2. The First Letter and Prime Minister Vajpayee

THE FIRST LETTER

 AND ITS

 REPERCUSSIONS

                  

                                                                                           

         

 The news media in India had been propagating since 1991 the view that privatization of the Public Sector Undertakings (PSUs) was the panacea for managing fiscal deficit and for all other ills of the Indian economy.

              In the year 2000, the National Democratic Alliance (NDA) Government under Mr. A. B. Vajpayee disseminated the view that the Public Sector Banks (PSBs) would become unviable due to competition from the private banks and disclosed its intention to de-nationalize them.

              Protesting the move of the Government, 10.5 lakh employees of the PSBs went on a token strike on 15 November 2000. The public, as usual, ignored the strike. 

          As an instantaneous but pre-meditated retaliatory answer to the strike, the Union Cabinet on 16 November 2000 decided to reduce the Government’s share in the PSBs to 33 percent.

         Thus, the Government showed to the world that the employees lacked public support for their agitation against privatization. The people, in fact, nodded in agreement.  

         The popularity of the Government was such that none in India dared to question it.

         The media did not mention the dissenting views to the people with any seriousness. Instead, it instilled the public against the employees to achieve its objectives.

          Quite unexpectedly,  the Cabinet Committee on Disinvestments (CCD) in November 2000,  identified 38 public sector units inclusive of the Air India (AI), Indian Airlines (IA), Videsh Sanchar Nigam Limited (VSNL), Shipping Corporation of India (SCI), National Aluminum Company Limited (Nalco), Mahanagar Telephone Niham Limited (MTNL) and Maruthi Udyog Limited (MUL) for immediate privatization.

          It is not easy for a coalition Government to take such a decision. This happened because the Government is only a formality for the industrialists.

            However, all right thinking people believed that Mr. L.K. Advani and Mr. A.B. Vajpayee were the driving force behind the above plot. They, perhaps, thought that the long arm of law would never reach them.

         Further, the print media said that all PSUs inclusive of the Life Insurance Corporation of India (LIC) and the Railways would be privatized very soon. Accordingly, the Government - in a hurry - invited bids to hand over the IA and the AI to the chosen people. Thus, the CCD gave shape to a great conspiracy.

          The actions of the Government should not look like a conspiracy. But it must look like an action taken in good faith. For this the media supported the above decision. They said that the fear of stick alone would make the employees to do their work.

      The people simply nodded in agreement.

          The media suppressed the voices that opposed the privatization moves of the Government although “The Hindu”, one day, in an insignificant manner revealed the view of Justice Ramaswamy, who said that the privatization of the PSU Banks was perverse in law. The paper said this only to convey the impression that it was a neutral paper.

          The Union Budget for 2001-2002 envisaged privatization for Re. 12,000/-  crore. The amount would look small. But the Government wanted to remove one half of the PSUs during 2001-2002.

There were reports that Mr. Ketan Parekh, a broker boy, siphoned off Re. 3100/- crore to Switzerland.

                 Further, there were reports that all state Governments were in the red and the employees believed that even the retirement benefits would be given in the form of bonds only. Fearing cut in retirement benefits, many employees opted for voluntary retirements from service.

         Everyone came out with his own theory to solve the problem. The theories led the people to believe that the only way was to sell the PSUs. The despondency of the people was such that a colleague of this writer Mr. M. Jochim, Lecturer in Mathematics, Lekshmipuram College, Neyyoor, said, “Sir, there is no hope! They are going to privatize everything…” His words reverberated in the mind of this writer.

 Further, apparently, the rate of public investments in many states and districts in India during the 50 years after independence was far less than that during the 50 years preceding independence. This writer felt that flight of capital was responsible for it.

 Furthermore, there was a sudden feeling the NDA Government was going astray.              In this connection, this writer felt that the media was manipulating the economic policies of the Government for the benefit less than ten industrialists. Disturbed by the developments, this writer wanted to know whether the problem was a real or imaginary one. Therefore, with the real desire for the ‘Good’, a letter was dropped to Mr. A.B. Vajpayee on 1 June 2001.

