LETTER TO THE EDITOR OF TOI

This letter below is my response to the news published in Times of India on 7th January 2010 titled “Tribals greet Patkar with eggs, tomatoes”. Quite interestingly in TOI’s web edition, the headline of the news changed and appeared as “Dantewada tribals attack Medha Patkar” and substantial part of the news was scrapped. The following letter is a response on the quality of news reporting and the apathetic, conformist attitude of the media when dealing with Human Right violations, especially Naxalism.

The web edition can be accessed in: http://timesofindia.indiatimes.com/india/Dantewada-tribals-attack-Medha-Patkar/articleshow/5418415.cms.

The newspaper version can be accessed here.

LETTER TO THE EDITOR

Dear Sir/Maam,

This is with reference to the news item published on 7^th January 2010, headlined “Tribals greet Patkar with eggs, tomatoes”. I regret to inform you about the apathetic state of the quality of news-reporting and insensitivity of the editorial desk, when dealing with issues pertaining to Human Rights, especially Naxalism. With reference to the abovementioned news item, I would like to throw some light on the  facts of the issue.

The area of Bastar and Dantewara, where the said incident broke out, is one of the main locations for the activities of  the State sponsored Salwa Judum movement. There have been repeated attempts by the Chattisgarh Government and Police Department, with the help of Salwa Judum and few other groups, to prevent the truth to be exposed, behind the atrocities and cases of human right violations against the tribal people in the region by the State. There are plethora of cases where social activists, resorting to peaceful methods like satyagrah or public-meetings, have been arrested and beaten up by salwa judum and other state backed organisations (Refer to pressnote released by Social Activists from Dantewada dated 6^th January 2010) It is quite clear from the conditions prevailing in south Chattisgarh that Medha Patkar and Sandeep Pandey, both were attacked by Salwa Judum and associated organisations in Dantewada, to prevent them from attending a public meeting organised by social activists in the region. It seems that the Government in Chattisgarh does not want any Human Right group or activist to operate in the area, especially in the areas of  Bastar and Dantewada. In the name of countering the Naxalites, innocent social activists and tribal people have been specifically targeted and beaten up or arrested by the State authorities. Recent examples of the atrocities on social activists like Shodhi Shambhu or Himanshou Kumar have also put the intentions of the State Government under question.

It will not be an overstatement to say that it is shameful for a major national daily newspaper to report such incidents without going into the depth of the incident. The absence of Salwa Judum in the said news item, which is prominent in the said region, or any statement by the victims or any other social activists of the region, clearly shows the the apathy of National Media towards human rights violations and atrocities in the region against tribal people. This kind of ill-researched reporting and apathetic attitude towards the problems of tribal people in the region is preventing the real issues to come out in the open. The propaganda against the Naxalites of such nature is not only adding to the problems of the innocent tribes but also creating a mirage of false issues in front of the nation.

The conformist attitude of the media with the State in these regards might prevent the real problems and the truth to be exposed in the public. It is my humble request to you to be more sensitive and more accountable to the problems of the region when reporting an incident of such nature.

Thanking you

Yours Sincerly,

Rajat Kumar

National Assets and Privatization: Reliance Gas Dispute

The recent Ambani Gas Dispute has raised many questions regarding privatization of national assets and competition law. The whole controversy mainly concerns with supply and pricing of natural gas between Anil Ambani and Mukesh Ambani. The dispute has its origins in Reliance Industries split in 2005, where a family agreement was reached between two brothers, brokered by their mother Kokilaben. According to the family pact, Mukesh Ambani headed Reliance Industries Limited (RIL) agreed to supply natural gas at the price of 2.34$ per unit to Reliance Natural Resource Limited, headed by Anil Ambani. Now after five years of the family pact, RIL says it can only sell natural gas for $4.20 per unit, claiming this is the price approved by the government. The core issue of the whole dispute is the legality of the family pact reached between two brothers during Reliance Industries split. In June, the Mumbai High Court upheld the claim by the younger brother Anil Ambani’s group, which was challenged by Reliance Industries in the apex court. The government too has intervened in the matter as an interested party, saying ‘gas’ was the property of State and cannot be fought between rival Corporate Houses.

