ashwanimahajan.com

Dr. Ashwani Mahajan

Recently Telecom Regulatory Authority of India (TRAI) claimed that the day is not far when you would be able to make a mobile call for ten paisa only. Reason told was increasing competition among telecom companies on the one hand and declining per unit cost on the other. According to telecom companies per connection revenue has also been declining very fast.

Its known to all that there are two kinds of mobile technologies used in India – one is CDMA and the other is GSM. Two technologies are different, so the companies using these two technologies have also been different. Mobile phone entered this country with GSM technology. Leading company using GSM technology is Sunil Bharati’s Airtel. Along with this another company which entered is this field was Essar, later known as Hutch and now Vodafone. This company maintains second position in GSM. Apart from these two, BSNL (Public sector), Aditya Birla’s Idea, BPL, Spice etc are some other companies providing mobile services on GSM technology. Its known to all that when mobile phone came in, tariff lends were very high at rupees 32 for outgoing and rupees 16 to incoming. Customer base kept on increasing fray more companies kept on entering in and call rate kept on falling. But till the time CDMA based companies didn’t enter into the as, customers had to pay very high call rates, thanks to monopoly of GSM companies. Thanks to the entry of Reliance at the first instance and Tata later, level of competition increased many fold and the result was drastic fall in call rates. At present nothing could the said about comparative call rates of different companies, as these companies offer different kinds of plans, which are not easily comparable. To raise their customer base, companies offer zero to ten paisa call within their own network. For roaming customers they offer low cost roaming plans, for youths they offer night talk plan, different plans for short messages (SMS), different types of packs for STD calls and many more plans to woo more customers. Despite all this, still GSM tariffs are still higher as compared to CDMA tariffs.

Never the less, thanks to increasing competition, mobile call rates declined and customers enjoyed more and better choices. Today a customer who wishes to own a phone, can get the same in minutes. Prior to advent of mobile companies, it used to take 8 to 15 years to get a phone connection. Today an ordinary workman can and is also affording a mobile phone. Today a mobile in the hand of a Plumber, Carpenter, Electrician, Autorikshaw driver is a common feature. At the time of independence there were two phones per ten thousand of population. At present by the end of 2007 there are about, about 3 phone connections per 10 persons. Data shores that by the end of 2007, available there were 28 crore 57 lakh telephone connections, out of which mobile phones were 24 crore 56 lakh.

As landline phones are connected through wires, mobile phones are wireless. Medium to send signals in mobile phones is ‘Spectrum’. This spectrum is available with Ministry of Defence. This ‘Spectrum’ is freed from defence activities and is made available to the mobile companies by way of a license. Overall ‘Spectrum’ in the country is limited. Even Prime Minister says, that spectrum is a limited resource, which must be used judiciously. In fact quantum of spectrum allocated to a company would decide the maximum number of connections/customers of the company. That is the size of the company is decided by the size of the spectrum held by the company.

There was a time when telecom sector was completely controlled as it was completely under public sector. Expected expansion of telecom services could not take place because of complete control. Lifting of controls on the one hand and technological development on the other, played a great role in the development of telecom services in the country. Recently a big controversy arose due to sale of spectrum by the government. To expand their services, 46 companies were in queue for allocation of spectrum. This queue was determined in accordance with the date of original license of these companies. In the meanwhile companies who have been using CDMA technology, now applied for GSM licence. Their argument was, that they already have mobile licence (though it was for CDMA technology). Department of Telecom, Government of India, accepting Their argument accorded the status of GSM licence to Reliance Communications and also offered spectrum as desired by the company for rupees 1651 crores. It may be noted that Reliance communications was ready with a Bank draft of rupees 1651 crores. Thus among 46 companies, who had made 575 applications, Reliance Communication jumped the queue and was allocated spectrum. Another company who got benefited was Tata. According to experts, government last rupees 6000 crores in the process. Had the government adopted auction route, it would have got rupees 6000 crores more. Recently US government’s auction of spectrum yielding more than 16 billion US $ have proved them right. Alongside started legal battles and also a war of words between Telecom Regulatory authority of India (TRAI) and Department of telecommunication, (DOT) Government of India.

