Why has Mani Shankar Aiyar rather than Prakash Mani Tripathi become the sole defender of the Joint Parliamentary Committee’s (JPC) washout of a report? No, it has nothing to do with the ‘Mani’ in their names. But look closely at the preface to the JPC report and you have the answer. Out of the 30 disparate members, it was a core group of six that was asked to draft the report. The group comprised, Mani Shankar Aiyar, Kapil Sibal, Kirit Somaiya, S .S.Ahluwalia, Nilotpal Basu, C.Ramachandraiah and C.P. Thirunavukkarasu. Of these, the BJP members were bound to work at saving the government rather than investors and the rest probably know very little about the capital market anyway.
But if Aiyar is so upset by the criticism, he should have ensured that the report itself wasn’t such a dead loss.
Old wine, new bottle
The first Asset Reconstruction Company floated by ICICI Bank, State Bank of India and a clutch of other banks and financial institutions is attracting derision from the corporate sector because ICICI’s chairman Narayan Vaghul heads it. They point out that several thousand crore of bad loans sought to be recovered now are from projects sanctioned during Vaghul’s tenure at ICICI. Moreover, although Vaghul’s reputation was hardly dented by the poor judgement and appraisal skills of the institution that he headed, the ARC may turn out to be old wine in a new bottle.
What ARCs really need is dynamic younger people who have fresh ideas about how to break the payment deadlock and the will aggressively hunt out potential buyers who will pay a decent price for recovered assets.
The next few months will test the financial institutions’ new toughness under the Securitisation Bill. While the institutions are busy restructuring the massive loans of three major steel groups, the industrialists themselves are unwilling to let go of any of their mega projects.
So, Ispat continues to lobby for a No Objection Certificate for its 1,082 MW Bhadravati power project, probably confident of raising the funds to finance it. Does the Maharashtra government believe that banks and institutions who have tens of thousand crores of rupees stuck in disastrous Independent Power Project (including Enron’s Dabhol power company) will sink more money into power projects?
And even if the State replaces the Power Purchase Agreements signed with Reliance and the Mittals with fresh ones signed, does the Maharashtra State Electricity Board (MSEB) have the funds at all to purchase any private power until it resolves the Dabhol debacle? Maybe the bumbling and bankrupt Maharashtra government simply planning to issue clearances first and worry about finances later.
The JPC in its report has lit into the Department of Company Affairs (DCA) saying that its inspections leave much to be desired and that its inspectors are ‘untrained and unable to cope with the quality of inspection’.
The JPC has also documented Dinesh Dalmia’s shenanigans at DSQ Software in some detail. Notwithstanding all the attention, DSQ Software has calmly moved the Chennai High Court for the compounding of its gross offense of allotting shares to three Overseas Corporate Bodies under false pretexts, leaving the regulators—DCA as well as Sebi — nonplussed about their future course of action.
The rapturous reception given to the Delhi Metro by the masses, should force the Maharashtra government to do something for the long suffering commuters of Mumbai who desperately need more public transport.
But the State government is focussed on elitist showpiece projects such as the suspension bridge linking Worli and Bandra across the sea. It has already sunk over Rs 100 crore on the unviable sea link that is not meant for mass transport services.
It is also allowing the roads to be clogged with more private cars and taxis. And it has permitted over 70,000 taxis to block up scarce road space. According to Krishan Khanna of www.wakeupcall.org only 10 per cent of the taxis are moving at any time, while the rest are illegally parked, blocking bus stops or preventing people from using roads.
In addition, says Khanna, we have 110,000 three-wheelers that disrupt orderly transport in the suburbs. In contrast, New York City has only 17,000 taxis. Yet, even the World Bank funded Mumbai Urban Transport Project, which recently got underway will do little to decongest Mumbai’s roads, unless government looks at viable mass transport alternatives such as the Skybus, which will not block up road space but build above existing arterial roads.