By M.V.Ramakrishnan

Sunday, July 30, 2017

When I Had A Lucky Strike During A Tough Discussion On Tobacco Exports

The 1970s were a wonderful time in my official career, because as a field officer conducting certain unprecedented investigative audits in the most formidable economic Ministries like Commerce, Industry, Agriculture and Supplies, I enjoyed absolute and unlimited freedom of action, and was able to adopt my own audit principles and could device my own extremely innovative audit procedures and practices.  

In this context, where I invariably encountered very forceful resistance from the Executive side at the highest levels, , I received immense encouragement and moral support from my superiors in the Audit establishment, including the Comptroller & Auditor-General of India (Mr. A. Baksi, who always spoke to me in an intimately friendly tone which bridged the enormous gulf which normally separated us in rank and status).

The CAG's audit under the Constitution of India covered the financial concerns of the Central Government and more than a couple of dozen State Governments all over India, as well as the performance of all the commercial enterprises owned by them.  It was an awesome jurisdiction, and it wasn't usual at all for the CAG to have any discussions with field officers in any connection.  But he was so fascinated by what I was trying to accomplish that he made a conspicuous exception of my case, and would now and then send for me to find out the nature and scope of ongoing and prospective investigations.

It was in such a context that I happened to outline my perception of the glaring anomalies in the tobacco export trade, as explained in a recent post (Manifestation Of The British Tobacco Empire In Independent India).  Present in the smoke-filled chamber of the CAG were Mr. G.N. Pathak, Accountant-General (my immediate boss), and the redoubtable Mr. H.B. Bhar, Deputy CAG.

In the course of the earnest discussion, the CAG and Mr. Bhar subjected me to a severe cross-examination, and I had a ready and accurate  answer for every intricate question they posed.  Mr. Baksi -- who was intensely concentrating on the intricate issue while puffing away at his cigarillos -- seemed very pleased, and decided to have a little bit of fun to relieve the tension.

"Are you a smoker, Ramakrishna, by any chance?" he intervened.

"I used to be, Sir, but not now." I replied.

"What did you use to smoke?"

"Mainly a pipe, Sir!  But also cigarettes sometimes, especially if I could get a foreign brand."

"Is that so?  Well then, let me ask you some tough questions!" the CAG said, with a mischievous smile. "Are you ready?"

"Yes, Sir," I said nervously, not knowing what to expect.

"What is the difference between Philip Morris and Lucky Strike?"

"Lucky Strike has a sweet taste, Sir, and Philip Morris tastes bitter."

"Not Bad!  Which Indian cigarette tastes bitter, like Philip Morris?"

"Char Minar, Sir!"

"Right again!  Which pipe tobacco has a sweet flavor, like Lucky Strike?"

"Three Nuns, Sir!"

"OK, but hold on!  Now I have a question I'm sure you can't answer!  What is Sobranie?"

"It's a cigarette made in France with Russian tobacco, Sir. It has an oval shape, and is wrapped in black paper with gold lettering."

Mr.Baksi seemed delighted, and exclaimed : "Well, I give up!  You win!" 

But of course, it was a pure coincidence that I knew all the right answers, and a couple of different questions were very likely to have floored me.  I just had a Lucky Strike, I guess!

Unfortunately, I wasn't so lucky with the day's main business.  As you'd have noted from the earlier post, the Deputy CAG wasn't convinced by my perfectly logical argument about the CAG's jurisdiction in the given context (even though Mr. Baksi himself was strongly inclined to agree with me), and we didn't process the red-hot material for the CAG's audit report.  

Anyway, it wasn't really wasted, for I could use it so colorfully in my column India of C-A-G in THE HINDU twenty years later!

Friday, July 28, 2017

Tricks Of Indo-British Tobacco Trade : Seeing Through The Smoke Screen

It's actually a good thing when a perfectly logical argument meets with strong opposition, because that usually gives you an opportunity to reinforce the narrative and make it still more forceful without letting it look like an overkill.  And here's an excellent example of such a 'blessing in disguise' : I won the match 6-0, 6-0, 6-0, as you can see!


Glossary & annotations
(In same order as in text)

Tobacco, tobacco!  --  Please see preceding post ( Manifestation Of The British Tobacco Empire In Independent India ).

ITC Ltd.  --  Indian Tobacco Company.

ILTDC  --  Indian Leaf Tobacco Development Company.

Agmark  --  A seal of approval given to agricultural products by authorized Government labarotaries, certifying conformity with standards specified by the Directorate of Marketing and Inspection in the Ministry of Agriculture.

Public Accounts Committee  --  A panel in the lower house (Lok Sabha, meaning 'People's Assembly') of Indian Parliament.  One of its main functions is to discuss important audit reports of the Comptroller and Auditor-General of India, with senior civil servants as 'witnsses' (who usually turn into defendants!).  The Chairman of the panel is normally a prominent member of the Opposition.  There are corresponding PACs at the States level.

BAT  -  British  American Tobacco Company, London.

Maharashtra  --  A major State on the West coast of India.



11 May 1995

'Tobacco, tobacco!'

          With reference to the article 'Tobacco, tobacco!' published in these columns
          on April 13, Mr. P.B.K Murthy, Retired Deputy Chairman, ITC Ltd., writes :-

Mr. M.V. Ramakrishnan's efforts in recalling certain intriguing stories relating to tobacco exports in the early Seventies call for clearing of the smoke screen.   An adverse impression has been created through the article, and it would appear government agencies, Indian officials, trade and industry were less than honest and busily selling India cheap while other countries fervently practiced nationalism.  While this is not to hold a brief for my previous employer or for their associates, I wish to bring a correct perspective to the subject. 