The above letter had been written in such way to catch the attention of Mr.A.B.Vajpayee. As he would be ordinarily busy, the letter was dispatched when he was taking rest in a hospital at Mumbai after his knee operation.

The copies the letter had been sent to a number of Chief Ministers and the prominent   leaders of political parties. This had been done in the hope that others also would prevail upon him from various directions.

  Later, the copy of this letter was sent to Mr. K.R. Narayanan, His Excellency the President of India. The letter follows. 

                                                                            

 From

            V. Sabarimuthu,

             Thattankonam,

              Vellicode,

                Mulagumoodu, P.O, 629167

To

               Mr. A. B. Vajpayee,

Hon’ble Prime Minister of India,                                                    

               Parliament House,

                New Delhi.

Your Excellency,

         

          Kindly consider the question of:

1                   Constitutionally preventing bulk purchasing to avoid big commissions.

2                   Awarding contract works in pieces and not in one go.

3                   Splitting big financial institutions like the UTI, LIC, Banks and giving them to state governments to check the flight of capital and to prevent big losses.

4                   Banning banks from giving advances against shares on any account even for normal investment activities to pluck loopholes.

5                   Passing a bill to effectively confiscate Re. thousand of crore amassed by brokers, corporate houses and manipulators and kept abroad since 1990 to prevent them from buying public sector undertakings

6                   Realizing at least one percent interest on all deposits and credits and ten percent of all service charges and processing fees.

7                   Granting all licenses including telecom, WLL to private parties through the state governments to realize maximum income and to avoid favoritism.

8                   Splitting the ONGC, SAIL and BSNL to promote competition and to prevent big commissions

9                   Giving exports licenses and code numbers through district level offices.

10              Devising a scheme to encourage expatriate workers to send money through the banking channel.

Vellicode,                                                                      Yours faithfully,

1-6-2001                                                                                                                                                                              Sd-

                                                                                   V.SABARIMUTHU

           The letter, apparently, reached the Prime Minister’s Office (PMO);  an officer took a positive note and handed over the letter to the Prime Minister while he was taking rest at Mumbai after his knee operation. This could be discerned from the fact that the Prime Minister, at that time, said that the teachers must talk more. His words were a source of joy to this writer.

 The officer who showed the letter to the Prime Minister deserves honour. This showed that good really exists.

 The above inspiration was reinforced by the extraordinarily active interest taken by Mr. A.B.Vajpayee.

  Thus, after his return from Mumbai, Mr. A.B.Vajpayee called for a revision of Government policies and programmes. Perhaps, he had been frightened by the magnitude of the impending manipulations. He wanted his colleagues to be careful with the deals.

        It must be pointed out that Mr. A.B. Vajpayee had been simply frightened by the message of the Point No.5 of the above letter. He wanted to show that noting illegal would take place. Further, he wanted to show that his actions were not arbitrary but legal.

           Accordingly, the CDD, on 4 July 2001 decided not to sell the PSUs to 1.Those who were a threat to the security of India, 2.Those who keep ill-gotten wealth and 3. The people who committed “grave offences”. The grave offence was defined as one, which outraged the moral sense of the community. The Government further clarified that for matters other than security, any conviction by a court or an indictment by a regulatory authority for a “grave offence” would be sufficient.

            Based on the above guidelines, the CCD disqualified the bids of Hindujas for buying the AI because of their involvement in the Bofors case.

           Videocon and Sterlite were disqualified because they were indicted by the SEBI.

           The bids of Tata and the SIA were neither accepted nor rejected.        In fact, the Government, in order to do the job with circumspection, deferred the proposal of selling the AI to them.

