Anxiety as India's IT minister
quits By Sudha Ramachandran
BANGALORE - India's booming
information-technology (IT) and telecom sectors
have been hit by a bolt out of the blue. The
sudden resignation of Dayanidhi Maran as minister
for communications and IT and his replacement by
Andimuthu Raja, a person with little expertise in
the field, have triggered anxiety over the future
of these sectors. There is concern whether Raja
will be able to inject the kind of dynamic growth
in the IT and telecom sectors that Maran had.
Maran resigned on Sunday when a bitter
feud within the Dravida
Munetra Kazhagam (DMK) - an
influential partner of India's ruling United
Progressive Alliance coalition and the party that
governs the state of Tamil Nadu - erupted into the
open.
Maran is DMK patriarch Muthuvel
Karunanidhi's grand-nephew. His spectacular rise
in politics obviously irked the DMK leadership.
Trouble over an opinion poll published in
Dinakaran, owned by the Maran family, triggered
violence recently. This was used as an excuse by
the DMK's first family to marginalize Maran. He
was accused of anti-party activities and plans
were afoot to have him removed as minister.
In anticipation of this, Maran resigned.
His resignation has sent shock waves through the
IT and telecom sectors.
In a bid to calm
nerves, Raja, who took over the reins of the IT
and Communications Ministry on Wednesday, assured
industry of continuity in policy.
"My
predecessor has announced a lot of schemes in the
past. I will give a final shape to whatever is in
the pipeline," Raja said. He added that will
welcome foreign investments in IT and telecom as
his predecessor had done and will look into the
possibility of zero roaming charges, which Maran
was pushing for.
"Raja's biggest problem
is that he has an impressive act to follow," the
chief executive of a leading mobile-phone company
told Asia Times Online on condition of anonymity.
"Maran was easily among the most able ministers in
Prime Minister Manmohan Singh's cabinet. He is
young, energetic and a 'can-do' person, a
personality that people in the IT and telecom
sectors identified with. He presided over the
Telecom and IT Ministry at a time when the sectors
have witnessed dazzling growth."
Indeed,
in the three years that Maran was at the helm of
the ministry, India's telecom sector added many
feathers to its cap. It joined the elite
100-million-mobile-phone club of which only four
other countries are members, surpassed China in
monthly addition of mobile subscribers (more than
6 million), and emerged as the world's
fastest-growing telecom market.
Policies
Maran put in place - the foreign-direct-investment
cap on the telecom-services industry was hiked
from 49% to 74% - attracted investment pledges in
the billions of dollars. Ericsson, Motorola and
Nokia set up mobile-phone manufacturing units in
India. Maran facilitated Vodafone acquiring a
majority stake in Indian mobile-services operator
Hutchison Essar. His initiatives brought down
telecom tariffs and fueled the growth of broadband
in the country.
The IT sector - though
less dependent than the telecom sector on Maran -
also did well. Maran's tenure saw several IT
giants pledging investments in excess of $30
billion in India. IBM announced last year that it
was doubling its investment in India to $6 billion
by 2010, while Microsoft and SAP pledged $1.7
billion and $1 billion respectively for research
and development. He set the ball rolling for
making India a chip-manufacturing hub.
Ministry officials say there is little
reason for anxiety. They say the momentum for
growth in IT and telecom is well established and a
broad framework is in place. "A change in
personality of the minister alone will not slow
the pace of growth or derail policies
substantially," said a senior official.
Others are less optimistic.
An
editorial in The Financial Express says that while
India's economic-reform process has survived
changes in government, even storming leftist
bastions in the country, "individual ministers'
departures still tend to cause policy disruptions.
Perhaps greater integration with the global
economy ensures that no rational government can
take the liberty to roll back macro-policies
without pushing the country into a crisis. But the
extent of maneuverability in ministries is much
larger, especially in those where the domain is
restricted to narrow sectors. Unlike the major
ministries like finance, industry or commerce,
these narrow-remit ministries tend to wield much
autonomy, and this sometimes means that they are
run like fiefdoms."
The IT sector seems
less jittery than the telecom sector. IT company
executives say that Maran was less crucial to the
sector's growth; the momentum in IT was put in
place several years before Maran became minister.
Maran's policy contributions were more in the
telecom field and his departure will be more
acutely felt there than in IT.
There is
concern that Raja has no expertise in technology,
but ministry officials say this is no big
impediment. They point out that Maran was a
newcomer to the field and to politics when he took
charge of the ministry three years ago.
Raja was minister of forests and
environment before he took over the reins of the
Communications and IT ministry. If his past
performance is any indication of what lies ahead,
then there is need for worry.
Examining
Raja's performance in the Ministry of Forests and
Environment, CNN-IBN's (Cable News Network-India
Broadcast News') H R Venkatesh recalled that "it
was during Raja's tenure that the entire tiger
population in Sariska [a tiger reserve 200
kilometers from New Delhi] was wiped out and the
Gir [a wildlife sanctuary in Gujarat famous for
its Asiatic lions] lions suffered depletion.
Disappointingly, Raja could do nothing about it."
Venkatesh said three key posts - director
general of forests, inspector general of forest
conservation, and director of the National Forest
Academy and Wildlife Crime Bureau - remained
vacant during Raja's tenure in the Forests and
Environment Ministry. Several boards and
committees that came under the ministry barely
functioned.
The telecom sector cannot
afford lethargy, not at a crucial stage of its
growth. Telecom company officials say Raja might
ensure continuity in policy, but could end up
dragging his feet in decision-making. Ongoing
discussions with the Defense Ministry for vacation
of spectrum by defense forces - Maran had managed
to get Defense to commit to free up more than 40
megahertz - could get stuck. There could also be
delays on the much awaited 3G (third generation)
spectrum policy.
Telecom companies and
mobile-phone users alike are keenly awaiting
Raja's decision with regard to roaming charges.
His predecessor was going to abolish them; he was
going to announce this on June 3.
If Raja
abolishes roaming charges it will please
subscribers by bringing down their bills by
28-58%. But this would annoy telecom operators,
who collectively will have to take losses running
into millions of dollars.
"Roaming charges
account for 10-12% of our revenues, so the move
[to abolish roaming charges] could have a major
impact on our bottom lines," said T V
Ramachandran, director general of the Cellular
Operators' Association of India.
Industry
watchers say Raja is a tightrope-walker and he
will not want to earn the ire of either side. He
is likely, therefore, to slash roaming charges,
but not abolish them.
This quality of Raja
not to ruffle feathers or provoke controversy is
said to have contributed to the DMK's decision to
replace Maran in this high-profile ministry.
Besides, Raja is known to be deeply loyal
to DMK leader and Tamil Nadu Chief Minister
Muthuvel Karunanidhi. He is unlikely to protest
even if the party leader decides to replace him
with his daughter Kanimozhi Karunanidhi.
Sudha Ramachandran is an
independent journalist/researcher based in
Bangalore.
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