Perhaps the author refers to me when he speaks of the Vice-Chairman of the Tobacco Export Promotion Council, Madras.  I held those positions of trust for a number of years in the Sixties and Seventies.  He has alleged among other things that the Managing Director or some other senior official of ILTDC had a strong bias for settling extremely low prices for its exports to allied firms abroad.  The following facts would help to set right the erroneous impression created by Mr. Ramakrishnan.  

Exports of Indian Leaf Tobacco development Company (ILTDC) were mainly to countries which did not bother about government minimum export prices.  The ILTDC was the largest single exporter to all the four largest manufacturers in the U.K.and in Japan.  It had no interest in government minimum prices, as our export prices were well above them.  The Tobacco Export Promotion Council noticed that the other traders were also exporting to countries above the government-fixed minimum export prices.    

Government statistics would prove that at that time the price for any grade of tobacco obtained by ILTDC was the highest.  One of the simple reasons for this was, whilst others generally had to export through intermediaries which took a five per cent commission, ILTDC made direct exports mostly without intermediaries.  Even if some exports had to be made in the name of an intermediary which supervised them, such intermediary was paid for its services by the importer abroad.  In the case of exports to Japan, the Japanese government monopoly only imported through its agents, and the commission paid by ILTDC to its agent was the lowest in the industry.  The ILTDC was aware that the company's interests would be served best when the trade as a whole prospered.   

The Tobacco Export Promotion Council did take care in recommending prices.  The concern for the Indian farmer and trade preceded any other parameter in recommending or fixing prices.  The recommendation was arrived at by consensus of members, who included other members of the trade.  The recommendation forwarded to the Commerce Ministry by the Tobacco Export Promotion Council was one of the inputs for the Ministry to decide the minimum export prices.  The Ministry was also aware of the export prices from other producing countries to the U.K.  It would be uncharitable to believe that the Commerce Ministry did not apply its mind before finalizing the minimum export price.  Further, the Ministry indeed had men of experience and integrity, and it would be absurd to paint all of them with the brush of dishonesty.

All exports of tobacco had to be certified by the Agmark authority of the Ministry of Agriculture.  This certificate ensures that the grade declared by the exporter is correct and consistent.

The importing manufacturers appreciated the services rendered by ILTDC to the whole trade through its R&D and extension services.  The importers abroad respected ILTDC for its services to farmers and the trade while retaining its integrity and reliability.

ILTDC's assets in India were purchased by ITC  Ltd. at a reasonable price.  This brought substantial export business to ITC, which helped it in no small measure.

The current controversy between BAT and ITC has been linked by Mr. Ramakrishnan to the need to restore ILTDC/ITC as a passive supplier of tobacco to the U.K.  This must be an original interpretation unknown to both the feuding parties.



18 May 1995

India of C-A-G

Oh tobacco !

I am grateful to Mr. P.B.K Murthy, formerly Deputy Chairman, ITC Ltd., for his comments (May 11) on my article on the tobacco export scene.  I am sure he is talking with conviction when he declares that my view on tobacco export trends 'calls for clearing of the smoke screen'.  But conviction carries the hazard that one may quite sincerely believe what is not true! 

It is my belief -- as a former investigative auditor of the Government's affairs -- that the thick smoke screen which has always surrounded India's tobacco exports has been the result of the serious distortions caused by the traders during the past several decades, which I had explained in the disputed article.  My recollections were not made from memory alone, but were also
based on authentic information contained in certain notes I had jotted down 20 years ago in the course of my audit scrutiny of the Government's concerns on the export front.

Mr. Murthy says that according to me, "the Managing Director or some other senior official of ILTDC (Indian Leaf Tobacco Development Company) had a strong bias for its exports to allied firms abroad."  That is not a correct quotation!  What I had said was that the firm ILTDC had such a strong bias, and its senior officials used to play a leading role in the business of the Tobacco Export Promotion Council, which had the responsibility to recommend proper minimum export prices.  Individual officials of the company might well have had a different attitude ;  but being placed in a position where they could influence the environment in favor of the clear corporate policy of the institution which employed them, they could hardly have avoided doing so.

Policy and practice

The same thing might have been true of the Commerce Ministry officials also.  Mr. Murthy says : "The Ministry indeed had men of experience and integrity, and it would be absurd to paint all of them with the brush of dishonesty."  But I never said the officials were all dishonest!  What I did assert was that, acting on the recommendations of the Export Promotion Council, the Commerce Ministry used to fix extremely low minimum export prices (MEPs) for FCV tobacco.  In doing so, many of the officials might only have been conforming to the overall policy laid down by their political masters ;  but that did not absolve the Ministry of blame for encouraging a regime of deception!  

In the late Seventies, Dr. P.C. Alexander, who is now Governor of Maharashtra, was working in the Commerce Ministry as Additional Secretary for some time and then as Secretary.  He had attended some sessions of the Public Accounts Committee of Parliament, as a witness during its discussions on certain strong audit observations about the arbitrary manner in which cash subsidies were being sanctioned by the Government for promoting exports.  Can anyone question or even doubt the honesty and integrity of Dr. Alexander?  And yet, he did find himself those days in a situation where he was forced to defend some extremely wrong decisions which had been taken by the Government.

Since those issues had been raised as a result of my special audit investigations, I used to be present in the PAC meetings as a shadow of the Comptroller and Auditor-General of India, who was always there to assist the Committee and guide its deliberations. Dr. Alexander is a very nice person ;  although he was miles above me in seniority and status and I was a constant nuisance in the Commerce Ministry, he never showed any resentment towards me.

