Because nobody understands

Kerjiwal doesn’t for sure. Aiyar, CAG, Reddy didn’t. PM does. Ambani, of course, does.

akash

Akash Deep Ashok | November 1, 2012



“Irresponsible allegations made by the IAC at the behest of vested interests without basic understanding of the complexities of a project of this nature do not merit a response,” said Reliance Industries Limited tersely on the latest expose of India Against Corruption’s Arvind Kejriwal. Kinda true. On another edgy Wednesday when political leaders were glued to TV sets (thanks to Kejri, these Wednesdays their interest in news watching is revived incredulously) watching the man in an aam aadmi cap firmly in place on a head of ordinary mental acumen trying to trespass the no-go areas of understanding, nobody actually understood that nobody understands. Mukesh Ambani does. And so does prime minister Manmohan Singh being the eminent economist that he is.

Also read: Making sense of IAC charges against Ambani

Mani Shankar Aiyer surely did not understand the complexities when he was replaced in 2006 by Murli Deora as petroleum minister who as a first of firsts cleared a proposal to allow RIL to hike the cost of development of Krishna-Godavari basin block from US$2.9 billion to US$8.8 billion. The move reduced the government’s share in the profit so that Mukesh could have the crème. “The decision to increase the gas price was taken by an Empowered Group of Ministers headed by Pranab Mukherjee. The benefit Reliance got out of this move was 10,000 crore,” alleged Kejriwal, of course without the basic understanding of complexities.

The comptroller and auditor general again did not understand similar complexities when he found serious irregularities in the 2007-08 accounts of the RIL in its 2010-11 audit.

On the top of the list of no-understanders, however, stands S Jaipal Reddy. As a result of his enormously low understanding, Reddy first refused Reliance's demand to increase price of gas (from the K-G basin) from US$4.2 per mmBTU to US$14.2 mmBTU. And secondly, he imposed a penalty of Rs 7,000 crore on the company for not meeting production targets. Reddy without an understanding of the complexities had also prepared a note for the EGoM in which he mentioned that the acceptance of RIL's demand to increase the gas price to US$14.2 would mean an additional profit of Rs 43,000 crore to Reliance in two years at current levels of low production. A man of such low understanding needed to be replaced, didn’t he?

The complexities of the entire issue are compelling. And only eminent economists like Manmohan Singh or people of eminent economic status like Mukesh Ambani are deemed to have a complete understanding of it. While the former presumptuously kept bending, the latter presumably had a gas of time. But travesty again that nobody understands.      

 

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