The removal of Jaipal Reddy from the Ministry of Petroleum and Natural Gas in the recent reshuffle creates the impression that the government is letting itself be ruled by corporate interests.
The recent reshuffle in the Union Ministry was billed as an exercise that would rejuvenate the government, the ruling United Progressive Alliance (UPA), and its leading partner, the Congress party. It was also projected as a corrective measure to address the corrupt branding that the ruling dispensation had acquired over the past three years. But as the exercise concluded and its impact was being felt across the political spectrum, the near unanimous verdict was that the much-touted initiative had failed to live up to expectations.
It has boomeranged, and how! was how a senior Congress leader evaluated the reshuffle in an interaction with Frontline. The expectation in a vast section of the party was that Prime Minister Manmohan Singh would assert his clean credentials and combine them with a youth-oriented political thrust evolved by Rahul Gandhi to impart a credible and positive orientation to the government and the UPA. Not only did nothing of that sort happen, but one was forced to witness quite the contrary. What was on display was a Prime Minister seeking to use his clean and honourable personal image to blatantly advance not-so-honourable corporate interests. So transparent was this submission to corporate priorities that even the middle- and grass-roots-level workers who gathered a few days later for a public rally in Delhi expressed their disappointment about this, said the senior leader.
The removal of S. Jaipal Reddy as Minister for Petroleum and Natural Gas and his eventual positioning in the Ministry of Science and Technology was central to this perception. The elevation of Salman Khurshid, who was recently in the eye of a storm over allegations about mismanagement of funds in a non-governmental organisation (NGO) under his control, from the Law ministry to External Affairs also raised eyebrows. Then there was the confusion about Lalchand Kataria, whose allocation of portfolio was put on hold by the Prime Ministers Office (PMO) for a considerable time. Later, there were allegations of murder against the young MP. Clearly, a messed-up start to what was supposed to be a new beginning.
The treatment meted out to Jaipal Reddy was utterly indefensible. His removal is widely perceived to be motivated by designs to protect the undue financial interests of the countys biggest corporate house, Reliance Industries Ltd. Under his leadership, the Ministry had sought to reduce the loss to the exchequer caused by the companys operations.
According to sources in the Ministry of Petroleum and Natural Gas, Jaipal Reddy had been stoutly resisting the efforts of the industrial giant to garner undue benefits from the Ministry, particularly in terms of increased prices of natural gas. The prices fixed by the Empowered Group of Ministers (EGoM) in 2010 were valid until April 2014, and Jaipal Reddy had taken a firm position that this could not be revised before the stipulated period was over. Reliance Industries repeatedly demanded an increase in the price fixed by the EGoM by linking it to international crude prices. This, the Ministry pointed out, would involve an approximate rise of $10 per million British thermal units (MMBtu) and it would result in an increase in the financial burden of the State and Central governments by around $10.5 billion.
The Ministry under Jaipal Reddy had also taken up the issue of the decline in gas production from the companys KG-D6 gas block off the Andhra Pradesh coast and had imposed a penalty of over $1 billion. The Ministrys assessment was that the output of Reliance should have averaged 70 million metric standard cubic metres a day (mmscmd) but was only 42 mmscmd in 2011-12. It was pointed out that this caused a direct loss of Rs.20,000 crore to the exchequer. Projections for later years were of losses to the tune of Rs.45,000 crore to the exchequer.
Despite these strong and valid objections, the company tried to use its influence to have its way in the past 10 months. According to Communist Party of India (Marxist) leader and Rajya Sabha member Tapan Sen, documents in his possession and his correspondence with the PMO clearly established that the latter was backing the arguments put forward by Reliance. Time and again the PMO had sent missives and was pushing the Ministry under Reddy to consider the demands of Reliance either on its own or through deliberations at the level of EGoM, he said. Sen wrote as many as eight letters to the Prime Minister on the issue over the past 10 months. Jaipal Reddy refused to deviate from his principled position. One had been hearing about his impending removal from the Ministry for several months. What we saw in the last week of October was the culmination of this series of pulls and pressures, he said.
After Jaipal Reddys ouster from the Petroleum and Natural Gas Ministry, Communist Party of India (CPI) leader Gurudas Dasgupta sent a letter seeking a continuation of the policies adopted by Jaipal Reddy in relation to reining in Reliance. In a letter to the Prime Minister, he wrote: You are aware that Mr Reddy imposed a fine of $1 billion on Reliance to restrict cost recovery due to shortfall in production in 2011-12. If we consider the current years shortfall, the implication is even more startling. Against the cumulative production target of 2.957 trillion cubic feet (tcf) to be achieved by the end of the current year, Reliance has said it will produce only 1.847 tcf of gas. By the same logic that was applied to last years shortfall, the government should give a fresh notice to Reliance, restricting cost recovery by $1.72 billion in the current year corresponding to a cumulative shortfall of 38 per cent. For the years 2013-14, based on Reliances own projections and the government-approved principle of proportionate restriction of cost recovery, there should be a notice to restrict cost by $2.1 billion.
It remains to be seen whether such demands will be considered. But the fact remains that the discussions on Jaipal Reddys shift from the Petroleum Ministry has taken the sheen away from the reshuffle exercise. According to the senior Congress leader, who spoke on condition of anonymity, the impression given by the leadership before the exercise was that it would involve handing over greater responsibilities and power to younger leaders, and strategic advancement of regional, community and caste considerations in order to strengthen the partys political reach and grasp. Of course, an effort to do this is visible in the promotion of younger leaders like Ajay Maken, Manish Tewari, Jyotiraditya Scindia, Pallam Raju and Jitin Prasada as well as the removal of super seniors like S.M. Krishna. But all the plusses that may have accrued on these grounds have been completely overshadowed by the abject and shameful subjugation to the corporate business interests in Reddys case, he said. The leader is of the view that this negative message is percolating down the party hierarchy, especially in the context of the partys rally, held two days after the reshuffle, to support its move to bring in foreign direct investment (FDI) in retail. The cumulative effect of all this is not positive, but I am not sure whether the top leaders like party president Sonia Gandhi or Manmohan Singh would really get this feedback, he added.
Sitaram Yechury, CPI(M) Polit Bureau, member pointed out that the reshuffle had once again underscored the neoliberal thrust of the UPA, particularly the Congress. Reddy has had to pay the price for defying the countrys biggest corporate. This episode has starkly brought out the tentacles of big business in the appointment of Ministers, he said in an editorial in the CPI(M) organ People's Democracy.
With this reshuffle, the process of putting persons in key economic Ministries who are committed to corporate interests and the neoliberal policies that the Prime Minister is bent upon pursuing has been completed. The reshuffle has put the Congress imprimatur on the big business-politician-bureaucrat nexus which is flourishing in the Manmohan Singh regime. More concessions to big corporates and foreign capital and more assaults on the livelihood of the people and more corrupt deals are in the offing, he said. An array of social and political activists, including many in the Congress, will agree.
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