On one occasion, during a recess in the PAC's tough proceedings, he told me in a frank and friendly tone :  "My dear fellow, you must have some sympathy for your fellow-officers in the Government!  Tell me, what would you do if you came on deputation to the Commerce Ministry as a Joint Secretary?  Would you be able to stop all this?"  The only answer I could give him was that I hoped such a situation would never arise --  and luckily for me, it never did!  I leave the moral of this story to the reader's imagination.

Mr. Murthy says :  "An adverse impression has been created through the article, and it would appear government agencies, Indian officials, trade and industry were less than honest and busily selling India cheap . . ."  -- Yes, Sir, the article was certainly intended to convey the very adverse impression of tobacco trade practices which had crystallized in the course of my audit research, and I had plainly said so!  When Audit justifiably finds fault with the Executive's actions or inactions, there can only be one or both of two reasons :  inefficiency and/or malpractices. And when business enterprises gain enormously from Government error, it does usually indicate a nexus between them and the Government or its officials.  Is this not quite obvious?  

Irrelevant  arguments

Now, let us take up the specific question of minimum export prices of tobacco in the Seventies.  Mr.Murthy says that "ILTDC's exports were mainly to countries which did not bother about government minimum export prices."  Indeed, why should those countries have bothered?   It was for India to worry about what was going on!       

Mr.Murthy adds :  "ILTDC had no interest in government MEPs, as our export prices were well above them."  Of course, they would have been so!  I never said that ILTDC used to export FCV tobacco at prices lower than the minimum export prices.  What I did say was that the MEPs themselves used to be fixed at ridiculously low levels, so as to make the actual realizations look reasonable.  There was a striking parallel to this in the case of steel tubes and pipes exports -- but let us talk about that some other time!

Mr. Murthy says :  "Government statistics would prove that at that time the price of any grade of tobacco obtained by ILTDC was the highest" (meaning, of course, highest among prices secured by Indian exporters).  This might well have been so!  ILTDC was the leader and trend-setter on the export front ;  and if it was bent on supplying large quantities of fine FCV tobacco to associated foreign firms at abnormally low prices. Who would pay more for similar grades of tobacco exported by other Indian companies?  Would the statistics prove that because ILTDC got better prices than other Indian companies, it did not accept unreasonably low prices in relation to what other exporting countries were getting for tobacco of the same quality?

Mr. Murthy goes on :  "All exports of tobacco have to be verified by the Agmark authority of the Ministry of Agriculture.  This certificate ensures that the grade declared by the exporter is correct and consistent."  But I had not said a word about any quality deficiencies!  On the contrary, I had highlighted the fact that India's exported FCV was among the finest in the world, quoting the National Council of Agriculture.  And that is precisely why the actual export prices must be considered to be far too low!   

However,  the fact remains that in 1980 British Customs officials did intercept Indian FCV consignments which were found to be of grades higher than those shown in the invoices.  It is not for me to say whether the Agmark certificates -- if they had been issued in those cases -- were right or wrong. One must ask British Customs, I suppose!

Accolades and award

Mr.Murthy says :  "The importing manufacturers appreciated the services rendered by ILTDC to the whole trade through its R&D and extension services.  The importers abroad respected ILTDC for its services to the farmer and the trade, while retaining its integrity and reliability.  Of course, why wouldn't the importers abroad be happy, when ILTDC was supplying excellent FCV tobacco to them at some of the lowest prices in the world? : 

It was in ILTDC's own interests (and those of the Imperial Tobacco Company in Britain and its branches and associates elsewhere in the world) that good R&D work was undertaken by the firm.  But how does that alter the reality of extremely low prices being secured for exports, and correspondingly being paid for procurement of tobacco leaf in India?     

As for ILTDC's services to Indian tobacco-growers, why look for accolades from foreigners?  Even the Federation of Indian Chambers of Commerce and Industry (FICCI) had given it an award for that!  And what were those services?  

Extending credit (mainly in the form of fertilizers, seeds, coal, etc.), and in due course mopping up their produce at the cheapest imaginable price on behalf of the highly pleased importers abroad! Naturally, the importers must have found ILTDC absolutely reliable!  

East India Company

Mr Murthy concludes :  "The current controversy between BAT and ITC has been linked (by the author) to the need to restore ILTDC//ITC as a passive supplier of tobacco to the U.K.  This must be an original interpretation unknown to both the feuding parties."   Well, it would have helped if Mr. Murthy  had explained what precisely then is BAT's motive in the ongoing confrontation.

In the absence of such clarification, the only logical impression which emerges is that BAT is fighting this battle mainly for making ITC's Leaf Tobacco Division the East India Company of the British Cigarette Empire, a unique distinction ILTDC used to have earlier in this century! 

Wednesday, July 26, 2017

Manifestation Of The British Tobacco Empire In Independent India

In the preceding post (When & How Chairman Haksar Wrote His Monumental Essay On Art & Culture), I had described the Sangeet Research Institute, Calcutta, as follows:-

A music-research unit in India's leading tobacco company  (ITC) : a corporate contribution to Indian culture, meant to dilute adverse impressions arising from certain negative aspects of the company's cigarette business.

The Company is also regularly organizing an annual festival of Indian classical music in major Indian cities by rotation, creating a highly visible spectacle, as part of its clever cultural camouflage.
Another way the company tries to obscure its true character is by diversifying its business into other fields like consumer goods and hotels, and also by abandoning its real name Indian Tobacco Company, and (rather naively!) calling itself simply ITC.  Actually its original name before 1970 was Imperial Tobacco Company of India, but hardly anyone remembers that fact!

