‘A fine tribute to a class of journalists lucky to be around at the right time’ — British Journalism Review

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One of the most frequently visited posts on this blog has been something that I wrote in September last year on Foreign Correspondent:  Fifty Years of Reporting South Asia, an anthology of more than 50 years of articles by members of the Foreign Correspondents’ Club of South Asia, where I was then the president, to mark the club’s 50th anniversary.

Amazingly, the post has drawn Riding the Elephant’s third highest number of direct hits (around 2,250),  after Nehru Was Lost For Years In A Trunk  (nearly 3,000) and Tina Ambani Pays Record $25m At Christie’s Indian Art Auction (almost 2,500) .
 
That’s a long-winded way of getting round to say that an updated edition of the anthology is now available in paperback (Rs450*).

It’s a unique round-up of India’s past 50 or 60 years of history, as seen by foreign correspondents through the years – selected by three of us who are current correspondents on the basis of being interesting, well written and informative reportage that provides a broad sweep of the sub continent’s history.

‘The book left me wanting more’ – Mint

We have added four articles to the hardback edition’s total of about 80. They deal with events in Sri Lanka and Pakistan, and the terrorist attacks on Mumbai a year ago, plus the assassination of prime minister Indira Gandhi in 1984 that we didn’t find in time last year.

It is sadly significant that the articles deal with South Asia’s increasingly serious security worries.

The article on the Mumbai terrorist attacks was written by a team of Wall Street Journal reporters led by Peter Wonacott and Matthew Rosenberg, graphically describing the horrific events. The good news is that there has not, so far at least, been a repeat of such an attack In India, and that the horror triggered the appointment of Palaniappan Chidambaram as India’s home minister – the first effective politician to hold the post for most of this decade.

The continuing decay of Pakistan was reported by James Astill of The Economist in February this year, when Richard Holbrooke, America’s not-very-successful (as is now apparent) special emissary to Pakistan and Afghanistan began to investigate the region’s problems. It is now becoming clear that Holbrooke is not the man for the job as Pakistan slides into deeper crisis, which is leaving a vacuum in Washington.

The last article in the book, by Emily Wax of the Washington Post, reported in May this year on the defeat of Tamil Tiger separatist-driven terrorists in Sri Lanka – and the dismal failure of the country’s Sinhalese-dominated government to pave the way for a permanent peace on the island.

This is a gloomy ending for our anthology, but it underlines the increasing risks and threats that the region faces alongside India’s growing economic success.

* The book is being published by Penguin India only in the Indian subcontinent, but some copies are emerging on international book-buying sites that will send anywhere in the world – to find them, search the title on Google.

Twice in the past week or so Manmohan Singh, India’s prime minister, has alluded to the poor state of governance in India’s states. In between those speeches, events in Karnataka, Jharkhand and Andhra Pradesh have graphically demonstrated how massive corruption and links between regional politicians and businessmen are turning state governments into gravy trains fuelled by extortion and fraud.

Coincidentally, they mostly have connections with iron ore and other mining licences and contracts that involve some of the most widespread corruption in the country. This is happening in areas where Naxalite rebels are gaining ground as the livelihoods of local tribals and other poor communities are disrupted. This points to the way that state government corruption is exacerbating India’s most threatening social issue and its most serious internal security problem.

“Sitting here in Delhi we can endlessly debate the qualities of national leadership,” the prime minister told the Hindustan Times Leadership Summit ten days ago. “But real change in India will come when we get the right kind of state level and local leadership – a forward-looking, modern and compassionate leadership that strengthens the foundations of our great Republic. The focus of the debate on leadership for building a new India should, therefore, shift to the States.”

Yesterday, at a World Economic Forum conference in Delhi, he repeated that there was “inadequate appreciation of the need to reform (governance) processes at state and local level”.

Just look at what has been happening in various states to see how far leadership is from what the prime minister rightly says India needs. There is of course widespread corruption in India’s national government, but it is not so pervasive as in some states.

Karnataka

In Karnataka, where India’s showcase IT city of Bangalore is the capital, two businessmen known as the “Bellary mining brothers” have caused a political crisis, now temporarily patched up, by undermining the power of the Bharatiya Janata Party-led state government’s chief minister. They have been trying to install ministers and top bureaucrats who favour their businesses.

In the past few years, Janardhan Reddy and Karunakar Reddy have become politically active and rich from businesses in and around the state’s Bellary mining town. They have direct links with national BJP politicians, especially Sushma Swaraj, who is a candidate to lead the party and become a potential prime minister in the future. Their riches are illustrated by a report that they have presented a Rs45 crore ($9m) diamond encrusted gold crown to a temple.  

Andhra Pradesh

The brothers have also had business links with Jaganmohan Reddy, son of Y.S.Rajasekhara Reddy (YSR), the chief minister of the neighbouring state of Andhra Pradesh, who was killed in a helicopter crash two months ago. The two families are not directly related (one is Hindu and the other Christian), but they come from a clan that dominates politics and business in the region. The joint businesses are reported to include large tracts of land and a steelworks. 