It is clearly evident from the chronology of events that in this battle among mobile companies, the government has tried to give undue benefit to one set of companies. Other companies, especially smaller ones are the losers. But this game of losses and gains are not limited to companies only. Experience in the past clearly reveals that due to campetition among companies the biggest gainer in the consumer, whose call rate have declined from rupees 32 for outgoing and rupees 16 for incoming to 50 paisa to one rupee for outgoing and zero paisa for incoming. Government has a special responsibility to encourage equitable competition among companies to benefit the consumers. The way in which the government has allocated spectrum to one set of companies, by a sudden change in policy, is against this spirit. If the government refrain from lobbyism and adopt fair policy, dream of 10 paisa mobile call can actually be realized.
--------------------------------------------------------------------------------------------------------

WORLD NEEDS INDIA
It is a fact that today India is second fastest growing country of the world. But but our policy makers are still reeling under the psyche that India can develop only with the help of foreign investment or foreign help. We must not forget that we are a country which provides scientists to US for its scientific excellence, a country which is fast becoming a hub for medical tourism, a country which is a recognised nuclear power, a country with the largest youth population of the world, a country whose people have proved their intellegence, hard work and entrepreneurship par excellence wherever they have gone. This all indicate very clearly that nobody can stop India in becoming a super power. What we need is the confidence in ourselves.
After the disintegration of USSR, it was thought it is the rule of USA all over. But position is detoriating fast for US. Increasing budgetary deficit of US government, thanks to its extraordinary involvement in Iraq and other countries, erosion in its economic position due to detoriating competitive strength is leading to constantly depriciating dollar vis-a-vis other currencies. It is the time when India is showing a high rate of growth in its GDP. Exports especially of services are rising in leaps and bounds, our scientific community has established its supremacy in the so called developed countries. But those at the helm of the affairs in the government are still reeling under the psyche of white men’s supremacy. They are still desperate about FDI, FII and MNC’s. For them the development is possible only if we are able to maximise FDI and hand over the management of our economy to MNC’s.
It is true that in the beginning of 1990s, the country was reeling under foreign debt, foreign exchange reserves were at their lowest, such that the country was not able to afford even one week’s imports. That was the position which was a natural outcome of our overdependence upon foreign assistance and a development model based upon foreign technology. But our policy makers could not learn from their past mistakes of following an alien model of development. They once again decided to follow another alien model, that is American capitalist model of development. They thought for this purpose Foreign Direct Investment and entry of multinational corporations can only take us out from this position. Norms for foreign investment were relaxed. Foreign promoters of the multinational corporations were allowed to regain their holdings in the companies which had earlier been Indianised, more and more sectors were opened up for Foreign Direct Investment, foreign institutional investors were allowed to rule Indian stock and commodity markets. In other words we can say that the Stalin model of development was replaced by capitalist model in the changed scenario. In the process under the influence of USA, in the past 15 years governments of different regimes have followed similar kind of policies. Similar influence had been at work forcing India to sign unequal multilateral treaties with regard to International Trade.
Though government has failed the people by putting India into an unfavourable position, Indian people have marched ahead to demonstrate their strength, intelligence and entrepreneurship and has put India on the world map as a powerful country, striving hard to become a super power in a short span of time. In the analysis to follow an attempt has been made to underline this march of the nation to become a super power.
India One Of The Fastest Growing Nations
According to a report published by World Bank India is now one of the fastest growing countries in the world and in the years to follow it will not only continue to sustain its growth, it may surpass even the developed countries of today. In the last three years India’s nominal GDP has been rising at 16% per annum in dollar terms (as Rupee has strengthened against Dollar). If this rate can be sustained then India will equal to US GDP of $11 trillion by 2050. One may not be mistaken that this spurt in the growth rate has been caused by FDI or FII from developed countries like US, UK, Japan etc. This has been made possible by the hard work and intelligence of Indians themselves. Had US been behind this booming Indian economy they would have done it for themselves first. Let us have a look at the comparative rates of growth of different economies to make the picture clear.
Declining Human Resources In Developed World
In the prosperity of a country human resources play the most vital role. The whole of the West is facing an acute shortage of this human resources both in terms of number as well as quality. Future is still very bleak for them. Take Germany, still Europe’s largest economy and its benchmark. By 2030, German demographers project their country will have 7 million fewer people of working age than now. There are now four workers supporting each retiree. Within a generation there could be just two.
Some other countries are facing an even steeper demographic slide. By 2050, the United Nations projects, Italy will shrink from 57.5 million people to just 45 million, Hungary from 10 million to 7.5 million, Poland from 39 million to 33 million, while Russia will shrivel from 145 million to barely 100 million.
This scarcity is behind large scale immigrations to European countries from the third world especially from Asia. Europe’s rate of population growth is falling while the inhabitants are ageing. Data from the EU’s statistical office shows that between 1975 and 1995 the EU population grew by just over 6%. From 1995 to 2025 however, this growth is expected to almost half to roughly 3.7%.
The working-age population was 225 million in 1995, and is expected to remain fairly constant at around 223 million in 2025. They are facing an acute problem of sustainability of retired population. Immigration is being regarded as the ‘magic bullet’ to solve Europe’s labour market and welfare state problems. A 2002 United Nations report on ‘replacement migration’ suggested that immigration could help solve their population problems.
Rising Migration - The National Statistical Office estimates the UK population to rise by around 5 million people over the next 25 years, with immigrants accounting for around two thirds of this growth. Net migration in the UK over the next 25 years is projected to be around 135,000 a year.
This trend of migration is found in almost whole of the Europe, US, Canada and Australia. Bulk of the migration comes from India. Though this involves a lot of brain-drain from India, where many of our educated youths trained in different spheres of life migrate in search of riches of these countries, this also brings many indirect benefits to our economy by way of International linkages. Bulk of our trade deficit is filled by way of remittances from Non Resident Indians. Not only this, what we call FDI also comes to a great extent, from people of Indian origin.
With the emerging trends in population of the present day developed countries, whether they like it or not Indians are likely to support these countries by way of migration to these countries. Even today Indian community plays an important role in the politics of US, UK, Canada etc. This phenomenon will get strengthen further in future.
Sometimes we do find a reverse trend. Many of the people from different parts of the world are looking forward to work in India for different reasons including good business environment, low cost of living, low cost of health services etc. In other words who would not like to work in an emerging power center, that is India.
India A Technological Super Power
On January 10, 2007 India stunned the world by launching four satellites on a single rocket, including one that will be brought back to earth to set the stage for the country to send an astronaut into space. It not only carried two small Indian satellites but also two foreign satellites, one each for Indonesia and Argentina.
India is fast turning to become one of the few countries to possess a capacity to hit a target of 5000 kilometers. India has already successfully test fired Agni II ballastic missile, with a range of 2000 km in April 1999. Marching towards becoming an IT superpower Indian IT industry recorded 34.5% growth in exports from $12.8 billion in 2003-04 to $17.2 billion in 2004-05 and to $22.5 billion during 2005-06.
India Emerging As A Hub For Medical Tourism
On the one hand Indians are getting settled abroad, high cost of health care is attracting foreigners from almost all parts of the world including so called developed countries to India for solution of their health related problems. As health care costs skyrocket, patients in the developed world are looking overseas for medical treatment. India is capitalizing on its low costs and highly trained doctors to appeal to these “medical tourists.” Even with airfare, the cost of going to India for surgery can be markedly cheaper, and the quality of services is often better than that found in the United States and UK. Many countries have developed links for speedy treatments in India for their nationals on account of the fact that in these countries one has to wait for extended periods of time to undergo operations. In India, medical treatment is not only fast but also costs a fraction of what it costs in USA or Europe. Even tele-consultancy is available for expert opinion and transmission facilities. An annual medical checkup in India costs US $150, whereas in Germany it costs US $1,400.
Is It Because Of Globalisation?
If we are the fastest growing nations in the world it is not because of globalisation. If we have a look at the composition of GDP and its growth, it is clearly indicated that globalisation has practically no role in GDP growth. Rather globalisation has played a negative role in the growth of agriculture, as it has been completely neglected under the influence of foreign investment. Government has reduced its expenditure on agriculture.
Budgetary allocation for agriculture has been reduced from 27 percent in the pre globalisation era to only 6 percent now. Contribution of agriculture has come down from more than 25 percent to less than 20 percent. Sector which has grown fastest, that is service sector, is mainly due to growth in IT, BPO sector etc. This at best can be attributed to technological factors and Indian genius. If India has emerged as a hub for medical tourism it is because of the excellent human resource in the field of medicine, surgery and other related fields. India has pushed the established centers far behind and made its position on the top on the basis of excellent service at competetive prices.
No country whatsoever has ever willingly provided us with any technology with regard to space, nuclear sciences or others. It is our scientists who have made it possible. To conclude we can say nobody can stop India now to become a global superpower. What we require is a self confidence, consistent efforts to educate our people at all levels, build infrastructure and a true nationalist character. Our policy makers should also understand that world needs us more than we need them.