The negative aspects of the British-influenced company's cigarette manufacturing business concerned the alarming health hazards it was posing, and also the harm it was causing by paying ridiculously low prices to indigent Indian tobacco farmers. Moreover, severe distortions in the context of raw tobacco leaf exports (effected through a subsidiary firm) had very sinister economic, social and moral implications.

I had thoroughly researched the whole export scene in the early 1970s from a performance-audit angle, and had recalled that exercise in my column India of C-A-G in THE HINDU in 1995:-


Glossary and annotations  
(in same order as in text)

The Capital  --  New Delhi.

One lakh tonnes  --  In India, even when we write in or speak English, in two cases of numerals we adopt or adapt native Hindi-language expressions.  Thee are :-  lakh (same as in Hindi, meaning a hundred thousand, written down as 1,00,000), and crore (anglicized form of karod in Hindi. meaning ten million, written down as 1,00.00.000).  There are no plural forms, and even in English we have to say '2 lakh' or '3 crore', and not '2 lakhs' or '3 crores' -- though in actual practice both versions are used.  As for the singular, we never say 'a lakh' or 'a crore', but invariably 'one lakh' or 'one crore', just as in Hindi.

Andhra Pradesh  --  A tobacco-growing State in South India.

Madras  --  Old name of Chennai, to which some of us Madrasis desperately cling even now.


14 April 1995

India of CAG

Tobacco, tobacco!

The late Mr. A. Baksi, who was the Comptroller and Auditor-General of India from 1972 to 1978, was a chain smoker.  He was fond of thin cigars and long cigarillos.  He would light them one after another and keep puffing away endlessly.  There was always a gray, warm haze of tobacco smoke in his room in the office, which used to make some visitors feel quite uncomfortable!

During Mr. Baksi's  entire six-year tenure as CAG, I was working in a field audit office in the Capital, and undertook certain innovative audit investigations, particularly in the context of the Government of India's financial assistance for exports.  In 1975, Mr. Baksi held a meeting with Mr. G.N. Pathak, Accountant-General and myself, to discuss certain significant aspects of India's tobacco exports, about which a very adverse impression had crystallized in the course of my research.  Mr. H.B. Bhar, Deputy CAG, was also  present. And the story I told them was certainly intriguing!

Mother and sister companies

Flue-cured Virginia (FCV) is the most important category of tobacco in the world, and is the basic leaf in the manufacture of cigarettes.  In 1973 India was the fourth biggest producer of FCV in the world, after China, the U.S. and Canada.  Raw tobacco (mainly FCV) was a major item of India's exports in the Seventies, the United Kingdom being the largest importer of Indian tobacco.

In 1973-74, India produced about one lakh tonnes of FCV, and exported about 70,000 tonnes.  Of this, 28,000 tonnes went to the U.K., while substantial quantities were exported to other countries where subsidiaries or associates of the London-based Imperial Tobacco Company and British American Tobacco Company were located.  The National Council of Agriculture in India had once cited the 'common knowledge' that India's FCV was among the best in the world.

There was no tobacco cultivation in the U.K., which was the world's second largest importer of raw tobacco, after Germany.  Nearly all British cigarettes were manufactured from high-grade FCV, imported mainly from the U.S., Canada and India.  India's share of such imports was 12.5 per cent in 1972.  Imperial Tobacco Company (ITC) controlled more than 65 per cent of the British tobacco industry, which earned the highest profits among all British industries that year.

British American Tobacco Company (BAT) was very closely associated with Imperial Tobacco Company, and was looking after the latter's foreign trade.  BAT held a substantial share of the equity of India Tobacco Company (now called simply ITC).

Colonial setting

India's biggest exporter of FCV tobacco in the Seventies was the Indian Leaf Tobacco Development Company (ILTDC), located in Andhra Pradesh.  This firm was wholly owned by India Tobacco Company ;  in other words, it was also under the full control of BAT and the indirect influence of British Tobacco Company.  (Later on it was merged with India Tobacco Company as the ILT Division).  Year after year it used to win the Commerce Ministry's trophy for the best tobacco export performance.

The prices at which ILTDC used to export unmanufactured Indian tobacco of the highest quality to its major markets abroad had been conspicuously low for a very long time, compared to the prices of similar grades of tobacco exported by other countries. Moreover, during 1966-72,, when the prices of U.S., Canadian and Korean FCV exports to the U.K. shot up by 50 to 100 per cent, the price of Indian FCV exports to that country went up -- believe it or not! -- by less than 10 per cent.

ILTDC was also paying extremely low prices to the tobacco-growers, as indeed ITC and all other cigarette manufacturers in India were doing.  Surely that was how it was able to export raw FCV tobacco to associated cigarette manufacturers abroad at absurdly low prices!

Floor prices, a farce

From 1963 the Government had been fixing minimum export prices (MEP) for unmanufactured tobacco, thereby giving a wrong impression to the world at large that India was securing very reasonable export prices.  These values used to be specified annually by the Commerce Ministry on the basis of recommendations made by the Tobacco Export Promotion Council, Madras. .

The Chairman or Vice-Chairman of the Council used to be the Managing Director or some other senior official of ILTDC, which had a strong bias for setting extremely low prices for its allied firms abroad.  (The Tobacco Board was constituted in 1976, and one of its functions was to fix proper export prices, but the trade continued to exert great influence).

The Government had traditionally been specifying minimum support prices for procurement of commodities like cotton, jute and sugarcane, where the usual beneficiaries were the owners of large estates and plantations.  But in the case of tobacco, where the growers were generally small and self-employed farmers, the Government had no such procedure.

