EXPLAINED NATIONAL

Three major scams of UPA: NDA Clean-up

Corruption Congress Modi Clean up

In about half a century years of Congress rule, the party has without doubt left our country an under-achiever. As compared to some of the other countries which had attained independence around the same time, India has lagged behind on many fronts mainly due to Congress’ mis-governance. While there are many components that make up this mis-governance, downright corruption has stuck out like a sore thumb on the party’s record sheet and indeed on the country’s economic record sheet. In particular during UPA II, the grand old party has broken all records when it comes to corruption. In stark contrast, Modi-led BJP in a reign of only about 5 years has driven a positive development-driven agenda even making earnest attempts to ‘right the wrongs’ committed by Congress over so many years.

Here’s how BJP has mounted operation clean-up of three major public policy and resource allocation spheres wherein government (Congress) role had become a byword for outright corruption, nepotism and irregularities of all sorts. We are talking of the three issues of Coal block allocation, Spectrum allocation and NPAs that the NDA has earnestly sought to set right.

Coal Block Allocation

Congress’ criminal wrongdoings

Instead of the widely practised method of competitive bidding, Congress Party took to a non-transparent and discretionary mode of allocation of coal mines. Misusing public office for private gains, the Congress government ensured that one of the core resources for a country’s development, namely, the coal blocks, was allotted to favoured private players through blatantly underhand and questionable means.

In fact, criminal conspiracy, apart from overstatement of net worth, non-disclosure of prior allocation, and hoarding rather than the development of allocated blocks, was a key charge framed by the investigating authority when prosecuting this case before a special CBI court.

Some of the other issues raised during this case had included inordinate delay in granting mining leases, and getting forest and environmental clearances for land acquisition from the Central and the state governments.

CAG, the most important auditing authority had estimated a loss to the exchequer to the tune of Rs. 1.86 lakh crore in its final report.

Finally, when the Supreme Court had to cancel the allocation of all coal block allocation since 1993 declaring them illegal, it happened when Narendara Modi government had come to power the same year.

Some big names such as former Congress central minister Dasari Narayan Rao, Congress MP Naveen Jindal and Kumar Mangalam Birla found themselves booked by the CBI with Essar, Tata and Jindal Steel and Power being major beneficiaries. A former Chief Minister Madhu Koda was convicted by the CBI.

Cleaning up by NDA

Notably, it were the BJP MPs Prakash Javadekar and Hansraj Ahir who had demanded an investigation into the coal scam as early as 2012.

The Modi government has outlined a clean and transparent system of allocation where every player gets a fair chance, private or public. In 2015 itself, Parliament led by Modi government passed the Coal Mines (Special Provisions) Bill 2015.

While private players had to participate in an auction, allocations were made to Central and state government utilities on a nomination basis.

The introduction of reverse bidding where the bidder who promises to charge the least from the consumer wins the block was done with the aim of upholding the end-consumers’ interests.

Form the first set of allocation of only 33 mines, total proceeds from the coal mines auctions have crossed Rs. 1.93 trillion gone beyond CAG’s estimate of Rs 1.86 trillion losses.

Another Rs 97,000 crore of additional tariff benefit will accrue to the consumers of power through reverse auction of coal blocks

The government also taken care of the public sector units: It has allotted 38 mines to central and state public sector units including NTPC, DVC and SAIL that span across states and regardless of which government is ruling which state. Among these are power generating companies of West Bengal, Chattisgarh, Jharkhand, Maharastra, Odisha, Uttar Pradesh, Rajasthan, Bihar, Punjab, Gujarat and Telangana.

It is estimated that Rs. 1.41 lakh crore of likely revenue to States from royalty over 30 years from these 38 coal mines allotments.

India today burns 8 per cent less coal to generate the same quantity of power as it did 4 years ago leading to reduced power cost, thanks to improved efficiency in using the dirty fuel.

While the drilling for exploration has almost doubled to 13.7 lakh meters in 2017-18 from 6.9 lakh meters in 2013-14. Coal offtake of CIL increased by 23 per cent to 580 MT in 2017-18 from 471 MT in 2013-14.

Spectrum allocation

Congress’ criminal wrongdoings

Again instead of an open, competitive and transparent process of auction allowing each player a fair shot, Congress government resorted to serious questionable means of discretionary allotment.

Licenses had been issued to ineligible applicants who had purposely concealed facts, given out incomplete information, made available fictitious documents and resorted to fraudulent means for getting licenses and thereby access to spectrum.

Not only that the cut-off date of the auction was arbitrarily advanced by the ministry, the telecom ministry under A Raja changed rules and eligibility criteria several times in the run-up to auction. Instead of at 2008 prices, licenses were issued on a distorted First Come First Served (FCFS) Policy and that too at 2001 prices.

Again CAG had estimated a loss of Rs 1.76 lakh crore to the exchequer.

The Congress government had also allowed the licenses owners sell significant stakes to the Indian/foreign companies at high premium within a short period of time.

Officials at the ministry allegedly shut counters to physically block selected telecom companies from entering the fray.

Telecom Minister Raja had acted against the advice of TRAI, Law Ministry and Finance Ministry.

Similar to the coal allocation, in February 20, 2012, the Supreme Court of India delivered a judgement declaring the allotment of spectrum as “unconstitutional and arbitrary” while quashing all 122 licences issued in 2008.

Congress through its spin doctor-in-chief Kapil Sibal came up with the ingenious zero loss theory which was demolished when as per the directions of the Supreme Court, the Government of India revised the base price for 5 MHz 2G spectrum auction to Rs 14,000 crore, which roughly gives the value of spectrum to be around Rs 2,800 crore per MHz which is close to the CAG’s estimate of Rs 3,350 crore per MHz.

