Shivakantjha.org - 'In a Nutshell' - 10: What I had witnessed with iron in my soul: FDI, the Enchantress of the neoliberal economy before whom all else should break and bend

'In a Nutshell' - 10

In the Vodafone Context

What I had witnessed with iron in my soul: FDI, the Enchantress of the neoliberal economy before whom all else should break and bend

By Shiva Kant Jha

April 7, 2012

I had witnessed with iron in my soul our Government’s craze for the FDI and portfolio investments. When I, as the Petitioner, was arguing in 2000 before the Delhi High Court (what on appeal before the Supreme Court became Azadi Bachao), he found the Solicitor General (Mr. H. Salve as he then was, now the eminent counsel for the Vodafone) all for FDI honing his logic to the point of not seeing any difference between an Indian citizen and a foreigner. The High Court rejected his plea, with a well-deserved curt judicial comment:

“So far as submission of the learned Solicitor General to the effect that Mauritius route may be taken recourse to for gaining benefit as is done by the industrialist setting up industries in M.P or some other place in the country where tax benefit are given re concerned, the same is stated to be rejected. ”

Our Government, it seemed, had forgotten that the Indians live to swim and sink with the lot of our country, and can never be its mere fair-weather friends.

Then came Azadi Bachao (2004) 10 SCC 1, where I, again as a Petitioner witnessed the same drama enacted. The Union of India appealed to the Supreme Court where, at the persuasion of Sri Arun Jaitley, Senior Advocate, ‘a tax haven’ company was allowed to become a co-appellant! It was amazing to see the learned friend (Mr. Salve) , who, as India’s Solicitor-General, had argued before the Delhi High Court, chose his role to become the chief Counsel for the tax haven company. The tax haven company and the Government of India was seen to sail in the same boat: crying for FDI. It was again agonizing to see that in Azadi Bachao, our Supreme Court uncritically adopted the ideas of an ‘interested’ person’s book by quoting three long paragraphs where the author had pleaded, in effect, everything is right if it helps the flow of foreign fund. Its author had been a partner of the infamous M/S Arthur Andersen for many years, and was an advisor to many tax haven companies. In my considered view it was this book which led the Court to observe ideas so apparently flawed as these:

“There are many principles in fiscal economy which, though at first blush might appear to be evil, are tolerated in a developing economy, in the interest of long-term development….”

In the three paragraphs of the books, quoted with approval from a book of that sort, paean was sang for FDI, more and more for FDI. Our country was counseled to be on the track of Madeira and Singapore.

I felt so bad that I wrote a letter to Shri Jaswant Singh, the Minister of Finance (during 2002-2004) in the BJP Government, bringing to his knowledge of the Government how things had unfolded themselves, and how that sort of pleading was misconceived. I had requested him to take appropriate actions: to consider whether some legislative change was worthwhile, or whether it was feasible to move the Supreme Court for a reconsideration of its decision in Azadi Bachao so that public revenue and public values were not jeopardized. In the penultimate paragraph of that letter, he had written to then Finance Minister:

“This letter is just pro bono publico in the interest of the common people of this country with per capita income just U.S. dollars 440 [when in Mauritius it is U.S. dollars 3,540]. We can forget only at our peril Gandhiji’s talisman: “ Recall the face of the poorest and weakest man whom you have seen and ask yourself if the step you contemplate is going to be of any use to him. Will he gain anything by it?”

But the Government took no action.

It is good and great that after a decade of that morbid event, our Government has decided to act, as evidenced by some of the Provisions in the Finance Bill now before Parliament, to undo the things which had gone wrong in the past. Let us see what happens: let us keep our fingers crossed. I would end this article with what I had written in my memoir On the Loom of Time:

“We must live to work with hope and dedication. Prof. Gould speaks of our ‘Tragic Optimism’ (The Encyclopaedia Britannica Year Book 1999). The expression is amply revealing. We have seen and suffered tragic experiences, but our commitment to ‘optimism’ is steadfast and unswerving. He quotes very aptly from John Playfair’s Outlines of Natural Philosophy (1814): “About such ultimate attainments, it would be unwise to be sanguine and unphilosophical to despair”.”

I hope we shall be able to say :'All's well that ends well'.