Business & Finance

The Fear of Vigilance

Take the case of GAIL for instance. It is in the business of gas supply and distribution, with a vast pan India network of pipelines

Mumbai: The Supreme Court order passed on 24th October 2019 settling a raging 16-year controversy about the mode of calculation and payment of telecom license fees and spectrum user charges by telecom companies (telcos), has dealt yet another body blow to an already fragile telecom industry, reeling under a huge debt of Rs.7 lakh crores and mounting losses, with no respite in sight. In a highly contentious order, with due respect, the Supreme Court held that telcos must pay license fees to the DoT, as a percentage of their total revenue, whether from telecom services or not. Telcos are thus required to pay fees to the government, not just on telephone and internet user charges that they earn from their subscribers, but even on other income like rent, interest, dividend, etc. for the fifteen-year period of the dispute. Together with interest and penalty, the total sum now payable by the telecom companies to the government is a whopping Rs.1.47 lakh crore, which must be paid within 3 months of the Supreme Court order. No telecom company has such funds and the initial response of the likes of Vodafone was that they would prefer to close down, instead of putting any more good money after bad money. The liability of Vodafone alone, pursuant to this Supreme Court order, is to the tune of Rs.40000 crores.

If the Supreme Court’s order was a shocker to the telecom industry, it was an unbelievable calamity imposed on the non-telcos, like GAIL, Power Grid, GNFC, RailTel, etc. who are not telecom companies but had taken ISP and VSAT licenses. Take the case of GAIL for instance. It is in the business of gas supply and distribution, with a vast pan India network of pipelines. To take advantage of its pipeline network, it has set up a network of fiber optic cables, along with its gas pipeline network and has earned a paltry income of mere Rs.35 crores from the provision of telecom services, during this period. And the demand imposed on it by this Supreme Court order is Rs.1.73 lac crores because the DoT is calculating telecom license and user fees even on the income of GAIL from its main business of gas distribution and supply, which is absurd. Or take the case of GNFC which is in the business of manufacture of fertilizers, but had taken licences for provision of VSAT and internet services, from which it has had zero income, but the amount now demanded by DoT, pursuant to the Supreme Court order is Rs.15019 crores. The demand in the case of Power Grid, which is in the business of power distribution is Rs.1.25 lakh crores. Interestingly while the total demand under this order from telecoms is Rs.1.47 lac crores, that from non-telecom companies is a shocking Rs.3.13 lac crore. These nonsensical claims suit the government, whose treasury is empty and is looking to raise funds from any available source, whether legal or not.

This grave order of the Supreme Court is said to be under review. While the order is erroneous in the case of telecom companies, it is certainly untenable and atrocious in the case of non-telcos like GAIL, GNFC, Power Grid, RailTel, etc. and needs to be struck down. Sources in the government admit that the order is patently wrong in its applicability to non-telcos in particular, but no one in the bureaucracy or the government has the guts to reverse it, fearing action by vigilance agencies in future. They are unwilling to even come out in the open and oppose it and have left it to the Supreme Court to make amends. The reality is that no one will be willing to interfere, for the sheer fear of being investigated and hounded by the vigilance authorities, even if it means the closure of companies and loss of employment/livelihood. The extensive vigilance machinery of India, which babus and bankers fear, has now become counter-productive and is an obstacle to our growth in many ways, such that even well-meaning babus are compelled to let files move at a snail pace and bankers are unwilling to lend, fearing vigilance inquiries. The larger picture of this curse of the vigilance systems in India is as under:-

  1. We have extensive vigilance bodies and authorities in India, such that every PSU/PSB and government department has a vigilance wing headed by a CVO. Why is it then that the government departments, PSU and PSBs are yet rife with corruption and frauds? Despite such a comprehensive vigilance, why do mega frauds, scams, yet take place in India.
  2. It is the fear of vigilance that makes the red-tapism longer and the government forms and procedures so difficult and cumbersome. A huge file must be built and gathered and time must be wasted before any decision is taken so that it does not appear that anyone has been favored, or else the vigilance will step in. It is due to this that tax officers prefer to pass wrong pro revenue orders and file unwanted appeals that harass the taxpayer, only because they need to pay it safe.
  3. Thus the motto of the bureaucracy is to be insensitive and it is better to harass the public than be harassed by vigilance authorities.
  4. The vigilance wings need to recognise ground realities and refrain from indulging in theoretical assumptions that harass babus and bankers. The classic case of the 2G scam where the CAG computed theoretical impossible cases of Rs.2.87 lakh crores, due to which the CVC hounded many a babu needs to be avoided at any cost.
  5. Genuine decisions if gone bad, cannot be punished by vigilance investigation, or else babus will play it safe, preferring to not take any decision at all.

It is the fear of vigilance that stalls bold and dynamic decisions and if that be so, progress and growth in India will go at a snail pace, apart from putting enterprises in a crisis, as we see in the case of GAIL, GNFC etc.


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