CAG's jurisdiction

When Mr. Baksi had heard the whole story -- grimly smoking a cigar chain and subjecting me to a grueling cross-examination -- he seemed to be quite fascinated.  "Go ahead and process the case!" he exclaimed, with unconcealed enthusiasm.  But Mr. Bhar's reaction was quite different, and he asked me what exactly the audit point was.  He said that since the issue could not be directly related toany expenditure of the Government, it would not warrant any criticism in the CAG's Audit Report.

Mr. Pathak and I argued that the Government was spending vast amounts of money as export incentives on many other items in order to increase  the country's foreign-exchange earnings, and that it could save a substantial part of that expenditure if proper prices were secured for tobacco exports -- and therefore, the export of Indian tobacco at prices deliberately pitched low by the exporters (with the Government's tacit approval) did call for comment in the Audit Report.  The CAG was inclined to agree with this view, but he could not make up his mind because of Mr. Bhar's strong conviction to the contrary.  In the event, he left the decision to the Deputy CAG, who told us afterwards not to proceed further in
the matter.

Subsequent scenario 

In 1980, there were reports in London newspapers that British Customs officials had found the grades of several imported consignments of Indian tobacco were much higher than those shown in the invoices. This development was quite consistent with the overall tobacco exports picture in India as we had observed five years earlier!

It is true that in recent years the Indian Government has been announcing minimum support prices (MSPs) for procurement of FCV, based on the recommendations of the Commission for Agricultural Costs and Prices -- and has also been fixing minimum export prices (MEPs) on the recommendation of the Tobacco Board instead of the Tobacco Export Promotion Council.  But the MSPs have been abysmally low (sometimes even below the cost of production!) -- and the MEPs continue to be far below the export prices secured by other countries for similar grades.

In 1988, the Government suddenly started paying a cash subsidy for FCV exports, at five per cent of the export value.  And the distortions in the export prices were still continuing.  Now, the whole rationale of sanctioning cash assistance for exports (technically termed 'cash compensatory support' or CCS) was to enable exporters to reduce their prices effectively vis-a-vis foreign competitors.  To sanction a 'compensation' for export prices willfully settled at low levels by the exporters in a system of colonial exploitation was to introduce another severe distortion in the scenario!

Four years later, he whole policy of sanctioning CCS for exports -- which had been bristling with many serious anomalies ever since its introduction in 1966 -- was given up by the Government..  Meanwhile, the subsidy attracted by FCV exports made when the CCS was available was more than Rs. 25 crores.

The battle of BAT

A sensational issue in the Indian business scene today is the desperate manner in which the British American Tobacco Company has been trying to wrest back complete control over ITC.  What exactly is bothering BAT?  To find the correct answer, you have only to take a look at the export trends in the past 20 years or so.

India's exports of raw FCV tobacco, which were 70,000 tonnes in 1973-74 steadily declined in the Eighties, hitting an all-time low in 1088-89 at 29,000 tonnes.  Then it picked up to reach 50,000 tonnes in 1991-92.  The exports to the U.K., which were 28,000 tonnes in 1973-74, declined to 6,000 tonnes in 1988-89, and rose to about 10,000 tonnes in 1991-92.

Meanwhile, India's exports of cigarettes have been expanding -- from about 800 tonnes in 1973-74, they rose to 2,700 tonnes in 1983-84, and 3,200 tonnes in 1993-94.  I do not have the latest figures for FCV exports, bbut it is quite clear that ITC's policy thrusts during and since the Eighties have been such that a traditional and once-reliable source of cheap but fine tobacco for the British cigarette industry and its world-wide operations has been threatening to dry up gradually!

So then, it would appear that BAT's true objective in the ongoing power struggle is to restore the original role of ITC's Leaf Tobacco Division (formerly ILTDC) as a passive supplier of excellent low-priced Virginia tobacco for cigarette manufacturers in the U.K. and British-controlled cigarette factories in foreign countries other than India.


PostScript, 2017

Logic and perceptions

One of the reasons why this vintage article may be worth close attention even today is that it raises vital questions of logic and perceptions, and shows how an all-too-rigid interpretation of the rules of the game can be extremely counter-productive.

It would be obvious to any intelligent observer that the tobacco muddle was a very valid topic for severe audit criticism, as it concerned the ruthless exploitation of one of the nation's important natural resources and the community of unorganized and poor tobacco farmers, in a setting so reminiscent of the former British colonial regime.. This was all the more so because there was no direct Government expenditure or specific loss of revenue, allowing the whole scam to escape the CAG's audit scrutiny in the normal course.

I had great regard for Mr. Bhar, Deputy Comptroller and Auditor-General of India, who had a passion for taking a rational view of all issues arising in the course of our work. Particularly in the context of our pioneering efforts to undertake innovative audit investigations, he used to subject us to a grueling cross-examination, to survive which we had to have a very comprehensive insight into the scenarios we surveyed.

It therefore came as a great shock that Mr. Bhar took such a rigid view of the question of the CAG's jurisdiction in this context, though the CAG himself was inclined to take the broader view.  The serious error in perception could only be attributed to the pitfalls of extreme conservatism.

Saturday, July 15, 2017

When & How Chairman Haksar Wrote His Monumental Essay On Art & Culture

As mentioned in the preceding blog ( The Disadvantages And Disconnectionsof Diversity ), my long twin track records as a professional civil servant and amateur journalist had brought me a unique opportunity for blending hard work with soft play, as the Member-Secretary of a prestigious panel which reviewed the performance of four Government-funded apex institutions in the cultural sphere.  