Since YSR’s death, his son has been trying to become chief minister of the state’s Congress-led government. Jaganmohan has had heavy backing from local businessmen who struck deals with his father and want to maintain their power over the state government. This is being resisted by the Congress’s national leadership, but the pressure has been relentless.

Jharkhand

In Jharkhand, one of India’s poorest and worst-governed states (hived off from Bihar in 2000), Madhu Korda, a former chief minister, has been arrested for alleged corruption ranging between $400m and $800m. This story illustrates the scale of money available in the states, especially from mining.

Born in a remote village, Korda was working as a labourer in iron ore mines and the metal trade till 15 years ago when he entered state politics. He became a state assembly member and minister in 2000, and in 2006 engineered a political crisis that brought down the state government and made him chief minister of a coalition for the next two years. Earlier this year he became an MP.

Assets that Korda amassed along with associates in those 15 years are reported to total some $375m and include mines in Liberia, South Africa and Thailand as well as India, plus bullion companies in Mumbai, a planned special economic zone near Delhi, many properties around India, and large-scale money laundering through Dubai and elsewhere abroad.

Much of his wealth came when he was mines minister from 2000, which opened the way for widespread extortion and bribes in what is one of the world’s most mineral-rich areas. One controversial project on which he is believed to have been paid well involved the Chiria mines that four private sector companies – Arcelor Mittal, Jindal Steel, Essar Steel and Tata Steel – wanted to wean away from government owned SAIL.

One report said he charged up to $400,000 to $4m (Rs2-20 crore) for signing a mining memorandum of understanding between the Jharkhand government and companies, and $6m-$16m (Rs30-80 crore) for recommending mining leases. Also similar amounts as “speed money”. 

That is in addition to daily collections through the region’s well known coal mafia on all loads travelling out of the area’s public sector mines that are reported to feed $3m (Rs14 crore) a month to the state’s chief minister.

When Korda became chief minister, Aditi Phadnis, a political reporter, wrote in India’s Business Standard newspaper that the state was “sitting on a volcano of left wing (Naxalite) extremism, pluralistic politics and enormous riches on account of natural resources”. She added that “efforts are now on to rig up an architecture that will restrain him from further damaging Jharkhand’s institutional structure”.

Whatever that “architecture” was, it didn’t work. The Naxalite threat has escalated, crime and lawlessness has increased, and Korda built on the riches he had gained while mines minister.

Tamil Nadu

My final example concerns the continuing story that I first reported in a post a year ago headed “India’s telecom minister ‘should be fired’ for a company’s 700% profits”. The minister is A. Raja, from Tamil Nadu, who last year allotted lucrative telecom licences to real estate companies that had befriended him when he was earlier environment minister – without tenders and at low prices valid four to seven years earlier. He belongs to the regional DMK party which is an important ally in India’s Congress-led government and he bluntly rejected appeals last year from Manmohan Singh to correct his ways.

In recent weeks the story has resurfaced, with calls for Raja to be dismissed as telecom minister – a job that Manmohan Singh reluctantly gave him for a second term after May’s general election.

When Pranab Mukherjee, India’s veteran finance minister, was asked about the case at the Hindustan Times conference, he obfuscated and said that “allegation of corruption does not mean that it is a proof of corruption” – which led to quiet sniggers in the conference hall.

What hope does Manmohan Singh have of getting his “the right kind of state level and local leadership” !

Mrs Gandhi electioneering in 1971

An era had ended. One of India’s most notable politicians and strongest leaders was dead, shot by her Sikh security guards, leaving a legacy that will long be debated but is generally regarded more negatively than positively.

Mrs Gandhi increased socialist economic controls started by her father Jawaharlal Nehru, and opened the doors to widespread corruption that leading politicians and bureaucrats now routinely practice day by day by.

She also sowed the seeds for both her own death and that of her son, Rajiv Gandhi, by encouraging a militant Sikh leader in Punjab and separatist Tamil activity in Sri Lanka. She also increased separatist sentiments in Kashmir.

If Nehru was greater than his deeds, as many people say, Indira was not as great as she should have been, and her deeds were more damaging than she probably intended.

Nehru’s controversial post-independence policies of economic centralism and peaceful relations with China are now generally regarded as well-meaning but misguided. Mrs Gandhi’s mistakes however are generally seen less charitably as the actions of an insecure woman, desperate to build power and relying too much on her malevolent power-hungry younger son, Sanjay Gandhi, who encouraged her to declare a two-year State of Emergency in 1975.

Strangely, Mrs Gandhi is seen more favourably abroad as a great though flawed leader who did her best to manage a massive poverty-stricken fractured country.

It is easy to catalogue her failings and the damage that she did to the country that she undoubtedly loved. Maybe she did not realise the long-term impact of actions that she took for short-term political reasons – more often than not stemming from her paranoia and concern about her power base.

But there was more to her than that. She tried more than any government before or since to protect India’s environment, which has been progressively plundered since independence in 1947, most recently by a series of corrupt environment ministers (until the current minister, Jairam Ramesh, was appointed in May).

A picture on the BBC website today captioned “Indira Gandhi remains very popular among many Indians”

She is also remembered for strengthening the confidence of Indian women, and for her ability to reach out to people and to care – a gift that her daughter-in-law Sonia Gandhi, and her grandchildren Rahul and Priyanka, now display.

