Brave new world: no place to hide

The 2G auction was a flop. Who says so, and more importantly, for whom? Certainly not a flop for economic rationality, or for the identification of the true culprits behind the 2G scam. In 2001, licences for the 2G auction (4.4 MHz) yielded Rs 1,660 crore; the equivalent auction revenue for 5 MHz would have been Rs 1,900 crore. (See Nripendra Misra, former chairman of TRAI, "An auction that did not flop", Business Standard, November 25). The CAG alleged, the Supreme Court agreed, and Arvind Kejriwal followed the lack of an auction for 2G in 2008 enabled a large dose of corruption whose magnitude was Rs 1.76 lakh crore that is, the revenue loss was almost 100 times that of the "successful" auction held in 2001.

In years gone by, the government or auditors could allege whatever and would be believed. Complete information was lacking, there was no internet and therefore no ability to conduct research in a timely fashion, and institutions (like the CAG) were respected because the presumption was that not only did the institutions know better, but that they must know better. Something like Caesar's wife, who should not only not be suspect, but be seen to be above suspicion.

What has not been generally been recognised, especially by the "ruling" generation, is that in this brave new world there is no place to hide one's fallibilities. One simple and crude calculation of the worth of the 2001 2G licence in 2008 would have been the 2001 revenue, adjusted upward by the growth in nominal per capita income. The latter includes both the effects of inflation and real income growth, that is, a first stop calculation of increase in nominal purchasing power. This calculation would imply a 121 per cent increase; Rs 1,900 crore in 2001 would be Rs 4,200 crore in 2008. The equivalent number for 2012 (per capita income levels of Rs 21,850, 47,508 and 79,990 in the three years 2001, 2008, and 2012) would be Rs 7,000 crore. The final realised auction revenue in 2012, according to Misra was Rs 6,994 crore!

The point is not that the two numbers are near identical; Misra's calculation left out the areas where there were no bids (Karnataka, Rajasthan, Delhi and Mumbai), and these would most likely have yielded an additional Rs 2,000-3,000 crore. The point simply is that whenever any analyst computes any number, and especially the lead accountants at the CAG, they should do a "smell" test to see if the number is not garbage. It would have been obvious to the most casual observer that Rs 1.76 lakh crore, by being 44 times the approximate ballpark figure of Rs 4,200 crores, was nothing short of utter, well, garbage.

If the CAG was a case of sense in, garbage out, what can one say about those who made judgements on the basis of the "reputation" licence that the CAG possessed? Should a leading political party, the BJP, with seemingly nothing to show for itself in five years other than screaming corruption and stalling Parliament, have allowed itself to be led by the nose to ignominy?

And what about Kejriwal and the fight against corruption? Even a cursory look at the coal scam and black money stashed abroad would reveal that the actual numbers are much less than commonly believed. Which is not to imply that there isn't corruption or there isn't black money. Just that the 2G auction has revealed that at least part of the revolt against corruption, in the form of manufactured magnitudes, is politically motivated. Which means that since there is no place to hide, political leaders will have to be evaluated on the policies they advocate, not on the short-term angst they are able to generate. So, what does the Aam Aadmi Party advocate in terms of policies to generate inclusive growth? What are their policies towards procurement prices for agriculture, the corruption in PDS and NREGA, policies towards GAAR, interest rates, land acquisition, food security bill, cash transfers, capital punishment and the like? If they take the route of the party from which they have stolen their slogan shout platitudes and you will win they then are in for a huge negative surprise. Don't believe me, just check the election record of the Congress for the last 20 years, except for a growth, not policy, induced blip in 2009.

And now for something not completely different. The sad state of Indian cricket, and the sadder state of its administration. In this brave new world, cricket enthusiasts could watch a super match being played in Australia, where the world was entertained by a thrilling draw on the fairest of pitches. One could also witness modernity and technology (rather than the ludditry in India) as the Decision Review System (DRS) was in place. It was great to witness important decisions being cross-checked with the availability of superior technology. Why isn't the BCCI compelled to introduce the DRS system, as done by every other cricketing nation in the world? Are they not doing so for any other reason than making money for only themselves? Can there be an RTI on this, Prashant Bhushan and Kejriwal? Can the BCCI be allowed to get away with the murder of cricket?

The brave new world has also caught up with the best amongst us Mahendra Dhoni and Sachin Tendulkar. Let me confess for the first time, I wasn't extremely upset when India lost. Not only did India deserve to lose, but also Dhoni needed to be slammed into reality. To argue so unsportingly for turning pitches from day one (because we play better at them, my dear but don't tell that to the English), Dhoni exposed the awkwardness and hollowness of his thinking, strategic or otherwise. In the olden days, we had little basis to compare. Now...

The manner in which Tendulkar has repeatedly got out suggests that age catches up even with the greatest. Whether Muhammad Ali or Tendulkar, footwork matters and less than a split second makes all the difference. And technology is there to expose one and all. No place to hide.

The writer is chairman of Oxus Investments, an emerging market advisory firm

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