          However, the Government, consistent with the demand of this writer, imposed 5% service tax on a number of items to mobilize 10,000/- crore.15 more items were added on 9 July 2001.Thus, the Government could very easily compensate the amount that would have accrued to it through disinvestments.

        The suggestion to impose service tax, in fact, saved India from a grave fiscal crisis that had been created by the industrialists.

          The newspapers - and therefore the industrialists - were shocked by the developments.

      A Mr. Sailesh Kottary said through The Indian Express on 9 July 2001 that the employees of Air India were responsible for the developments.

        The other industrialists were equally embarrassed by the new stand of the Government. They said that charges of said nature in business were not unexpected.

       Mr. Hinduja very politely said that the Government should not have changed the rules of the game when the game was nearly over. This clearly showed that there had been a conspiracy and Mr. Hinduja had been a part of that.

      Mr. Bal Thakkery, Chief of the Siv Sena, threatened to withdraw the support of his party to the Government saying that he was opposed to Indo-Pak talks. This showed that he was also aware of the conspiracy.

        The new guideline issued to sell the PSUs divided the corporate houses.

       The newspapers began to attack the Government.

        The New Indian Express through its editorial on 25 July 2001 asked the political parties not to allow the “whale”, meaning Mr. A. B. Vajpayee, to get away with its misdemeanors. The New Indian Express had wanted him to transmit the public assets to some people, but he retracted from the commitment. This is the reason for its anger.

        The Hindu on the next day exhorted Mrs. Sonia Gandhi to take on the BJP-led challenge in the wider national arena and wanted her to prove her mettle.

          A Mr. Bharat Jhunjhunwala on 1 August 2001 through an article in The Indian Express wanted the people to oppose the policy of the Government to do business. He said that the profits of the PSUs came from monopolies that existed in oil and telecom sectors.

       The Indian Express on the same day said that Mr. A.B. Vajpayee was under a cloud visa vise the Unit Trust of India (UTI).

        The other newspapers, inclusive of The Hindu, also wanted Mr. A.B. Vajpayee to come clean on the UTI affair.

        A Mr. C. Rammanohar Reddy on 12 August 2001, through an article in The Hindu, said that the sale of state assets to the preferred buyers and subsidized finances to favoured enterprises were all for a price. He substantiated this by the words of Mr. Arun Shourie, Minister for Disinvestments, who said that possible competitors through exchange of money sabotaged the privatization of the IA and the AI. That writer said that favoured companies were manipulating the policies and rules in the economic ministries over which the Office of the Prime Minister had total control. The same writer deplored that the corrupt politicians-cum-entrepreneur operated through shell companies established in Mauritius or many Atlantic tax havens and assessed funds slashed in Singapore, Dubai, London and Zurich.

       On the same day, a Ms. Sushma Ramachandran advised the Government to wind up the “Civil Services” as they were impediment for disinvestments. She exhorted the Government to devise a transparent guideline for disinvestments with the help of technocrats and specialists from industry.

         A Mr. P.V.Indiresan of The Hindu wanted the Prime Minister in August 2001 to step down to save his reputation.

        Shiva Sena again threatened to withdraw its support opposing Indo-Pak talk at Agra.

The media, further, wanted the Government to bring the rural rich under the tax net, stop giving food grains, freeze the D.A and introduce the VRS.

Articles were written decrying the actions Mr. A.B. Vajpayee. The media all over India criticized him. The criticism originated from the same source. The industrialists simply believe that the policies of the government cannot be different from the one prescribed by them.

In the meantime, the UTI sought a loan of Re.2000 crore from the State Bank of India. Realizing the dangers, the following letter was sent to the Chief Justice of India on 24 July 2001.

From

V.SABARIMUTHU,

Thattankonam,

Vellicode,

Mulagumoodu P.O.629167.

To

Justice Anand,

Chief Justice of India,

Supreme Court, New Delhi.