In her final years, she started tentative reforms to open up the economy and unravel the central controls that Nehru and she had put in place. These reforms were continued hesitatingly by Rajiv, who succeeded her as prime minister and was killed in 1991, and then by the 1991-96 Congress government led by Narasimha Rao (with Manmohan Singh as finance minister), and by subsequent administrations.

She also initiated (after a disastrous false start by Sanjay Gandhi) a very successful small car joint venture, Maruti, with Suzuki of Japan, which triggered a gradual modernisation of India’s engineering industry that is paying dividends now with the country’s internationally competitive auto companies.

Her legacy also lives on in other ways, 25 years after her assassination.

Internal and regional problems of the sort that Mrs Gandhi dabbled in for short-term political gain have expanded enormously and, judging by recent Naxalite developments in West Bengal, some politicians still play her dangerous game of trying to capitalise on the ambitions of rebel movements.

In foreign relations, India has moved on from its reliance on the old Soviet Union, which Mrs Gandhi described as a friend that had never let the country down. As was illustrated by a speech made in Delhi this morning by former president George W.Bush, India now straddles wider international relationships, especially with the US that has recognised its nuclear weapon status. Speaking at a Hindustan Times conference, Bush described that agreement, perhaps a little euphorically, as India’s “passport to the world”.

But India’s regional relationships have not grown out of the hegemony practised by Mrs Gandhi in South Asia. Here it is being outgunned by China, which is exacerbating border disputes between the two countries and raising the spectre of a short border war in 1962 that India lost.

Finally, the Nehru-Gandhi dynasty is firmly entrenched – a fact that was reflected in the vast number of large sycophantic advertisements placed in newspapers today by government ministries to mark the anniversary.

Sonia Gandhi controls both the Congress Party and the current government, and Rahul is preparing to take over. Such dynastic succession brings a form of political stability to India’s turbulent and fractured politics, but it also blocks the emergence of other leaders at the top.

Even worse, it has now spawned a cascade of dynasties across the country involving families that rarely have the Nehru-Gandhi family’s sense of service, but instead are primarily interested in maintaining wealth that comes from prestige, patronage and corruption.

This dynastic surge is partly both the cause and effect of a sharp decline in the standards of Indian politics that began in Mrs Gandhi’s time. Standards  have worsened enormously in recent years as personal greed has replaced politicians’ concern for the country – especially in regional parties, whose role expanded dramatically after the 1980s as Congress declined.

My headline is not a comment on India in general, though it could be because of all the disasters and shortcomings that this amazing country does little to correct. It’s actually a comment on the country’s very successful “Incredible India” tourism advertising campaign, which has been running internationally for several years and has lulled the government and others into believing that Indian tourism really is growing successfully.

But it isn’t, despite the advertising campaign. I can remember the government talking about achieving 6m foreign tourist arrivals more than a decade ago yet, incredibly, they only grew from 2.2m in 1995 to 4.5m in 2006 and then to 5.1m last year – and a huge proportion of those arrivals are businessmen and overseas Indians visiting home, so are not genuine tourists.

When Raymond Bickson, managing director of the Taj hotels chain, presented these figures at a World Travel & Tourism Council conference in Delhi yesterday, he added dramatic rises to 10m in 2011, and 18m in 2016. Next year of course the Commonwealth Games planned in Delhi will inevitably boost the figures, generating more false self-congratulation, but who can seriously think the total will more than double by 2011 – unless of course slow preparations for the Games means that they are postponed for a year.

For a country of India’s size, with its massive potential for different types of tourism ranging from visiting old monuments to climbing maintains, these statistics are awful, especially when compared with China, which went from 20m foreign tourists in 1995 to 53m in 2008, , according to figures provided by Bickson. Singapore similarly rose from 6m to 10.1m while Mexico, Turkey and Ukraine had around had 22m-25m last year.

As Suhel Seth, a branding specialist, pointed out at the conference, India’s basic problem is that “tourism is seen as an elitist industry by those in power, not an employment and revenue generator”.

That indeed has been the problem for decades, but there are also other reasons – not least that the big tourism companies, especially hotel chains, are far happier building  splendid up-market hotels for the big-spending elite, than in tackling the lower end of the market. That is now beginning to change, not least with low-end Taj group hotels, but not enough to broaden the base of foreign tourist arrivals.

Then there is the biggest tourism deterrence – aviation – with mostly lousy airports and late flights. Sadly, but perhaps unsurprisingly, Praful Patel, the aviation minister, who should have been at yesterday’s conference, cancelled at the last minute -  presumably he was involved in post-assembly election manouvrings for his Maharashtra-based political party, the NCP.

If he had been there, he would have heard Bickson complain about the absence of a comprehensive civil aviation policy, about tough norms for granting international flight licenses, a ban on foreign airlines investing in the Indian airlines, the high cost of aviation turbine fuel, and inefficient airport infrastructure including a lack of aircraft hangars, hotels, and cargo facilities

But even worse than Patel’s cancellation was that of Kumari Selja, the minister for tourism, who also failed at attend. If she had been there, she would heave heard what are by now ancient calls for tourism to be given the status of an industry and improved infrastructure, for visas to be issued to visitors on arrival, and for a crisis management system on natural calamities and terrorism, plus other initiatives.

