In the latest of a series of attacks on the frail economic sovereignty of the nation, the UPA government has decided to raise the foreign direct investment (FDI) limit in the telecom sector to 74 per cent from the current ceiling of 49 per cent. This comes close on the heels of a move to disinvest 10 per cent share of BHEL, one of the navaratna companies, and a part of government holdings in the Maruti Udyog. The categorical promise made in the Common Minimum Programme that there will be no disinvestments in the navaratna units was thus thrown to the winds. And the telecom decision will soon be followed by opening up other lucrative sectors like real estate and pension funds for easy entry of foreign capital.
The government’s main argument in favour of the hike in FDI cap is that this is necessary to augment tele-density. But our tele-density has gone up nearly five-fold in the last five years. The Indian telecom firms in the public and the private sectors have achieved this without much FDI, and they can meet any practicable target on their own. The official story thus falls flat on facts.
Another official argument is that foreign telecom companies have already surpassed the current limit of 49 per cent through holding companies, so let us make this legal. The move will allow companies such as Bharti Tele-Ventures and Hutchison Essar to ‘regularise' foreign holdings in their companies, which have reached 67-69 per cent of their equity. Is this ‘transparency’, as the Finance Minister claims? Or a shameless instance of legitimising subversion of national policy by foreign companies, and rewarding them for backdoor manipulations?
It may be recalled that the former Union Communications Minister Arun Shourie had publicly expressed his desire to raise the cap but could not go ahead because of serious objections from the Intelligence Bureau. Now Chidambaram accomplishes the task left unfinished by his predecessors. He says conditions have been put in place to address the nation’s security concerns, e.g., the majority directors on the board of any telecom firm – including the chairman, the managing director the CEO and top trechnical officers – shall be resident Indian citizens. But does the nationality of high officials always safeguard the nation’s best interests? The Indian experience, including the track record of our most illustrious finance ministers, does not seem to suggest that. More important, the TNCs have all the means – economic, technological, managerial and other – to cheat, coerce, manipulate and subjugate joint ventures and whole industries once they gain a strong foothold there. And given the role of telecom in the information age, in this particular sector that amounts to foreigners acquiring control over a nation’s central nervous system, so to say. Thanks to high technology monopolised by imperialist countries, electronic eavesdropping on telephone and other communication lines is rampant nowadays, and with overwhelming foreign presence, information security for civil administration, defence, and financial sectors will be a thing of the past. Satellite and undersea cable communications are already vulnerable; now if foreigners own telecom firms, spying will be much easier because ownership of physical telecom networks offers the added advantage of listening to the landline communications as well. And this can be done even without the knowledge of the operating company personnel by supplying pre-bugged hardware. These are some of the reasons why almost all countries from the USA to China and Japan to Taiwan have made it a point to maintain a FDI cap of 25 to 49 per cent in this highly sensitive sector.
The telecom policy has naturally evoked a barrage of protests from the true custodians of national interest, the working people. To placate them, the FM has come up with a carrot too, hiking PF interest to 9.5 per cent. Now, this was the rate that prevailed before Chidambaram got it slashed first thing after assuming office, so in fact all the government is doing is restoring the old rate. Moreover, the FM remains non-committal on how the added interest will be provided for, raising doubts whether the increment will at all be at effectual this year and continue next year. Then there is a hidden cost, too. The bar on investment of PF funds in the share market is removed, which means the fund itself will now be subjected to speculative risks, even as the fresh inflow of money jacks up share prices and helps the FIIs, which nowadays call the shots at the bourses, to fatten themselves.
The simultaneous announcement of the two decisions has naturally been accompanied by reports of a clandestine deal of give and take between the government and the friendly Left. The latter has emphatically denied this and launched a campaign against the FDI hike in telecom. Yet the impression lingers on because, no matter whether there was a specific ‘deal’ in this particular case, it remains a fact that the UPA government operates within a framework of overall understanding, close liaison and formalised coordination with the parliamentary Left. Secondly, the open and indiscriminate wooing of foreign investment by the West Bengal government – a policy re-endorsed in the recent WB State Conference of the CPI(M) in the name of ‘utilising globalisation in the people’s interest and creating jobs’ and ‘advancing class struggle along the path of development’ – makes it clear that the Left Front’s opposition to the hike in FDI cap is more rhetorical than real.
All this, however, does not prevent the self-styled ‘watchdog’ from barking. It barks on the streets, it will bark in the house when it assembles for the budget session. But, as the adage goes, the dog that barks seldom bites.
Not so the people of India. We are not watchdogs and we have no ‘owners’ to forewarn. We fight back. As the trail of betrayal goes on, it’s time we closed our ranks and cried out in one voice: Enough is enough!
-- Arindam Sen