Your Lord,

          Sub: PIL to restrain banks from giving a loan of Re. 2000 crore to the Unit Trust of India-reg

          The money from all over India flows to Mumbai through financial institutions like banks, LIC, UTI. There, some brokers and some corporate houses use the funds to manipulate the stock exchange and siphon off Re. hundred of crore to other countries. Though part of the money reappears in India as FII and through over invoicing/ under invoicing/ of exports/ imports, major portion goes into oblivion. This affects the economic activity all over India. Small businessmen, employees and the common man are the worst affected. Even 20% of the basic pay as interim relief to employees would not compensate for the harm caused by the siphoning of money by brokers and corporate houses in this year alone. In the past, they succeeded in maintaining high interest rates and this crippled almost all industries in India. Now they suggest (1) freezing of the D.A. (2) VRS and (3) and controlling lavish spending by M.L.As, M.Ps and the Government.

Distressed by the above, a letter was written by me to the Constitutional Review Commission on 30.7.2000 to split the Public Sector Undertakings such as banks. Had the Commission acted on it, the 20,000/- crore loss suffered by the UTI could have been averted. Later, on 1-6-2001, a letter (copy enclosed) was written to the Prime Minister of India to restrain-among other things- banks from giving any advances against any shares. The letter is pending before the Prime Minister.

Now the UTI, instead of asking the corporate houses to remit the amount received by them from the UTI over and above the net asset value of the shares, has sought a loan of Re. 2000 crore from the nationalized banks. The loan, if given, would affect the day-to-day life of all people all over India.

Therefore, this letter may kindly be treated as public interest litigation and the banks be restrained from giving any loan to the UTI till the disposal of my letter before the Prime Minister or this petition before the Supreme Court.

Vellicode                                                                                Thanking Your Lord

24-7-2001       Yours faithfully, V.Sabarimuthu

                                                                                                                       

The Chief Justice of India did not accept the above letter as a writ petition.

 However, he might have informed this matter to the Prime Minister of India as the banks turned down the request of the UTI. But for the above two letters, the banks might have given the money to the UTI and all banks in India would have become bankrupt like the Global Trust Bank as the Government was forced to give about 30,000 crore to the UTI later. Thus the two letters saved India from a grave economic crisis. The service tax became a great boon to the Government to overcome the fiscal crisis. However, the Government did not give any credit to this writer for the suggestion. The Government did not claim any credit for itself for imposing this tax either. 

                Coming back, as if to give a fitting reply to the media, Mr. A.B. Vajpayee in his Republic Day address from the Red Fort on 15 August 2001 said that profits earned by “hook or by crook” should not be the sole criterion for judging the success of a business. He added that the Government would not “turn a blind eye” to corruption how high a chair they might occupy.

         True to his words, the Chairman of USHA Ltd was arrested for Re.44.75 crore.

          A Mr. Subash Rastogi was arrested for overprizing the exports.

        In the mean time, the Security and Exchange Board of India (SEBI) in its interim report on stock markets said that the brokers were able to build up concentrated positions utilizing the funds available to them from the overseas corporate bodies, Indian Corporate Houses and the banking system.

          Now ‘The Hindu’ wanted the government to spare the corporate houses from investigations.

       ‘The Indian Express’ on 20 August 2002 disclosed that several corporate houses absconded after collecting Re. several crore through mega issues. In this connection, the paper mentioned Mrs. Rita Singh, Mr. Sailesh Kattary and Mr. Kumar of Delhi.

       Many Members of Parliament (MPs) supported the Government.

        Mr. Chandra Shekhar on 21 August 2001 said in Parliament that a particular industrial house had stranglehold over the government and could get decisions in its favour. Apparently, he was referring to the Reliance Industries.

        Mr. Dasmunshi described the UTI as the United Thieves of India.

       Mr. Kirit Somayya of the BJP said that Reliance Industries had looted the UTI and made it bankrupt.