Kamal Nath, minister for highways, did turn up and usefully suggested setting up of a cabinet committee on tourism to co-ordinate policies and action between various ministries and departments. He also offered to improve road links to designated tourist spots. Jyotiraditya Scindia, minister of state for commerce, reiterated that tourism was a big employment generator and pointed out that unlike other sectors, for every single direct job it created, eight indirect jobs were created.

The conference was titled Energizing the Future, but I didn’t detect much energy, nor sign that India’s lamentable tourism record is about to change.

That is a pity because the Incredible India campaign generated interest and praise around the world after it was launched in 2002 by a team led by Amitabh Kant, a tourism ministry joint secretary. Kant had earlier been responsible for turning the state of Kerala into a leading international tourist destination, and he has written about his work in Branding India – An Incredible Story  that was published a few months ago.

But branding is not enough – widespread government action is required, and there is no sign of that.

“We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all”

This astonishing remark was made today in London (where I’m visiting) by Lord (Brian) Griffiths, vice chairman of Goldman Sachs International. He was defending massive bonuses in financial services that are estimated to be exceeding £6bn this winter in Britain, despite the recent international banking collapse and government-funded rescues.

Maybe the statement’s not surprising, coming from Goldman Sachs which has just produced massive profits of $3.2bn in the third quarter of the current year, and is reported to be on track to pay its 31,700 employees salaries nearing an astonishing $700,000 average this year.

But Griffiths has a wider brief than just making money, or so it would seem, because he is also chairman of Christian Responsibility in Public Affairs, as well as the Archbishop of Canterbury’s Lambeth Fund. So he’s a leading figure in the Church of England as well as a banker. Less surprisingly, he was also once a top adviser to Margaret Thatcher, one of Britain’s most socially uncaring prime ministers.

But is it Christian to defend inequality in Griffiths’ terms? Do the large cheques received by him and his colleagues and other bankers really create wealth And, in any case, is it acceptable in any religion, stated as blatantly as this?  Surely it is it even more indefensible when the gaps in wealth are as huge as they are now between financial services and other equally stressful but often more productive occupations.

Stephen Green, Chairman of HSBC and a Church of England priest, has shown more Christian consciousness. He has said banks owe what he called the “real world” an apology for the past year’s crisis. Banks, he said recently, need to “learn the lessons” related to “governance and ethics and culture within the industry” – and that included the way that banks award and control bonuses.

Even in India, international banks have been paying relatively astronomic salaries in recent years to people ranging from top executives to new recruits from management colleges. Top Indian businessmen have been debating salary levels, having been urged by prime minister Manmohan Singh to curb them at the top.

But only one, Mukesh Ambani of Reliance International (RIL), has volunteered to cut his salary – by 66% to $3.2m (in 2008-09) which itself is astronomic for India and totally unnecessary in terms of giving enough headroom for his top executives to be well rewarded. And his gesture was probably just that, aimed at polishing his image.

Of course, it is inevitable that any push for economic growth will create riches for some while leaving others behind. That has been increasingly evident in India since the 1991 economic reforms boosted unequal growth. The social price of this growth are vastly widening the gaps that are developing between the rich and the poor and that are beginning to show up in violent social and political rifts across South Asia.

One would not of course wish the Naxalites on Griffiths and his colleagues, but his arrogant remarks today in London surely deserve to be dammed internationally.

“For Delhi, every day is pivotal and every hour is vital”

Living in India as a reporter for a total of nearly 20 years, I have always been curious about why problems are left to fester till they escalate into crises instead of being tackled before they do serious damage, and why everyone assumes that, to use an English theatre expression, “it’ll be alright on the night”.

Current events make this not just an academic question that can be left, like the problems, for another day, or month, or year, but one of immediate importance.

Inefficiency, lethargy and corruption have come to haunt the country and dominate the news this week on two quite different issues– the alarming spread of Naxalite violence (right), and the inadequate preparations for the Commonwealth Games that are to be staged in Delhi a year from now. That’s leaving aside, for a moment, India’s appallingly inadequate defence readiness in Arunachal Pradesh and elsewhere on its north-eastern borders with China where tensions are rising.

Talkatora Stadium, one of the Delhi games venues

“For Delhi, every day is pivotal and every hour is vital,” Mike Fennell, the Olympic Games Federation’s president said in Delhi yesterday at the end of a week’s visit to the capital that exposed serious delays on both construction projects and operational systems. And so it is across a whole raft of issues that require action.

Palaniappan Chidambaram, the home minister, has been issuing that message to States increasingly besieged in recent weeks by Naxalite rebels, but his strong warnings about the need for immediate action have been diluted by a pathetic debate about whether or not the primary focus should be on economic development in Naxalite areas (of course it should, long term), and whether the Indian Air Force should fire on rebels in self defence (obviously, what else should it do!).