This leaves us with a big question of privatization of national assets. It is important to delve into this question because in assets like natural gas and oil, any slight price fluctuation can have repercussions in the whole economy. I intend to provide a brief economic analysis of how and when it is feasible to privatize national assets, especially natural resources. As far as Reliance Dispute is concerned, this analysis is very important to understand the possible consequences of the outcome of pending litigation.

The choice of private or national form of institution depends on many factors like economic conditions, human capital, political regime etc. Normally, in developing countries the institutional choices are “volatile” and keep changing from one form to another. Among many other factors, this cyclic transition is mainly determined by economic conditions of the country.  After economic recession hitting the economies across the world, we can easily see the transition from one form of institution, i.e. privatized, to another form, i.e. nationalized. This back and forth movement is natural and as mentioned earlier depends on many factors.

The choice of private or national form of institutions is mainly stated as a trade off between equality and efficiency. On a simpler note, nationalized form is preferred when the commodity is scarce and prices are high. The vice-versa of this is true for privatized form of institution. Apart from the type of commodity and price, other factors like tax regime, risk aversion and other exogenous costs determine which model is to be preferred. Globally, in natural resource and utilities sector, nationalization and privatization cyclic change are more frequent.

Developing countries like India are largely dependent on imported oil because of poor natural resources to manufacture oil. Due to this problem, generally, tax system proves to be inadequate because of fluctuating prices; therefore, all the more it is advisable to have nationalized form of institution to govern such sectors. The inadequacy of the tax regime along with poor human capital can be chiefly attributed as the reason for preferring the nationalized form. Privatization of natural resources in a country like India would only increase the existing inequality. Latin American countries and South East Asian countries are live example and have already witnessed problems due to privatization of natural resources in the past. In my opinion, privatizing, as of now, will only worsen the conditions, and increase misery in the poorly diversified productive structure.

By saying that, I am not proposing that “nationalization” is the solution of all problems in a growing economy and privatization is not required at all, but I am stating that in this cyclic transition, at this given point of time, privatization of national assets is not required.

In Reliance Gas Dispute, privatization would have grave repercussions if two companies were allowed to deal with each other in a manner to determine prices of national assets by private agreements. Not only is there the danger of worsening inequality, as mentioned earlier, but also of competition between corporates.  In view of this, many private companies have intervened in the pending litigation in Supreme Court. Needless to say, that the Mumbai High Court Judgment is of little help in this regard when it ordered RIL to supply natural gas at the price settled in family pact after assigning NTPC certain quantity at the same price.

Taking all the above points into considerations, allowing the Ambani brothers to carry on with family pact would not be a feasible decision in existing conditions. This would not only increase the competition between the two entities but also affect the economy of the country adversely.

Since the matter is pending before Supreme Court, we can expect that the court would take a strong stance on the same keeping in mind the social justice point of view. The oil found in Krishna-Godavari basin is one of the major and biggest discoveries not only in India but also in Asia. Any sort of dispute concerning oil distribution between the two rival corporate houses will only delay the national progress. Moreover, at present, when the prices of commodities are zooming high, resolving this dispute should be of high priority for corporates, government, and the Supreme Court.

Gendered Bias and Trafficking**

Globalization is witnessing an extra ordinary movement of people across the borders, across the national or international borders whether legitimate or illegitimate. In the post-colonial world the distinction between the issue of trafficking and migration, and trafficking and sex work, had become distorted, resulting in the formulation of confused legal strategies that are both anti migrant, anti-sex work and  anti- families. They failed to recognize why people move, and the consequences of trying to stop movement through border controls and displaced the problem onto primarily, forced sex work and prostitution. These responses are infused with assumptions about women’s appropriate roles and conservative sexual morality. The anti-trafficking campaign, with its focus on violence and victimisation, is but one example. It has generated initiatives by some states that impose minimum age limits for women workers going abroad for employment. In 1998, Bangladesh banned women from going abroad as domestic workers. Although Bangladesh is reconsidering the ban, it still remains in effect. On the same lines the Nepal Foreign Employment Act, 1985 prohibits issuing women with employment license to work overseas without the consent of women’s husband or the male guardian.