In 2011, Time magazine listed the scam at number two on their “Top 10 Abuses of Power” list (just behind the Watergate scandal).

A Raja and MK Kanimozhi among politicians, Siddharth Behura, R K Chandolia among bureaucrats and Shahid Balwa of Swan telecom, Snajay Chandra of Unitech and Ravi Ruia of Essar were some high profile accused among many others.

Cleaning up by NDA

A sector weighed down by corruption while reeling under debt and undergoing consolidation, smooth and transparent auction along with raising of spectrum caps for operators were key starts for the entire ecosystem.

India has now conducted multiple free and fair telecom auctions since 2015 with no controversies surrounding them whatsoever.

In 2015, a quantum of 418.05 MHz of spectrum was sold across multiple bands contributing Rs. 1.10 lakh crore to the government’s exchequer.

Through auction of spectrum in 2015 and 2016 – more than 1382 MHz sold, realising an upfront payment of approximately Rs. 65,000 crores.

Within two years of government, Foreign direct investments (FDI) worth Rs 27,000 crore (four-fold higher that the FDI inflow during the April 2012-March 2014 period), the revival of ailing state-run Bharat Sanchar Nigam Ltd. (BSNL) and policy approvals such as on spectrum sharing, trading and virtual network operators (MVNOs) were landmark initiatives.

BSNL which was in loss of Rs 8,000 crore under the Manmohan Singh government in 2014,” reported an operating profit of Rs 672 crore in 2014-15 fiscal.

Exemplifying new policy success, eleven crore mobile devices were manufactured in India during 2015-16, from six crore in 2014-15.

By Dec-end 2018, a six-fold increase in Government spending on telecommunications infrastructure and services in the country – from Rs. 9,900 crores between 2009-14, to Rs. 60,000 crores.

Average voice tariff declined by 67% – from an average per minute tariff of 51 paise in June 2014 to 11 paise in June 2018

Average data tariff declined by 96% – from Rs. 269 per GB in 2014, to Rs. 12 per GB in June 2018.

Under the BharatNet project, nearly 50% of the total 2.5 Lakh Gram Panchayats (GPs) in the country have been connected through high-speed OFC network by October 2018, as compared to 59 GPs in June 2014.

Increase in overall tele-density in the country – from 75% in June 2014 to 93% in March 2018, adding 305 million new subscribers.

Mobile Internet subscriptions more than doubled – from 233 Million in March 2014 to 491 Million in June 2018.

Over 107% increase in internet coverage – from 251 million users in June 2014 to 512 million in June 2018.

Cheapest data tariff globally – from Rs. 300 per GB in 2014 to Rs. 12 per GB in June 2018, tariff reduction of 96 percent.

Seven times growth in broadband access – from 61 million subscribers in March 2014, to 447 million subscribers in June 2018.

Digital payment transactions through mobile grew four times– from 168 million in November 2016 to 600 million now.

Left-Wing Extremism Affected Areas – 2335 mobile towers installed in Phase I, at a total outlay of Rs. 4,781 crores

DoT received an Excellence Award from CVC in November 2017, for “Transparency in e-auction of spectrum in 2016”

Vodafone CEO praising the government for ‘progressive reforms’ at one of the global platforms, namely, the WEF is a sign of industry appreciating the government’s reformist intent

NPAs

Congress’ criminal wrongdoings

Phone-a-loan has been the norm during long Congress rule impacting the economy for a long time.

The 12 biggest defaulters, who between them account for over Rs 1.75 lakh crore in NPAs, were given loan by the Congress regime.  Congress had even tried to cheat people by underestimating the loan amount at Rs 2-2.5 lakh crore when it actually was Rs 9 lakh crore.

During Congress years, banks not only conducted inadequate due diligence before and after handing out loans, but wilful default/fraud was not seen as NPAs on banks’ balance sheets. Unscrupulous promoters who inflated the cost of capital equipment through over-invoicing were rarely checked and funds were released even when sanction conditions were not complied with. There was inadequate monitoring all around.

When the then RBI Governor Raghuram Rajan told a parliamentary panel that a large number of non-performing assets were given between 2006 and 2008, when the UPA was in power, his statement nails Congress. He has even said that the earlier culture of leniency” present at the RBI has started to change today implying the present Modi government.

Cleaning up by NDA

The Insolvency and Bankruptcy Code (IBC) has been an outstanding measure aimed at structurally addressing the NPA issue.

Since IBC came into effect, more than 2100 companies including Arcelor Mittal and the Tata Steel have been made to pay up their dues. Over 2,100 companies have cleared their dues of Rs 83,000 crore before action was initiated against them under the Insolvency and Bankruptcy Code (IBC).

Tata Steel has settled Rs35,200 crore, or nearly two-thirds of the money the steel maker owed to lenders.

Now the stock of NPAs not rising any more. Today the stock of NPAs had reduced by Rs 21,000 crore in last quarter of 2018. Banks recovered Rs 36,551 crore in the first quarter of FY19.

The Section 29 A of the IBC has especially worked.

Now every loan of over Rs. 50 crore has been strictly scrutinised making sure that the rules are followed and recoveries made.

Speedy action to recover loans from the top 12 defaulters as well as another 27 who owe Rs. 1 lakh crore is being taken.

There is provision for specialised Monitoring for loans over Rs.250 crore.

Passport details of borrowers for loans over Rs. 50 crore are required now,

2.96 lakh shell companies have been struck off.

We have saved over Rs. 80,000 crore, or 12 billion dollars in leakages.

Legislations such as Fugitive Economic Offenders Act & Banning of on Unregulated Deposit Schemes Bill are significant supplementary measures.