The armed forces have been issuing Fennel’s warning in different words to the Defence Ministry for years to accelerate orders for urgently needed new equipment ranging from guns to helicopters and training jets that are mired in bureaucratic inertia, corruption, and the manipulations of competing suppliers that trip up each other’s potential orders. (The same applies to equipment needed for internal security such as tackling the Naxalites). How Pakistan and China must enjoy watching the self-inflicted  damage that India does through all this to its own war readiness – could those two countries themselves do more damage in a border war?

That all is not well with preparations for the Commonwealth Games has been apparent for months. There are various reasons for this, but they basically come down to political and bureaucratic inefficiency that frequently stems from individual ambitions to gain in terms of personal patronage and financial gain rather than to get a job done.

Well-founded gossip about massive extortion on every games contract has been swirling around Delhi, and about how that extortion is not just making those involved richer but is also disrupting progress on contracts and on the hiring of much needed foreign help (a point made by the Olympic committee in the past week).

Sometimes the lack of action on potential crises is intentional, stemming from a belief that some blood-letting is needed before a major issue can be tackled. I first came across this when I was part of a Financial Times interview with Indira Gandhi, then the prime minister, shortly after 6,000 people had been killed in riots in Assam. We asked Mrs Gandhi why she had not acted earlier to stem the killings, and she replied that one had to let such events take their own course before stepping in.

I remember how horrified I was by her answer, though I now understand (but don’t accept) the logic. The same probably applied in a slightly different way to the Khalistan movement in then Punjab that she allowed to escalate into a crisis that led to her putting troops into Amritsar Golden Temple, and later to her assassination.

Then there are the Naxalites, who have been threatening areas of India since they started as a peasant revolt in West Bengal 40 years ago. The government assumed they would slowly fade away or, at worst, remain virtually out of sight in remote forested tribal areas where they have operated since the 1960s.

Three months ago, on this blog, I asked “What must Naxalites do to rate as a real threat to India?” I wondered whether Delhi was in denial about the approaching crisis, along with the rest of the world, because the Naxalites had not assassinated a top leader.

Since then the rebel atrocities have escalated, and it is now clear that they intend to threaten urban centres in the coming years, not just where the tribal forests. They are already active in more than 223 of India’s 600-plus districts (see map) across 20 states. Between January and August, they were involved in more than 1,400 violent incidents, and the killing of nearly 600 civilians, according to official records.

In the past few days, widespread attacks have included killing 17 police, blowing up mobile phone towers and stretches of railway tracks and disrupting power supplies, not just in their home areas of Bihar, Jharkhand and West Bengal in eastern India, but in Maharashtra on the borders of the west.

So why is it that India waits for crises before acting? Maybe the country is just too big and complex, its borders too long, and its peoples too varied for any government to govern effectively. Maybe centuries of repressive foreign occupation, plus the debilitating shortages of 45 years of economic controls after independence, have bred an acceptance of things as they are.

That of course does not fit with the new international image that India has of itself as a big (almost super) economic and diplomatic power. Sadly that image is not sustainable. China’s recent 60th anniversary celebrations show the gap between the two countries, as does a comparison of last year’s Olympic Games in China with India’s stumbling towards next year’s events.

UPDATED INTRO SEPT 28:    What a disastrous start for Arvind Jadhav, the new chairman and managing director of Air India, who has firm ideas of what he wants to do to turn round the country’s financially destitute national airline. a senior member of India’s civil service, he’s been in charge since May and last week announced productivity pay cuts of 25-50%, starting last month, for top pilots and management personnel.

That brought pilots out on strike-oriented “sick leave” over the weekend, stopped flights,  and led the management immediately to set up a committed to re-examine the decision.

This does not bode well for Jadhav’s new regime. The AI board should have foreseen trouble when it reach its decision on the cuts on September 23 and should have approached the cuts more cautiously.

Brashly announcing tough decisions and then having to retract them is bad management – and smacks of the weak Indian governments a few years ago where ministers of finance would allow opponents to hack away at their annual Budgets within days of announcing them!

Arvind Jadhav

I spent an hour with Mr Jadhav a few days ago, following my recent post on how Praful Patel, India’s aviation minister since 2004, failed to implement change after he nominally merged Air India with Indian Airlines last year into the National Aviation Company of India (NACIL) and an airline called Air India.

Jadhav’s job is to pick up the pieces with a three-year $1bn rescue plan. He wants to:

-   Hive off by next March more than half the airline’s operations into four separate engineering, ground handling, cargo, and training NACIL subsidiaries that will take 18,000 to 20,000 of the 32,000 current employees and do contract work for other airlines as well as for AI, thus cutting costs and increasing revenues.

-   Cut out unprofitable routes – maybe 20% of the total 246 – and build customer loyalty by boosting flight frequency on routes that make money.

-   Restructure flight schedules and ease airport transfers through the main hubs of Delhi and Mumbai so that both domestic and international travellers want to use the airline, especially at peak times.

-   Retrench staff, and restructure salary levels which, says Jadhav, are currently 20% to 200% above general market levels, and cut and change productivity payments (this has already started with 25%-50% cuts announced on September 23 -  and now challenged – for pilots and other senior staff) so that they reward achievement not just hours worked.