The UN protocol on trafficking 2001 and the South Asian Convention on Trafficking 2002 regard the consent of women who move or are moved across borders as largely irrelevant. Such measures conflate women’s movement or migration with trafficking, where even women moving (legally or illegally) to see higher-wage work are suspected of being trafficked. The primary reason for this conflation is projection of women as a victim of violence and this has triggered a wave of domestic and international reforms focused on criminal law, which are used to justify state restrictions on women’s right and protection of women.

The image that is produced of a third world woman is that of being  sexually constrained, tradition-bound, incarcerated in the home, illiterate and poor. It is an image that is strikingly suggestive of the colonial construction of the eastern woman. Current scholarship on trafficking and sex work that takes place in post-colonial world evokes such imagery.

Human Right Watch claims not to take stand on prostitution or sex work in the report, it favors the criminalization and punishment of owners of brothels, pimps and traffickers.  It strongly condemns ‘laws and official policies and practices that fail to distinguish between “prostitutes” and victims of trafficking, treating the latter as criminals rather that as persons who deserves “temporary care and maintenance” in accordance with International Human Rights standards.’ The discourse of women in the post-colonial world as being in permanent state of misery and agony, partly creates the artificial divide and assumption that the struggle for rights and self-determination is a first world phenomenon. The divide and the assumptions on which it is based are in the part because anti-trafficking has operated along a forced versus voluntary nexus. The recognition of human rights of sex-workers would entail the voluntary prostitution which neither governments nor many feminists are prepared to accept.

The new meaning of “trafficking in person” adopted by UN Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children (2000), is:

“Trafficking in person shall means the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, or of abuse of power or of a position of vulnerability, or of the giving or receiving of payments or of benefits to achieve consent of a person having control over another person, for the purpose of exploitation. Exploitation shall include, at a minimum, the exploitation. Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs.”

The new definition is relatively more acceptable and inclusive definition of trafficking. A striking feature of the definition is that in international scenario the expanded definition is accepted and recognizes the need to expand definition of trafficking to include forced labor, forced marriage and slavery like practices. There is some recognition that the problem of trafficking is problem of Human Rights and not law and order or public morality issues related to prostitution. However, the problem of conflation between migration and trafficking for purpose of sex-work is not done away with. Law has failed to recognize that women move for various reasons with or without reasons.

Women who belong to subaltern group move across borders for various reasons. The reason could be war, social pressure, and economic burdens. The decision of moving across the border could be consensual; she takes her decision to move across the border as an adult. Through earlier examples of countries like Bangladesh, Burma, Nepal with restriction on women employment outside the territory of the country it is proved that laws regarding anti trafficking is highly discriminatory and considering women as incapable of taking decision and failed to understand woman as an adult. The construction of women who move as victims of a web of criminal network sits in tension with counter-narrative that regards the movement of labour as part of the globalization process. The emergence of human trafficking and smuggling networks is part of the migration phenomenon that first world nation-states refuse to address other than as an issue of immigration or criminality.

** For reference read “Erotic Justice by Ratna Kapur”

PUBLIC OPINION AND ROLE OF MEDIA

In a time of universal deceit, telling the truth becomes a revolutionary act.

—GEORGE ORWELL

It will not be an understatement if we judge a society by the way its media functions. ‘Public Opinion’ plays a very crucial role especially in a democracy; government’s stability is determined by the public opinion of that nation. In a democratic nation where the control on media is excessive, the society can issue a wrong mandate instead of right or any mandate at all in things with which it ought not to meddle with, in such case it practices a social tyranny which is more formidable than many kinds of political oppression, since though not usually upheld by such extreme penalties, it leaves fewer means of escape, penetrating much more deeply into the details of life, and enslaving the soul itself.

‘Public Opinion’ of what is laudable or blamable, are affected by all the multifarious causes which influences society’s wishes in regard to the conduct of others, and which are as numerous as those which determine their wishes on any other subject. Media is one such factor which has the power to mould public opinion and that too without much hassle. What we read and see in news channel or news papers is automatically considered as truth without even going in any details of the news item. One of the great dangers arises when media is controlled by superior class to further their interests. In that situation, a large portion of morality emanates from its very class interest and its feelings of class superiority. Media critics claim that commercial mass media controlled by a few multinational conglomerates have become an antidemocratic force supporting the status quo. The news channel and papers are more entertaining than informing, supplying mostly gossip, scandals, sex, and violence. Political news are more about personalities than about their ideologies. In the absence of serious debate, voters are left with paid political propaganda containing only meaningless slogans making them disinterested and cynical about politics. It is also claimed that the watchdogs are barking of the wrong things. The media hunt for scandals in the private lives of politicians and their families, but ignore much more serious consequences of their policies. Minor dangers are hysterically blown out of proportions, while much more serious dangers in our society go largely unnoticed. The exaggerated fears often lead to unnecessary measures, legislation, and “gonzo justice”*.

