Can UPA check corporate predators?

The RIL case will test the resolve of the Indian government to reclaim its authority over national resources

 Hardnews Special Delhi

The decision of Reliance Industries (RIL) to file a petition in the Supreme Court against a Mumbai High Court order that gave precedence to a personal agreement between two brothers is fraught with interesting possibilities.

Described as a case that will test the resolve of the Indian government to reclaim its authority over national resources, that have seemingly been sold for a song in the name of economic reforms, RIL's petition would challenge the Mumbai High Court ruling that it should supply gas from Krishna-Godavari basin to his brother, Anil Ambani's company, Reliance Natural Resources Ltd. (RNRL), at prices that are half of what it is selling to the government. The agreement to supply gas at this rate was brokered by Kokilaben, mother of the two feuding brothers, after her husband, the legendary businessman, Dhirubhai, died intestate in 2002.

RIL claims that the agreement was subject to the approval of the government that controls the gas field and fixes the rates. But, Anil's company states that it (agreement) stands on its own.

Media reports suggest that the petroleum ministry would impose penalties on RIL if it decides to supply gas at a lower rate to Anil Ambani's company. Meanwhile, RNRL has filed a special leave petition (SLP) in the SC to make RIL follow the high court order.

The latest public exhibition of disagreement between the two brothers may go through the usual twists and turns that have been witnessed during this extended high-profile face-off in India's most powerful business family. But, what is bringing out in the open is the contempt with which the instruments of the government have been wantonly used to attain certain business objectives.

Columnists have decried such oligarchic tendencies in the economy and how it can hurt long-term efforts towards inclusive growth. After all, the manner in which the support from the bureaucracy, judiciary and politicians has been lined up for causes that are manifestly bad in law would even make banana republics look pretty. The court ruling that re-interprets national policies and agreements is just one example of how the laws play out in this country.

Whatever maybe the advantages that RIL maybe drawing by submitting itself to the Supreme Court and the agreement initialed between them and the government, the fact is that there is recognition in the company that plutocracy, which helped RIL emerge as country's foremost industrial house, has its limitations.

The government and the courts should grab this opportunity with both hands and reassert the primacy of the State over predatory corporate interests and straighten out the distortions that have crept in our economy in the last two decades. Oligarchic tendencies that prevented competition by limiting access to other business houses could be corrected, too, in this manner. It is important that the Congress-led UPA government, riding on a resounding mandate from people of India, should rid itself of the machinations of those who prospered in a fractured political environment that was amply irrigated by a cabal of oligarchs. Most of the policies and programmes that were initiated in the last ten years largely helped this lot and skewed the economy in a different direction altogether.

Most of the privatisation programmes did not perform as expected as the companies believed less in providing good service and more in paying bribes regulators and people's representatives to overlook their anomalies. There is more money to be made by not doing a good job and still getting paid for it than earning a decent profit from providing quality service.

The shoddy performance of the electricity distributor in Delhi, owned by Anil Ambani's BSES, is a case in point. Chief Minister Sheila Dikshit's much-vaunted exercise of improving power distribution in the city was badly compromised by poor service provided by the BSES. Sources tell Hardnews that BSES provided faulty electricity meters and poor quality transformers. In comparison, Tata-owned NDPL lived up to its mandate.

Oligarchs routinely hurt political parties and their ideologies and make many cash-strapped politicians dependent on them. Only strong governments and robust politics can stymie these trends.

The feud between the two brothers has subverted politics in a manner that not many people understand in this country. It has cast its dark shadow over politics, elections and even on the exercise of government formation. The differences between the two unfortunate brothers afforded opportunities to a breed of people like Amar Singh, who latched on to the younger brother, Anil Ambani, to correct his perceived "injustice". Using every trick in the business, Singh manipulated individuals, businessmen and politics to his advantage and in the process helped the younger Ambani's company.

Audio CDs that were surprisingly banned by the Supreme Court last year, told a saga where Singh had corrupted and compromised everyone who touched his life. There were businessmen who were seeking his favours and there were film actresses who were at his beck and call. The CDs were destabilising for the corrupt judiciary, bureaucracy and the government. Hence, the effort to hush it up hurriedly.

There have been other instances of Singh using sting operations to blackmail or harass his opponents. Rumours abound how Singh also stung his opponent, former law minister HR Bharadwaj, and played a role in his removal from the government.

To reiterate, the RIL decision to appeal against the Mumbai High Court order and the issues flowing out of it would help in redefining corporate governance issues as well the relationship between the laws of the State and corporate interest.