-   Move towards a lower-price airline, with some single-class aircraft, once costs have been cut – and complete the actual merging of operations (which has scarcely begun) so that it AI works as one, not two, airlines.

“If you want to sort out a problem, disaggregate it and tackle it at the first point where it occurs,” says Jadhav. Then “monitor and incentivise on the right parameters”, and question teams that regularly fail to meet targets. He gives, as an example, how he has tightened up timings for closing passenger check-ins and shutting aircraft doors so that flights are ready to leave terminals for departures on time.

In a Business World interview, which I mentioned in my earlier post, Jadhav mentioned how 750 business class meals used to be ordered for flights from Delhi when there were only 400 travellers – and that “no-one knows” where the other 350-400 meals went. The answer of course, is that they were presumably eaten or taken away by staff. Jadhav says the meals provided have now been cut to 2% above seat bookings, but the staff “are not very happy about it”. I asked if there were many other examples of unaccounted expenditure – “you bet……everywhere – it requires tight monitoring”, came the answer.

This all means overcoming massive staff resentment and lethargy. “There’s opposition from NACIL employees because they think the merger was not the right thing to do,” says Jadhav. That opposition is stronger – as many commentators said it would be– from old Indian Airlines employees, who resented being subsumed into Air India that was in a far worse state.

As Jadhav said in the Business World interview, “had this merger not happened, Air India would have died” – and he didn’t mean the newly merged entity, he meant the old elite and doomed international player that few travellers wanted to fly.

Old Air India dominates

So in addition to inevitable resistance to change, job shedding and salary cuts, there is a culture problem that stems from the old badly run Air India regarding itself as superior to the more efficient Indian Airlines, and having its name used after the merger. On the airline’s website there’s a page called the Air India Brand, which lists all the former chairman of the old Air India. Nearby are other details such as aircraft flown down the years. No-where is the history of Indian Airlines similarly recorded, and an Indian Airlines webpage morphs itself into AI. If I was an Indian Airlines executive, I’d resist being subsumed by such a merger implemented at the insensitive diktat of Patel’s aviation ministry.

The plan to hive off the engineering operations into a separate revenue-earning subsidiary, which will have joint ventures with Boeing and Airbus, illustrates the potential that Jadhav sees to cut losses. Currently there are 7,500 engineering and other technical personnel in maintenance teams for each of the combined airline’s eleven aircraft types. This costs Rs2,000 crore (approx $400m) a year, including a Rs750 crore ($150m) wage bill, but is only servicing about 100 or so aircraft, even though it could do 200. Servicing 100 aircraft from other Indian carriers that currently send their fleets to high-cost operators in South East Asia, the Gulf and Europe for major overhauls could, Jadhav hopes, save half the wage bill and bring in Rs1,500 crore ($3.75m) annual revenue.

This, and the other hiving-off plans, were put to staff and unions two months ago. “They see the advantages,” says Jadhav. He believes there is a will to survive inside the airline. “I’m saying ‘do you have a choice?’ They agree there is no choice but are not agreeing to the size of the (productivity) cuts because they are not yet confident the government will support them”

The airline is hunting for a chief operating officer – but with what seems to be to be a rather forbidding advertisement that doesn’t give the impression of a constructive environment. And is not being backed up by an executive search firm, which surely is essential for such a challenging job.

Many of Jadhav’s ideas have of course been aired before, and drip-fed as sound bites by Patel to a largely unquestioning media. Now Jadhav is determined to implement them. He seemed, in my hour with him, to mix sufficient charm, toughness and analytical logic to know what he wants to do and to have a chance of seeing it through.

His career in the Indian Administrative Service has been based in the state of Karnataka, where he was principal secretary in charge of sorting out Bangalore’s creaking infrastructure among other things for a year before joining AI. Aged 53, he was previously chief vigilance officer at GAIL, the government’s successful gas corporation, which gave him experience of how public corporations operate, and before that spent several years in the power ministry. In the mid-1990s, he ran a state minerals company in Karnataka.

Past airline chairmen have of course been just as able, but have been tripped up by self-serving motivations of the aviation establishment, as well as internal intransigence and opposition. Unlike many of his predecessor however, Jadhav has not spent years dealing with aviation, so brings a fresh mind uncluttered with close-knit egos, loyalties and favours that need servicing.

There’s an added advantage that monitoring is no longer under Patel and his ministry, but a broader-based committee chaired by the cabinet secretary.

Incidentally, the AI website calls the airline “India’s finest flying Ambassador”, which of course is rubbish. Private sector Jet Airways deserves that title, with Kingfisher Airlines as a runner up. Jadhav’s job is to win back the title.

In Britain it’s known as the ”silly season”, when large numbers of news-makers are on holiday and the media follows silly and often embarrassing stories of little importance. I’ve never heard the phrase used here in India, but it’s certainly been the silly season for the last week or two, with a media feeding frenzy focusing on a twittish tweet by a over self-confident and inexperienced ministerial tweeter, and on a load of false economies foisted on unwilling ministers by Pranab Mukherjee, the finance minister, and the ruling Gandhi dynasty.