We can term this problem as anything else but commercialization because the latter is a process which is inevitable. Media is not charity or spirituality, it has its own commercial interests, and the problem which we are referring to is more normative in nature. It is the business ethics of media that are being violated; media giants cannot blame or take shelter under garb of commercialization or globalization to justify their unethical functioning. It is therefore reasonable to require that media live up to expected standards with respect to these functions, and our democratic society rests on the assumption that they will.

---

* Gonzo justice refers to the use of extraordinary means to demonstrate social control and moral compliance through rule enforcement and punishment designed to stigmatize publicly, often through the mass media, and to demonstrate the moral resolve of those mandating the punishment.

 

BRIEF OVERVIEW OF FDI IN INDIAN REALTY

The Government of India in March 2005 amended existing norms to allow 100 per cent FDI in the construction business. Until then, only Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs) were permitted to invest in the housing and the real estate sectors. Eventually Foreign investors other than NRIs were allowed to invest only in development of integrated townships and settlements either through a wholly owned subsidiary or through a joint venture company in India along with a local partner.

Guidelines for FDI application in Indian real estate (refer http://www.indianground.com/real_estate_fdi.aspx )

The Government of India has set up certain guidelines for investors willing to apply in FDI in real estate, which have conditions like area, investment options and target for completion of a project.

1) Minimum area
In case of development of serviced housing plots, 10 hectares (25 acres)
In case of construction-development projects, built-up area of 50,000 sq m.
In case of a combination project, any of the above two conditions
2) Investment
Minimum capitalization
	for wholly owned subsidiaries – US$ 10 million
	for JV with Indian partners – US$ 5 million–, to be brought in within 6 months of commencement of business
Original investment cannot be repatriated before a period of three years from completion of capitalization.
The investor may exit earlier with prior approval from Foreign Investment Promotion Board (FIPB).
3) Time frame & rules
At least 50 per cent of the project to be developed within five years from the date of obtaining all statutory clearances.
Investor cannot sell undeveloped plots – where roads, water supply, street lighting, drainage, sewerage and other conveniences are not available.

REMF and REIT

One of the most anticipated promises for the Indian real estate sector, which in turn will benefit developments of hotels, has been the entry of Real Estate Mutual Funds (REMFs) or Real Estate Investment Trusts (REITs).

Industry experts believe that REMFS and REITS will definitely ensure more availability of funds to the developers and faster growth of real estate sector. A few real estate entities like HDFC Real Estate Fund, ICICI-Tishman Speyer, Ascendas India IT Park Fund, Kotak Mahindra Realty Fund, IDFC, and Edelweiss Capital have received approval and started investing in real estate.

India and China – A Comparison

India’s FDI has always been compared with China and this is where the differences stand out. For 2000, FDIs for China and India stand at USD 40 billion and USD 2 billion, respectively, showing India in poor light. But, India considers only cash inflows of equity when counting its FDI, but China reflects cash, reinvested earnings and round-tripping routing through Hong Kong in its FDI calculations. Based on the standard IMF methodology, India’s FDI inflows stand at $8 billion while China stands at $22 billion. There is still a wide gap, but one that can be bridged. Of course, about half of China’s FDIs are in the real estate sector, while India has minimal FDI in this sector. One must understand that there is no private ownership of land in China. Plus differences in the political environment between the two countries may also have an impact on FDIs. The political structure in China still binds politicians strongly to entrepreneurs and infrastructure is able to keep pace with the growth in real estate. But one must keep in mind that India and China are not competing for FDIs from the same sources, but totally different sectors. Though China appears to be outperforming India in FDIs, India is better placed than China in the democratic, financial and business sectors. Table II compares the two giants from the economic point of view.

