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No to Kingfi sher Bailout

[Extracts from a letter to Prime Minister Manmohan Singh.]


Issn 0012-9976

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‘Foreign Hand’ and the Anti-Koodankulam Movement

martya Sen’s felicitous metaphor which celebrated an aspect of an open middle class Indian society has been harshly disproved by no less a person than the mild-mannered Manmohan Singh when he followed the practice of Indira Gandhi in seeing a “foreign hand” behind democratic opposition. Even when the prime minister trumpeted that United States (US) and Scandinavian non-governmental organisations were behind the Koodankulam people’s agitation against a nuclear facility, a seminar was held in Delhi attended by Admiral Ramdas, former chief of naval staff, and P M Bhargava, former vice chairman, Knowledge Commission, who voiced doubts about the safety aspects of nuclear power installations. It may be remembered that A Gopalakrishnan, resigned as chairman, Atomic Energy Regulatory Board in the 1990s, over his concern about non-satisfactory safety practices in our atomic energy establishments. If S P Udaykumar, who selfl essly leads the people’s protest at Koodankulam, is to be falsely accused as an agent of foreign interests, the same charge should cover other eminent persons as well.

Public protests against nuclear power stations have intensified all over the world after the disastrous accident at the Fukushima power plant. Several grave management errors have since then come to light in that power plant despite the fact that Japan is a rich developed country with a fine record of democratic social concerns. And we must not forget Three Mile Island accident in America, or the horrendous fallout of Chernobyl. All these accidents occurred in rich countries. Indians naturally fear that similar accidents may occur in India with its known history of poor management practices, and the inadequate training and motivation provided to lower staff. In people’s minds, it is more a question of when and where a nuclear accident will occur, rather than if, and that nuclear contamination lasting several thousands of years will wreak havoc in our densely populated land.

The Germans, once votaries of nuclear power, have now said that their nuclear

march 10, 2012

units will be phased out as quickly as possible, and power generated by renewable energy sources. After all, a turbine can be turned to generate electricity by using either coal, oil, wind or hydropower, far more safely than with nuclear energy. India has enormous potential in the solar energy it receives. Megawatt units of solar thermal and photovoltaic systems are being installed in the US, Spain, Greece and several other countries. The European Desertec project now on the drawing board envisages a future when all of Europe will be powered by solar systems set up in the Sahara. But solar energy has never had the powerful corporate or military backing of nuclear energy.

It is not enough that highly placed experts in an arrogant hierarchical society say that accidents will never happen. It is a fundamentalist statement not worth arguing about. Further, an open public discussion of the economic viability of nuclear energy, including all costs, has not been held anywhere. Its plant-load factor record in India is dismal, though technocrats keep assuring us that it must get better in the future. Many scholars are aware that the American public relations drive in the early 1950s of the concept of “Atoms for Peace” was really meant to mask its horrific military deve lopment. And hawks everywhere, including India’s Raja Ramanna, continued to exploit the same theme for military reasons. Even poor illiterate people are aware of the great political, economic, and personal pressure that is brought to bear on our politicians, bureaucrats and scientists by foreign corporate interests who must sell nuclear systems to third world countries to make a fast buck since their own people reject the danger. The “foreign hand” is not supporting the humble protesters at Koodankulam; we have to look higher up to spot its pressure.

Vithal Rajan


No to Kingfi sher Bailout

[Extracts from a letter to Prime Minister Manmohan Singh.]

tatements from your ministers for civil aviation and finance seem to suggest that the Government of India is

vol xlviI no 10

Economic & Political Weekly


on the verge of succumbing to the scare tactics of Vijay Mallya, owner of Kingfisher Airlines (KAIR). The government seems set to “persuade” banks to provide him yet another bailout to fund a company that has so far racked up almost Rs 7,000 crore in losses, entirely funded by loans. Since most of the money has been lent by nationalised and public sector banks, which are repeatedly capitalised by the government, it would ultimately mean that this profl igate private enterprise will be bailed out with public funds.

