences. But ET calculations on the estimated cost of developing a mine, and the possible alternatives to cancellation before serious players, suggest this figure might be an overstatement.

3. the one before that, done last year, looked at how the investigations and court hearings were puttering along.

Fires from coal block allocations, which erupted in mid-2012, are threatening to engulf more. Its latest surge has touched an industrialist(Kumar Mangalam Birla), a bureaucrat (PC Parakh)and the prime minister (Manmohan Singh). While the conversation today is about these individuals, five larger questions merit attention. The answers to these have a bearing on how much a consumer pays for electricity, whether a thermal power plant stays in business or not, how many more industrialists, bureaucrats and companies will be prosecuted in this issue, and when— and if—coal-rich India will meet its own needs. The prognosis is not good.

2. and well before all these, sometime in 2012, when coalgate had just entered the nation’s consciousness.

The Central Bureau of Investigation (CBI) filed its first FIRs this week. According to media reports, at least 10 more are expected soon. The Inter-Ministerial Group, comprising bureaucrats from ministries like steel, power and finance, and chaired by additional secretary (coal) Zohra Chatterji, is in the process of deciding what to do with errant captive blocks. Even at the time of going to press, the group is quizzing the companies whose 58 blocks are running badly behind schedule.

And then, there is the Public Accounts Committee (PAC) chaired by BJP leader Murli Manohar Joshi which will look into the report of the Comptroller and Auditor General on the coal mess. And it is the PAC which will vet whether the CAG’s observations on captive coal block allocations are valid or not.

However, these institutional responses invite a large question: are these institutional responses we are seeing are enough to clean the sector up? And the short answer to that question is: no, they aren’t. The remedial measures we are seeing focus largely on how captive coal blocks were allocated. But the mess in coal runs way deeper.

1. and before that, in september, 2012, this one.

From discussion—in Parliament, the lack of it—to action. The story of alleged irregularities in the allocation of coal blocks to private players for captive use is taking a distinct turn, with institutions at three levels responding within their jurisdiction, and a chance of a fourth one stepping in.

on the nachiket mor committee’s financial inclusion report…

Last week, when the Nachiket Mor committee released its report on financial inclusion, it created a flutter. It was ambitious. In a country which is still struggling to provide banking facilities to most of its poorer citizens, the committee set aggressive targets. By January 1, 2016, it said, every Indian over 18 should have a full-service bank account. By then, the country should also have such a thick distribution of electronic payment access points – where people can withdraw, deposit or transfer money – that every citizen should be within a 15 minute walking distance from one.

Every low income household and small business should also have “convenient” access to formally regulated companies which provide financial products for credit, savings and investments, insurance and risk mitigation. It introduced the notion of ‘suitability’. “Each low-income household and small-business would have a legally protected right to be offered only ―suitable financial services. While the customer will be required to give informed consent, she will have the right to seek legal redress if she feels that due process to establish ‘Suitability’ was not followed or that there was gross negligence.”

As a roadmap towards these goals, the committee made a slew of wide-ranging recommendations. It suggested the creation of new banking models, it suggested new regulatory structures, it argued for the elimination of the statutory liquidity ratio for existing banks, a convergence of rules for banks and NBFCs…

The report was received with some incredulity. Says a rural finance practitioner, “What India could not acheive in 60 years, the Mor committee wants to acheive in two years.”

To understand what the Mor Committee report can mean for India’s unbanked, you have to study five smaller questions. For the vision statement presented by the Mor Committee – or, to take its full title, the “Committee on Comprehensive Financial Services for Small Business and Low Income Households” — to come true, a set of building blocks have to fall in place. Among them: Aadhaar; a new set of financial organisations; the notion of responsible marketing of financial products; a new credit push; and a new model for regulation and oversight.

The full story, here. Also see my colleague Vidhya Sivaramakrishnan’s interview with Mor for this story, here.

the expert non-appraisal committee

Monday’s order by the Gujarat High Court directing 12 units in the Mundra SEZ of the Adani Group to temporarily stop operations till the SEZ receives an environmental clearance is yet another indictment of the environment and forest ministry. The order, besides hauling up the Adani Group for allotting land to companies even before obtaining an environmental clearance for its SEZ complex at Mundra, highlights the ministry’s poor scrutiny of the project.

the rot in india’s environmental governance continues to astound.

on the investment in captive coal blocks

Last week, defending the Centre in its coal-block allocations, Goolam Vahanvati, the government’s top law officer, told the Supreme Court that companies had invested Rs 2,00,000 crore in their captive blocks. Some industry players have been citing this figure as the financial cost of a complete cancellation of licences. But ET calculations on the estimated cost of developing a mine, and the possible alternatives to cancellation before serious players, suggest this figure might be an overstatement.

india’s quest for an independent environment regulator

After the Supreme Court ruling on Monday, it is now clear that India will soon have an independent environmental regulator. What is less clear is whether this regulator will be a watchdog with teeth or without…

in this story, i argue that since “environmental clearances can be a source of political rent, it is important to delink the new regulator – in aspects like staffing and funding — from political pressures”. also see these two older stories (one and two) written four years ago — when i had just joined et — about this idea to create an env regulator. an idea that went on the backburner once jayanthi natarajan came to the ministry.