       Mr. Alvi said that the Prime Minister did not answer his letter against Reliance Industries Limited (RIL). He said that even the portfolios were determined by the RIL.

      Mr.Arun Shourie on 24 August 2001 said that the avalanche of allegations against potential buyers of PSUs was scaring them away and added that the potential buyers - by staying in the race - were needlessly persisting in a minefield. His words showed that he was a man behind the conspiracy. Further, he was in charge of executing the decisions of the conspirators.

         The New Indian Express on 25 August 2001, through a Mr. Sunil Jain said that several industrial houses had systematically abused Indian Financial Institutions and banks. He cited several examples including the misuse of the IFCI by Indocount Choongnam Textiles Ltd, the Indurial Development Bank of India (IDBI) by a sponge iron unit in April 1992 and the investment of over Re. 850 crore in preference shares. Therefore, the paper sought a lenient view against the present culprits. This showed that the paper had lost its direct contact with Mr. A.B. Vajpayee.

          However, on 26 August 2001, The New Indian Express - driven by ambition to usurp - demanded the Government to withdraw from all sectors except those concerned with the security of the country.

.     Writing for The Indian Express   Mr. T.V.R. Shenoy on 30 August 2001 unleashed several allegations against the Prime Minister and gave a suggestion to change the presiding physician meaning Mr. A.B. Vajpayee. The print media, in fact, wanted to pull down the Government. The newspapers deplored that Mrs. Sonia Gandhi failed to avail herself of the opportunity provided by them to pull down the Government. As a copy of the letter had been sent to her, she was aware of the reasons for the developments and therefore maintained a studied silence.

          During the Chief Minister’s conference on co-operative credit system, the Minister for Finance wanted to end dual control over co-operative banks. He wanted to bring the co-operative banks under the control of the Reserve Bank of India (RBI) based on the tutored recommendation of the task force on co-operative credit system. This was presumably to make the deposits in them accessible for the industrialists through a single window. However, Mr. Agit Singh, Minister for Agriculture, and the Chief Ministers stoutly opposed the recommendation and the move was dropped.

       The exasperated leaders in the BJP wanted some radical changes in the Government. It must be noted that this writer had sent the copies of the letters to Mr.Agit Singh. Later, he lost his position in the Cabinet presumably due to the estrangement, which started from this day.

          Now, the industrialists, apparently, were persuading the Prime Minister to change his mind. Accordingly, he made some changes in the Government. Thus, the Minister for Disinvestments was elevated to the Cabinet rank.

         Mr. Ram Vilas Paswan was transferred to Coal and Mines.

     Mr. Saharad Yadav was shifted to another Ministry.

       A crucial new post was created in the Prime Ministers Office (PMO). For this post, Mr. Vijay Goel M.P. from Delhi was appointed.

           The Prime Minister then convened the meeting of the Advisory Council of the Trade and Industry for reviving the economy. A series of meetings were conducted with various committees. The RBI Governor, Mr. Murasoli Maran, Minister for Commerce, Mr. Arun Jaitly, Minister for Law, Mr. Suresh Prabhu, Minister for Power, Mr. Arun Shourie, Minister for Disinvestments, Mr. K.C.Pant, Deputy Chairman, Planning Commission, Industrialists Mr. Sanjeev Goenka, Mr. Chirayu Amin, Mr. Reghu Moody, Mr. Ratan Tata, Mr. Kumaramangalam Birla and Mr. Mukesh Ambani besides the Home Minister attended the meeting. Mr. A. B. Vajpayee conveyed the decision of the Government to utilize the surplus deposits in banks for large scale development of Roads, Railways ports and PSUs and requested the industry to ride on the back of higher public investments. This conveyed the impression that the Government embraced the views of this writer and as such it no longer wanted to mobilize resources through disinvestments.

          Thus, Mr. A. B. Vajpayee listened to the industrialists to affect some changes in the Union Cabinet but he was not ready to change the new policy.

        The present writer was ecstatic at the developments