Columns: The Usual Suspects

Columns

India Today, April 12, 1999
April 12, 1999

THE USUAL SUSPECTS
Rabri's Economist

How Manmohan whiffed a Rs 5,000 crore steel scam.

By Swapan Dasgupta

There are some individuals whose reputations far outshine their actual performance. Former finance minister and Congress leader in the Rajya Sabha Manmohan Singh is among those fortunate few. A master survivor who moved effortlessly from socialism to market economics, from P.V. Narasimha Rao to Sonia Gandhi and from technocracy to partisan politics, Singh has scrupulously maintained the image of being a cut above the rest. The disagreeable features of public life never seem to rub off on him. He may preside over the complete decimation of the primary capital market, be a mute spectator to a colossal stock- markets scam and disingenuously declare a permanent address in Assam but these lapses never seem to affect him. He remains the teflon sardar.

It's more than that. As an influential member of the Congress Working Committee, Singh's passionate intervention was a crucial factor in his party's opposition to the imposition of President's rule in Bihar. But even this curious advocacy of Rabri rule seems to have escaped widespread scrutiny. Singh, everyone seems to have concluded, is an honourable man. And an honourable man always plays with a straight bat.

So it was in the Rajya Sabha last month. Intervening in the Mohan Guruswamy revelations debate, Singh donned the ex-finance minister's hat and referred to the kerfuffle over the floor price of steel. "I say with all the sense of responsibility," he said, "that the extra, undeserved gain to the producers would be Rs 5,000 crore." Coming from Singh, and blessed "with all the sense of responsibility", the figure of Rs 5,000 crore quickly became conventional wisdom. The next day, a Congress spokesman referred to the Rs 5,000 crore scam and by a wonderful sleight of hand this staggering sum became journalistic wisdom. Against a Rs 5,000 crore swindle, the Rs 64 crore Bofors bribes seemed loose change.

Full marks to Singh for scoring a powerful political point. He will no doubt be rewarded for it in future. Of course, it doesn't matter that the floor for seven steel items was set by an expert committee, that the floor price of hot rolled coil (HRC) was determined on the strength of European and Japanese prices and that the Indian steel industry (most of it public sector) is facing a battle for existence. What mattered to Singh was to put an arbitrary figure on an imaginary scam. His methodology was charming in its simplicity. He merely deducted $247 (his favoured floor price) from $302 (the Government's declared floor price) and multiplied the difference by 23 million tonnes -- the total steel production in India. The quick-fix accountancy wouldn't have passed muster in a tutorial for BA (Pass) students, but then accuracy and truth were not foremost in Singh's mind.

Singh just chose not to hear. He didn't hear that the domestic production of HRC is around 1.5 million tonne per quarter, that most of the steel is being massively discounted thanks to the knock-on effect of dumping from the CIS countries and that the most generous estimate of additional revenue to the Indian steel producers is Rs 750 crore in the past quarter. A more realistic Steel Ministry estimate puts the additional revenue at Rs 60 crore for sail and Rs 30 crore for the other private producers. Both ways, it is a far cry from Singh's Rs 5,000 crore lollypop.

From Manmohanomics to Rabrinomics, it has been an effortless intellectual journey for Singh. He has finally shed his pretensions.

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