At the outset I had the assurance of the Chairman, Mr. P.N. Haksar, that I would be solely responsible for writing the panel's report, which had to survive the severe tests of time. I did produce an excellent draft on specific issues concerning the arts, but found the generic concepts governing the true dimensions of culture rather elusive.  In the event, it was the Chairman himself who wrote the introductory chapter, which enhanced the flavor and force of the whole report.

I told the story in an essay a couple of years later, and submitted it to the Editor of THE HINDU, Mr. G. Kasturi, suggesting it could perhaps be the prelude to a monthly column on art and culture, to be titled Articulations.  His instant response was to launch the column with Mr. Haksar's exquisite articulations.


Glossary & annotations
(in same order as in text)

P.N. Haksar  --  Distinguished Indian diplomat who had wielded enormous power and influence as Prime Minister Indira Gandhi's principal private secretary, and after superannuation, had turned into a highly sensitive and widely respected cultural philosopher.

Sangeet Research Institute, Calcutta  --  A music-research unit in India's leading tobacco company  (ITC) : a corporate contribution to Indian culture, meant to dilute adverse impressions arising from certain negative aspects of the company's cigarette business.

National Akademis  --  Three prestigious Government-funded institutions in New Delhi, concerned with the promotion of art and culture -- called Lalit Kala Akademi (visual arts and crafts : drawing, painting, sculpture),  Sangeet Natak Akademi (performing arts : music, dance, drama), and Sahitya Akademi (literature).  

H.Y. Sharada Prasad  -- Civil servant and journalist, who was media adviser to Indian Prime Ministers Indira Gandhi and Rajiv Gandhi. 

Other Members  --  Ebrahim Alkazi (patron of Indian arts and former Director of National School of Drama);  Indira Parthasarathy (South Indian novelist, writing in Tamil language);  K.V. Ramanathan (High-ranking civil servant who retired as Secretary, Planning Commission, and then became Editor, Indian Express);  Premlata Sharma (musicologist);   and Ghulam Sheikh (artist : oil-painting). 


Sunday Magazine

3 February 1991


The Chairman's chapter

Addressing an impressive gathering of classical musicians and dancers, musicologists, music and dance critics and members of the cultural bureaucracy in New Delhi recently, Mr. P.N. Haksar outlined his wide-angled vision of culture in a democratic society and polity.

The occasion was the inauguration of a four-day symposium organized in the Capital by the Indian Classical Music And Dance Fraternity and the Sangeet Research Academy, Calcutta.

Not so long ago, Mr. Haksar had chaired a committee which had reviewed the performance of the three National Akademis (Sangeet Natak, Lalit Kala and Sahitya Akademis) and the National School of Drama.  Its  report was submitted to the Government of India in July 1990, and the Department of Culture released a summary in August.
There have been several Press reports about the committee's recommendations since then, but so far they have tended to be sketchy, distorted or speculative.  Although a thousand copies had been printed by the Government several months ago, they have not been circulated widely.  There seems to be no clear awareness, even among the articulate journalists, of what Mr. Haksar and his colleagues had actually said about the various issues involved.  I ought to know, because I happened to be the Member-Secretary of the committee.

The main theme of the Classical Music And Dance Fraternity's symposium was the role of the Government in the field of art and culture.  The Haksar Committee had gone exhaustively into that question because it felt that the activities of the National Akademis had to be viewed in the widest possible perspective, which naturally covered the legitimacy and limits of the State's intervention and functions in this sensitive area.

A few months before we started writing our report, Mr. Haksar had asked me to prepare a draft on the definition of 'culture' and the values which should govern the cultural environment in India today.  This had to be written at the conceptual level, incorporating a historic and philosophic vision rather than a clinical set of views.

I did try, but not for long.  I just could not get a grip on the composition, though I knew exactly what Mr. Haksar had to say on every aspect of art and culture.  I was confidently looking forward to initiating the draft dealing with our findings and recommendations, but the chapter on the definition and dimensions of culture was clearly beyond my credentials.

It occurred to me after some time that perhaps Mr. H.Y. Sharada Prasad, who was one of the Members of the Committee, could undertake the job successfully. Just before we started writing the report, all of us got together and had some long discussions, so as to crystallize our views.  During one of these sessions I made my suggestion.  Mr. Sharada Prasad's response was immediate and decisive.  He declared that Mr. Haksar should himself write the general chapter.  The Chairman said he would prefer to have a first draft, which he could review and touch up. "Not at all,"  Mr. Sharada Prasad told him firmly, "It's your job, Mr. Chairman, not ours!  We shall do some touching up, if necessary."

So Mr. Haksar had no choice but to agree, and said he would try.  He declined all offers of technical help and said he would be working "in his own way".  He dictated the entire chapter to a very capable stenographer-friend called Mr. Unni, and took no assistance from anyone else in the committee.  After some time, when we were wrestling with the rest of the draft, the Chairman's chapter hit us like a tidal wave.

Profoundly simple 

It was an intricate piece of writing, all 25 typed pages of it, so tightly packed with ideas that it seemed to weigh like a large block of marble.  I showed the manuscript to Mr. Sharada Prasad and asked him whether I should try to simplify the text.

After reading the chapter very carefully, he told me not to interfere with the text except for cutting out some lengthy quotations.  "Mr. Haksar should be quoted, he shouldn't quote so much!" he quipped, repeating a thought he had once expressed about Indira Gandhi's speeches, many of which he had either written or edited.  He also jotted down half a dozen other suggestions -- to alter a word here, or moderate a phrase there -- and told me to get them approved by the Chairman tactfully.  Apart from that, he ruled, the text was not to be touched by anybody including himself.