Recent Concerns

Recently the government was weighing the impact of a possible three-year ban on stake sale by foreign investors in real estate projects, a decision  that could affect future capital inflows into the sector.

Real estate developers had then urged the government to reinterpret a provision in the foreign direct investment guidelines, so as to stop overseas investors from withdrawing their funds, beyond the minimum capital of $5 million, before three years of the initial investment.

This, they said, will help them tide over the current liquidity crisis. However, the commerce ministry is concerned that such a measure could be counter-productive. The government wants to keep the foreign investment policy as flexible as possible since the country now needs foreign capital to sustain the growth momentum. For any foreign investor, the exit strategy is as important as the entry strategy. If it is difficult to withdraw capital and redeploy it in another sector, then foreign investors could become reluctant to invest in real estate.

The basic crux of the matter is that in any cross border Joint Venture deal the foreign investor has to provide a minimum of 5 million dollars and this should be accordingly brought within 6 months of the commencement of the business. Furthermore, there is a limitation when it comes to any repatriation of the funds before 3 years starting from date of minimum capitalization. This has now been interpreted in such a way so as to give a leeway to the investor who has provided for funds exceeding the minimum capital requirement of 5 million dollars. Hence the investor can repatriate the funds within the 3 year period.

---

IMPEDIMENTS TO THE BHARTI- MTN DEAL:WHY IT FAILED?

The history of mega-mergers and acquisitions (AOL-Time Warner, Citibank-Travellers) proves that most mergers end up destroying shareholder value considering the fact that they are propelled by unfettered illusory growth by size. The Bharti-MTN merger is no exception. Under the proposed deal, Bharti will buy 49 per cent of MTN through a cash-cum-shares offer totalling about $13.1 billion and MTN will buy 36 per cent of Bharti, with a similar cash-cum-shares offer of around $10.5 billion. Furthermore the impediments to the proposed deal can be classified as follows:

Lack of Synergy:

The cultures of Bharti and MTN are considerably different, and it is a fair bet that the two companies will spend at least a couple of years trying to find an alignment of values, either though combo branding (Airtel-MTN) or a completely new one.  Hence the synergy can only be achieved if the two entities adequately address the issues pertaining to the workforce, branding and any other changes in the work policy.

The Issue of Control:

It would be a fallacy to consider that 49% of MTN would give Bharti unhindered control. In fact considering the South African Government’s adamancy over retaining its local character (which will be elaborated on the issue of dual listed companies), there would be conflict as to who would retain the control and over what domain. The question of control however is the crucial issue that had propelled a stalemate and a falling off the deal.

Dual Listed Companies:

Another major impediment to the deal would be the fact that India does not have a dual listing law in force like South Africa. Although the Government has declared on print that it is open to permitting dual-listed companies, practically speaking the entire process would take years. Under the dual listing arrangement, two firms continue with their separate identities under a single management.

A dual listed structure is a series of contractual arrangements between two listed entities under which they operate as if they were a single economic enterprise while retaining their separate legal identities, tax residencies and respective stock exchanges.  Under dual listing securities are listed on more than one exchange for the purpose of adding liquidity to the shares and offering investors a choice on where they want to trade.

The benefits of a Dual Listed Company range from nil or low premium enforcement, no loss of national identity or corporate status, no flow -back and more access to capital markets.  Perhaps the biggest risk that would be suffered on account of adopting the Dual Listed Companies would be the dilution of voting interests of shareholders of each entity. This would be a major concern simply because issues that would be affecting these groups of shareholders of each entity would get ignored by the opposing votes by another group of shareholders.

The Risk of Exposure to New Laws:

If the dual listed company structure is indeed embraced, then it would require a policy change in the full convertibility of currency. Furthermore it would also introduce the entity to new laws, risks and regulations which it would have no exposure to.

Under the new Telecom Policy, 2005, foreign ownership, including foreign direct investment and portfolio investment in telecom is capped at 74%. Moreover if the deal had gone through, the Foreign Direct Investment, press notes 2,3 and 4 in February 2009 would also be tested. Additionally the changes made in the SEBI takeover norms with respect to American Depository Receipts and Global Depository Receipts.

The basic disapproval was shown by the South African Government with respect to the deal structure. The primary reason for the collapse of talks according to MTN was attributed to the “economic, legal and regulatory framework” in which the companies operate.