Let’s deal with the tweets first. When author Shashi Tharoor (below), the United Nation’s communications chief, failed to get himself promoted last year to the secretary general’s job, he retreated to India and his long-forgotten home state of Kerala where he successfully became an MP in April’s general election. Even though he had absolutely no experience of Indian politics, he was immediately made a minister of state in the Ministry of External Affairs and became a much publicised tweeter, telling his followers – there are now 197,778 of them (click here) – his frequently irreverent thoughts.

His ministerial bungalow was not ready when he was appointed in May, so he stayed in Delhi’s upmarket Taj Mahal hotel while, coincidentally, the new foreign minister S.M.Krishna, stayed for the same reason in a suite in the even more expensive ITC Maurya ($400-$2,000 walk-in rates for suites).

Two weeks ago, Mukherjee suggested – and announced he had done so – that they should move out of their hotels, even though they said they were paying for themselves (presumably with hefty discounts). They both did move, Tharoor into a no doubt very comfortable Indian Navy guest house, after protesting he had needed the Taj for its “gym and some privacy”.

Mukherjee then lectured the cabinet on austerity economies that ministers should introduce at a time when many parts of India are suffering a serious drought. There are precedents for governments calling for austerity measures during earlier droughts, and Mukherjee – presumably backed by Sonia Gandhi who heads the Congress Party – may have been trying to assert the sort of central authority that former prime minister Indira Gandhi, Sonia’s mother-in-law, used to exert years ago.

That leads me to a thought that perhaps the most significant – and under-reported – point to have arisen from all this is the authority that Mukherjee has over his fellow-ministers. He spoke, and his colleagues fell in line, some quietly and others after complaining a little. He has for years been regarded as the government’s leading politician and problem-solver, and he now seems to carry more personal clout than Manmohan Singh, the prime minister, whose edicts are always on target but rarely lead to action.

Mukherjee got some grumblings – Sharad Pawar, the agriculture minister,  is reported to have initially said he was too large to fit into an economy seat. But Ministers quickly scuttled to airlines’ economy class or switched to trains, and flew abroad on regular flights instead of taking government planes. Sonia Gandhi and her son Rahul, who is a general secretary in the party, did so too – Rahul to a train that was stoned by some youths and generated additional expenditure on special security protection.

Cattle-class and holy cows

The irrepressible Tharoor however couldn’t resist replying, when asked by a tweeter how he was travelling, “in cattle-class out of solidarity with all our holy cows”.

Well, cows are regarded as holy in India but that does not mean people like to be told they travel cattle-class, and uproar broke out with sanctimonious allegations that his remarks were “not in tune with the party (Congress) culture”. It looked as though he might have to resign – I reckon he should have offered to do so, but maybe he feared it would be accepted and he’d be jobless again. Anyway, the row now seems to have blown over, and he’s been tweeting responsibly from Liberia, where he has been on an official visit.

But the economies are false, as was a suggestion by Sonia Gandhi last month that party MPs and officials should donate 20% of their salaries to drought-relief. It made a good headline, and some donations may have been made, but most will surely have been recouped in the way that public figures usually supplement their incomes.

Ministers are used to demanding luxuries in their offices – ranging from Spanish tiles and Italian porcelain to wooden panelling and other adornments – and an (inexplicable) toilet demanded by a lady minister “on the back side of her seat” in keeping with Vaastu (Indian feng shui) . (Sounds like a colonial hangover – click here for British MPs expecting to have their little luxuries – including moats round their houses – paid for).

This morning the Indian Express is reporting that the prime minister has told government departments to stop requiring corporations they control to provide freebies that range from cars, air fares and hotels to mobile phones and laptop computers.  This is something that ministers and bureaucrats have done for years, tapping corporations for personal and family luxuries as well as work-related items.

The prime minister is again on target with a sensible idea, but he has apparently been trying to enforce this since May and has only just got cabinet secretariat support. Let’s see what happens – and how long it all lasts.

At last it looks as if the government might be making a genuine effort to sort out the problems of its ailing Air India airline. A rescue plan is being finalised by ministers involving Rs5,000 crore ($1bn-plus) new equity that would be paid in tranches over three years.

“This is a fundamental call (to Air India) that there must be a turnaround or the government is not going to support you – it is not a carte blanche,” Praful Patel, India’s aviation minister, told me a few days ago. The airline must, he said, cut costs and increase revenue or it would not get the rescue package that will probably be paid in tranches over three years.

How many times have we heard that before! Is Patel crying “wolf” or is it for real? I should maybe have written “surely not again”, instead of be “at last”, in the first paragraph because there have been many failed rescue attempts over more than 20 years. I remember Ratan Tata and Rahul Bajaj (who head broadly successful business groups bearing their name), being put in charge of what were then two airlines in the 1980s by an over-optimistic Rajiv Gandhi, then the prime minister.