"We want this report to stand the test of time," he told me. "It is Mr. Haksar's chapter which will make that possible.  Those who can't take it in quickly can skip it and go on to the next chapter, but this one will ensure that the report lives on.  We can't take liberties with a piece of literature!"  During our final deliberations, all the other Members --  Mr. Ebrahim Alkazi, Prof. Indira Parthasarathy, Mr. K.V. Ramanathan. Prof. Premlata Sharma and Mr. Ghulam Sheikh --  agreed with him.  In the event, the only addition we found necessary to make was a single paragraph, in which Mr. Ramanathan succinctly articulated some of our common thoughts on the regional diversity of India.

I certainly saw the point, but I was not quite satisfied.  It was all right for Mr. P.N. Haksar to address his peers on an exalted plane, but it was my obligation as the committee's anchorman to produce a document which could be wholly and readily understood by the ordinary reader.  I went on groping for a solution, and found it when I started drafting the final chapter summarizing our recommendations. 

I had been worrying for some time about how to condense Mr. Haksar's profound reflections into one or two pages of our report.  It had looked like an impossible task at first.  I was about to give up the idea altogether, consoling myself with the thought that the last chapter was to be a summary of our suggestions and not our approach.  But when I was brooding over the problem, it occurred to me that the conceptual chapter contained, apart from a scholarly and philosophic dissertation on the history of Indian culture, certain statements which had the force of recommendations of a generic kind.

These were addressed not only to the cultural establishment and the artistic and literary communities, but to our society as a whole.  I realized that I had only to extract these, and there would be no need to look any further for a precis.

So I just marked every sentence which contained a definitive expression of advice, or of guidance, addressed to any intelligent reader.  I arranged them in a sequence I liked -- and I saw that the core of Mr. Haksar's cultural vision stood out like a tower, and would be visible even to the layman's naked eye.  Mr. Sharada Prasad condensed and re-phrased my extracts a little so as to match them properly in length and language with the rest of our summary of recommendations -- and we had a short section containing a far-reaching cultural testament, which could be  read through and understood effortlessly. 

Glowing vision

I have since reviewed the text, and made a fresh compilation which is only slightly longer but fully restores the unique flavor of Mr. Haksar's prose.  Bulging with such a rich haul of gold, I am sure Chairman Haksar's hold-all is not likely to escape the close attention of the cultural authorities and the people of India.  And what is true of our society, I should imagine, is likely to be valid in the whole world.

--  The term 'culture', in its most comprehensive sense, refers to diverse creative activities which give a sense of purpose to human existence, and provides the reflective poise and spiritual energy so essential to the maturing of the 'Good Society'.

--  Thus defined, culture refers to a wide range of activities -- literature, performing and visual arts, and various forms of artistic self-expression -- in which individuals and communities are perpetually engaged.  The definition of culture, therefore, should not differentiate between the specialist creator of culture and the lay citizen.  Culture constitutes an integral part of the social and political existence of human beings.

-- While the State has a vital role to play in the field of art and culture, its political and ideological predilections can have adverse consequences.  Any rash political intervention into culture would be disastrous.

--  There is a need for the exercise of extreme sensitiveness on the part of the cultural bureaucracies of the Akademis and the Government departments concerned with cultural affairs at the Centre and in the States, and by politicians.  Management of culture should be avoided.

--  The  State, through institutions specially designed to facilitate creative activity, can only promote a congenial climate for the stimulation of culture.  It remains the task of the inspired artists to invoke that spirit which reflects culture in the noblest form. 

--  It must be ensured that the cultural life of the individual, no less than that of the community, should seek to relate aesthetic fulfilment to the everyday activities of life.  Encouragement should be held out to creative activity which locates both beauty and utility in the artefacts of cultural as well as material production. 

--  We must be constantly be on guard against any surrender to vulgar or populist forms of artistic endeavor.

--  Manifestations of folk art and culture must not be considered as museum exhibits for satisfying exotic interests.  Their subordination to the laws of commercial 'mass culture' is a threat against which it is necessary to provide institutional protection and support. 

--  Cultural production today is accomplished in a social context in which the mass media and the market have emerged as arbiters of taste and quality in aesthetic activity.  Modern economics have converted art itself into a commodity.  In the generation of cultural values, the market needs to be tamed and harnessed to serve the interests of men, nature and society. 

--  The laws of the market of mass-produced culture should not be allowed to annihilate the artist, even as the artist tries to wrestle with them.  This must be one of the desiderata of State support. 

--  Those concerned with the field of culture must sensitize themselves to the fact that our country is involved in vast, complex and turbulent processes of economic, political, social and cultural transformation.  

--  Culture has to be an important component of our planning processes.  Our response to the 'hunger of the heart' and the 'famine of the brain' need not await the response to the minimum needs of the body. 

--  Cultural development requires the planned and sustained creation of infrastructure over a long period of time. 

--  The approach to culture in India must positively encourage regional diversity, and not merely tolerate it, so that no region or group can have the threat of having a feeling of being swamped.  There are no 'majority' and 'minority' cultures.  The smallest unit has its contribution to make to the enrichment of the national sum total, and must be respected. 