When government announces that GDP is growing at a rate of around 9 percent and that India has emerged as one of the fastest growing economies of the world, it gives a feeling of pride. Infact in the last fiscal year April 2007 to March 2008, our GDP growth rate though less, but was still around 8.8 percent.
Government is patting its back for the so-called growth experience. What does GDP mean to an average person living in this country? If we have a look at the composition of GDP, it includes agricultural products including food grains, industrial products and services. On the one hand more of GDP should mean more of wheat and rice, more of cars and two wheelers and other industrial goods. But it also means more of transport services, electricity, tele-communication etc. If we try to look into the factors leading to increase in GDP, we find that agriculture does not contribute to this growth experience, industry is growing almost equal to the rate of growth of GDP and growth of services surpass all limits and as such the contribution of services sector to GDP jumps from 45.80 percent in 1997-98 to 55 percent recently, whereas gain of services is the loss of primary sector, contribution of which dips from 26.50 percent to 19 percent during the same period.
Latest NSSO data shows that still 58 percent of the population depends on agriculture and rest 42 percent is engaged in non-agricultural activities. Another important thing to note is that hardly 7 percent of total work force is engaged in organised sector, both public and private. If we try to compare the share of primary sector (including agriculture, fishing, mining and animal husbandry) in GDP with the proportion of population engaged in the same, story of unequal and non-inclusive growth experience becomes evident. Vast majority of population is reeling under poverty, while a few enjoy all sorts of luxuries.
Experience of 60 years after independence has been a mixed one. In these 60 years we have build up a wide production base, large scale infrastructure, and self sufficiency in food grain, far reaching achievements in the scientific and strategic fields and so on. But we are facing a serious challenge of unemployment, poverty and hunger of our masses.
Unprecedented Agricultural Crisis
Continuous neglect of agriculture by the government, declining capital formation both by public and private, consistently rising cost of production and unequal competition with imports has made agricultural the most vulnerable sector of Indian Economy, translating into unprecedented crisis of agricultural sector. Farming is becoming most unprofitable venture, deepening of farmer’s debt, translating into large-scale farmers' suicides. So far lakhs of farmers have already committed suicide and many others are loosing their titles over land. The process of pauperisation of agriculturists is being accentuated by entry of multinational agri-business firms, whose interests are being promoted by the state.
Indian economy is going through a critical phase today with worst situation of agriculture than ever before, rising unemployment both in absolute terms and as percentage of working population, sky rocketing prices especially of food products etc. on the one hand and rising aspirations of the people at large and youth in particulars.
But response of our policy makers has been very dismal. They perhaps have left the economy to the whims and wishes of markets, especially international markets, which in turn are controlled by transnational corporations. When our finance Minister rose to present his budget proposals for the finical year 2008-2009, this influence was once again looked very apparent and solutions suggested in response to the present problems have not only insufficient they also lacked depth.
Loan Waiver for Farmers is no solution
The fact that agriculture is a very bad shape has been clearly conceded in Economic Survey 2007-08 and in the Union Budget 2008-09. More significantly the government has also conceded that agriculture has been grossly neglected during the period of economic reforms. In the last four years when GDP was growing at an average rate of 8.8 percent, agriculture was lagging much behind with growth rate of less than 2 percent. Ever increasing suicides by farmers, persistently rising cost of production, declining area under food crops are all indications of the crisis in India’s agriculture.