There have been odd spurts of success since then, but now there are heavy losses – Rs5,000 crore ($1bn-plus) in the year to last March, and a similar figure is expected for this year unless savings are made. Patel has said he’d like to sell the airline, but has been told by the government to keep it flying.

aviation minister Praful Patel and Arvind Jadhav of AI (Business Standard graphic)

Air India is notionally India’s national carrier, but its real role for decades has been to line the pockets and make life comfortable for those directly involved in its affairs – from ministers and bureaucrats, who get kickbacks on aircraft and other orders and benefit from freebies and powers of patronage, to top executives, pilots and other staff who often don’t work but do block change.

If the airline also carries non-government passengers, that is a bonus for India, but it is not the real reason that those in charge want it to continue flying.

There has been little progress in the past four years or so, except for a flawed and incomplete merger of the old Indian Airlines national and regional carrier and the international Air India under a new National Aviation Company of India (NACIL).

Patel painted the merger two years ago as the solution for the two airlines’ problems, but total losses since it was implemented have rocketed to Rs7,000 crore. He’s  been aviation minister since 2004, and I’ve been blunt, some might say unkind, about his record in the past on this blog – see Bed and Bhai Runs Indian Aviation and (on ministerial jobs after the recent general election) , so I went to see him last week. I thought I should hear his views about why the merger has been such a failure, and what can be done now.

“The people in the system have worked to defeat the merger – the unions and directors and levels of management,” Patel told me. There were “vested interests in the unions and the management – up to general managers and executive directors”.

Patel is the most urbane and unflappable of India’s ministers, and is also a wealthy businessman. He owns one of India’s biggest bidi and tobacco derivative operations, based in his home state of Maharashtra where he packs political punch alongside Sharad Pawar, a veteran top politician who runs the National Congress Party and is agriculture minister. So he knows how to run things.

He is credited with reforming aviation by creating NACIL’s merged Air India, authorising its purchase of 111 aircraft, allowing foreign airlines massively increased access to Indian airports, rapidly increasing the number of domestic airlines and available seats, and pushing through the privatisation of Delhi and Mumbai airports.

Sadly the record of implementation is not so good. Air India has not really been merged, and it does not now (and some say never did) need 111 new aircraft to replace its ageing fleet, especially when it faces massively increased competition from the foreign airlines that Patel allowed in.

Most airports in the country are nowhere near ready to cope with the increased traffic that has been allowed. The airport privatisations were swamped in tendering controversies and ended up with real estate and land developers grabbing the franchises – and the construction of a glamorous but faulty new domestic terminal in Delhi, parts of whose roof blew off in a gale recently after earlier leaks.

Patel understandably makes the point that airlines all over the world are bleeding so neither Air India, nor he, should not be picked out for special blame. That is partly true, but those airlines that aren’t being forced to close by the world’s economic crisis are taking dramatic steps to cut costs and improve efficiency, whereas till now Air India has done virtually nothing, despite the merger. It is therefore fair to criticise Air India and the government for not implementing change.

For a start, I (like many other people) haven’t understand how Patel could imagine that merging two failures without changing the ownership or top management would achieve anything except compound failure. When I asked Patel about that two years ago at a Delhi conference, he dodged the question and said he was confident that there would be advantages 

He now admits that not enough has been done, and primarily blames the airline’s staff (as the quote above shows). He says that the government has not had the power to make things happen and claims that the government can only give “macro directions” – and that, indeed, is all that seems to have been done, though Patel could have used much more muscle if he had bothered or wanted to.

There have been some economies – cutting back on duplication of routes, manpower and assets, says Patel. But internal opposition has blocked merging the information technology systems and the airline still has two airline codes – IC and AI. Plans to halve a productivity bonus have also been opposed.

A new chairman and managing director was appointed in April last year but, as has happened many times before, he came from the Ministry of Civil Aviation so did not bring a fresh approach. He was removed after a year in the job and a new chairman and managing director, Arvind Jadhav, has been appointed.

Jadhav is also a bureaucrat but not from the aviation ministry, so can take a more independent fresh look at the problems. He is advertising internationally for a chief operating officer, hoping to hire someone who can transform this ailing airline.

But he has a huge task as he showed in an interview in India’s Business World weekly magazine last month, The Time For Talking Is Over, Jadhav where he spelt out the problems – here are some of them:

-   Air India has 32,000 employees compared with 12,000 “in any like-to-like company”.
-   Employees are not conscious of working for a business in crisis.
-   Pilots “sitting at home” are paid “80 hours of flying allowances”.
-   Despite a freeze on recruitment, “we have recruited”.
-  “There is a duplication of every activity and no single chain of command”.
-  “Revenues are 14,000 crore and costs are Rs19,000 crore” (approx $2.9bn and $3.9bn)
-  “We have 22 offline stations where we no longer fly”.
-  “We have an alarming number of aircraft (25) and engines (33) on standby”.
-   For 800 business class seats from Delhi, 750 meals are ordered but there are only 400 travellers – “no-one knows” where the other 350-400 go.

Is there any chance of such an array of problems being sorted? The government’s rescue package is based on six months of survival, with recovery starting in the next nine months, followed by profitability being achieved in the second half of the three years. Monitoring progress will be done not by Patel and his aviation ministry, but by a government committee chaired by the cabinet secretary.

I hope to meet Jadhav soon to discover how he plans to meet these targets – more on this blog then.