We express our strong objection to any further bailout of the fl amboyant billionaire, which will only allow him to continue to mismanage the airline. We wish to submit that:

  • (1) Mismanagement: Vijay Mallya, a Member of Parliament, famous for his extraordinarily expensive lifestyle, has driven this airline to bankruptcy by sheer mismanagement and bad fi nancial planning. This is evident from the profi ts earned by other airlines (Indigo), which did not make expensive acquisitions for foolhardy growth. This expansion and growth has come only because of the benevolence of Indian banks.
  • (2) Indian Banks Complicit: We are surprised that Indian banks have done nothing since September 2011, when a report of an independent research fi rm, Veritas of Canada, was available to all large institutional investors. Their silence amounts to dereliction of duty, since KAIR’s inability to pay endangers their own profits. As Veritas says, “we believe that unless the banking institutions have provisioned judiciously for the debt provided to KAIR – approximately Rs 4,567 crore ($986 million) in loans to Kingfisher in addition to standby letters of credit, etc – it renders the disclosed capital position of the banks unreliable.” Even earlier, banks bailed out the airline by scandalously converting its debt to equity at higher than the ruling market price of the day. Such largesse is unheard of and has never been extended to smaller and more deserving entities.
  • (3) Collateral Destruction of a Public Asset – Air India: Kingfi sher’s profl igacy is not only at the cost of India’s
  • Economic & Political Weekly

    march 10, 2012

    nationalised banks but also the national carrier – Air India. Even a foreign observer like Veritas calls the civil aviation ministry’s attitude to Air India “duplicitous” and observes, “it could be on the diktat of the regulatory authorities involving various ministries of the Government of India that an unviable airline, KAIR, which is competing against the incumbent state carrier and siphoning away its passengers on both the domestic and international routes, is being supported via taxpayer-funded fi nancial institutions”.

  • (4) Bailout is Unjust, Unfair: In contrast to the constant injection of public money into Kingfisher, most Indian citizens are struggling with spiralling cost of living and poor public provision of healthcare and education. The situation is far more tragic when it comes to our hardworking and badly indebted farmers. Between 1995 and 2010, over 2.5 lakh farmers across the country committed suicide primarily because they could not bear the burden of debt they incurred to meet the growing cost of agriculture. They prefer death to dishonour and do not have the luxury of defaulting, like the super-rich Vijay Mallya does.
  • We suggest the following as a possible solution to prevent more public money being pumped into Kingfi sher and end the increasing harassment of the fl ying public.
  • (a) Exercise State Powers: We strongly suggest that if the state of Indian aviation is a matter of concern then any concessions to KAIR must come only after a change in management and with strict conditions. The Indian Companies Act has several provisions under which the government can actively intervene to force companies to behave or effect a change in management.
  • (b) Force Mallya to Pay Up: Even without Mallya in management, there should be no bailout without forcing him to liquidate his own personal assets to pay for the excesses of his airline. Mallya must be forced to bring in at least Rs 4,000 crore to KAIR.
  • Aruna Roy, Nikhil Dey, Sucheta Dalal, Debashis Basu and others

    vol xlviI no 10

    Aadhaar and Civil Society

    he Aadhaar project was started in 2009 with much fanfare to provide the poor and marginalised with an identity. The Unique Identifi cation Authority of India (UIDAI) chairman Nandan Nilekani personally pushed for close interactions with civil society and the authority held several rounds of consultations to seek inputs from the grass roots. Unfortunately, those initial efforts were quickly drowned out by the strong voices of opposition from privacy advocates. Propoor non-governmental organisations (NGOs), which might have been expected to enthusiastically support the project, chose to remain on the sidelines. This suited the bureaucrats, who were uncomfortable with the notion of civil society partnerships to begin with, and plans to reach out to the ID-less were soon put on the back burner.

    Fortunately, there has been a dramatic shift in favour of the project in recent weeks: The government has reiterated its strong support for Aadhaar and the project is expected to fi nd prominent mention in the upcoming budget speech. The UIDAI has proven its critics wrong on several important issues, such as the accuracy of biometric technology and the cost of the project. Several initiatives are currently underway to demonstrate the power of Aadhaar on the ground – e g, as meeting KYC norms for small accounts; for e-payments in MGNREGS, pension schemes, and student scholarships; reining in illicit trade in LPG supply, etc.

    Will the UIDAI use its renewed mandate to boldly accelerate its plan for inclusion of the ID-less, while at the same time addressing the “security concerns” of the Union Ministry of Home Affairs? Will pro-poor NGOs break their self-imposed silence to support the various Aadhaar-based initiatives to better manage our welfare services, despite the naysayers in their ranks?

    There is a need for a renewed dialogue between the UIDAI and civil society on how they can work together to meet Aadhaar’s pro-poor mission, while at the same time addressing the legitimate concerns regarding data privacy. Raju Rajagopal

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