There is no reason to believe that our Oxford educated Finance Minister does not know about the root cause of agriculture crises in India. But the only package he chose was loan waiver for farmers. It was told that 4 crore farmers would be benefited from 60 thousand crores of loan waiver. But he conveniently ignored the fact that farmer indebtedness is not the cause, but actually the effect of agriculture crises. The crises of agriculture is caused primarily due to lack of infrastructure such as electricity, irrigation, roads, market etc., high court of production due to rising prices of fertilizers, pesticides, electricity, seeds etc. and above all non-remunerative prices for their produce. Farmers’ indebtedness thus is only an indicator of deep agricultural crises. To solve the problem of agricultural crisis we need to attack the root cause of the problem.

It is important to note that loan waiver as announced by the Finance Minister can give relief to only those farmers, who have borrowed from Regional Rural Banks, Co-operative Banks and Commercial Banks. But 70 percent farmers, those who have borrowed from moneylenders, traders etc., could not get any relief from this loan waiver scheme of ballot box budget. More important is a fact that there is no significant impact of government’s claims about agricultural policy at ground level. Rampant corruption in National Rural Employment Guarantee Scheme, persistently increasing cost of production and non remunerative prices of agriculture produce are all making agricultural crisis more and more deeper.

Just saying that slow growth of agricultural is disappointing and conceding that agriculture has been neglected during the reform period, will not serve any purpose. Some concrete measures are called for including a policy shift, giving due respect to the agricultural sector in national economic policy. If the policy makers do not rise to the occasion, not only sectoral inequalities would get more widened, disturbing our social fabric, even our food security would also be endangered.