Tuesday, July 11, 2017

The Disadvantages And Disconnections of Diversity

A rather discouraging thing about Articulations Online is that it has no chance of uniformly pleasing a universal audience, because its progress is characterized by so many sudden twists and turns.  The following facts will indicate the true reason for such a kaleidoscopic perspective :-

Recalling my reflections as an articulate layman -- writing in some of the most prestigious English-language newspapers in India for more than 50 years -- had gradually evolved as the main objective of this column, as explained in the preceding post (The Never-endingExpansion Of The Great Cyberian Ocean).

Unfortunately my contributions had never been collected in book form, which could perhaps have made a progressive impact on more and more readers, especially those belonging to younger generations.  So it seemed to be a good idea to dig the best of them out of cold storage and present them in this blog -- with suitable introductions and postscripts to make them relevant today and tomorrow in a historic sense (and also with helpful glossaries and annotations, to let the texts make sense in global terms) -- thus consolidating them into a durable, universally accessible source of reference.

But my intellectual excursions in the cultural, social and organizational realms, spanning five decades, had been extremely diverse in character, content and style.  Naturally, readers of Articulations Online who are fascinated by some of my vintage reflections tend to look for more and more recollections of the same kind, and are likely to be disappointed when they encounter something totally different -- which in turn may fascinate some other readers (who may not be pleased by texts of the first kind, of course).

After all, even bestselling novelists like Dick Francis or John Grisham must have displeased millions of their devoted readers when leaving their standard settings like race courses or courts of law and venturing into some far different scenario on rare occasions.   And who knows, at the same time they might have pleased some other readers who found those unique novels more interesting than the authors' usual works!

Twin tracks

At this stage, when I set out to review the merits and constraints of this ongoing endeavor to salvage and preserve some of my most significant articulations in a universal source of recurring reference, I must explain my concerns both as a professional civil servant and as an amateur journalist. 

I was an innovative officer of the Indian Audit & Accounts Service (IAAS) for more than 35 years in the second half of the 20th century, and also a forceful freelance journalist for 30 years till the end of that period.  Thus I had a combined track record of more than 65 years as a successful bureaucrat-commentator when I retired from civil service towards the end of the century.  On my superannuation, I worked for a couple of years as a consultant to the Comptroller & Auditor-General of India and the Press Trust of India successively, on certain unusual assignments.  

On the official front, whether as an accounts executive, internal financial controller/adviser, or external auditor -- in the Audit Department as well as other government departments or organizations on deputation -- I invariably streamlined existing working methods or introduced new ones, usually achieving impressive results (and sometimes spectacular ones, as during an intensive ten-year spell when I emerged as the leading pioneer in the field of investigative government audit in India). 

As an amateur journalist, I began by writing English essays of the classical kind in THE HINDU (then published only in Madras), but later on wrote humorous articles including satire, and turned to Indian and Western music as constant and substantial sources of material --  writing successively in the Free Press Bulletin in Bombay, Indian Express in Madras, Shankar's Weekly and Hindustan Times Evening News in New Delhi, and again THE HINDU (music in the New Delhi edition, essays on art and culture in all editions).  I had also drawn cartoons to illustrate my light-hearted weekly column in the Evening News and the HINDU essays.

There were a couple of unusual contexts in which these parallel track records proved my credentials for undertaking two unprecedented assignments.  The first one, a few years before I retired from government service, was when I was the sole candidate for the position of Member-Secretary of  a special panel in the Culture Department reviewing the performance of four prestigious national institutions concerned with music, dance, drama and literature -- a choice made personally by Mr. P.N. Haksar, a distinguished ex-diplomat and cultural philosopher, who was looking for someone who had achieved excellence as a bureaucrat, writer and artist at the same time.  

Style and status

The second occasion arose a couple of years after my superannuation, when THE HINDU appointed me as a special correspondent on a semi-professional basis, mainly for writing a forceful and unprecedented column on the audit reports of the Comptroller & Auditor-General of India.  This feature, titled India of C-A-G, explained the substance of the most significant current audit findings in a historic perspective, recalling relevant past scenarios, and analyzed important related issues.  

Mr. N. Ravi, the Editor, gave me absolute freedom of expression, and allowed me to adopt a lucid personal style and illustrate the texts with my own cartoons, which simplified even the toughest topics and made audit and accounts almost as interesting as art and culture. He also gave me a remarkably free hand to draw cartoons in a startling style in a weekly feature called Talk Exchange in the business section of the newspaper.

That assignment, which gave me a  prominent semi-professional status among leading newspapermen in India, was the summit of my progress as a journalist.  I thought it would never end, but it did after five years, for some mysterious reasons. I tried continuing the CAG saga in a monthly column called Auditscan in the online edition of the Business Today in New Delhi, but I couldn't cope for long with the tensions created by criticizing the fraudulent activities of businessmen in a business magazine.

After that I went on what amounted to a sabbatical for a few years, making an unsuccessful attempt to transform into reality my lifelong dream of writing a humorous bestselling book on management which would project some intriguingly original ideas.  But in due course I found my way back to my alma mater, THE HINDU -- once again as an amateur contributor -- and wrote a fortnightly column called Musicscan for several years, conveying many useful insights into concepts and trends relating to Indian and Western music.     

Changing tracks

Obviously, presenting even some selected articles on such diverse topics (written in several different styles, depending on the contexts and contents) in a single source of reference carried the risk of building up an amorphous mass of writing, which would have no continuity and might please some readers sometimes but none of them at all times. 

Anyway, I fished out more than a hundred vintage essays or reviews or sketches from my old records and posted them in the blog at random, just stringing together some of them now and then if they were of the same or a similar kind or flavor. In mid-2016, however,  I lined up more than 30 articles in a row with a common thread running through them, highlighting the perceptions and and preferences of ordinary lovers of Western music in India, which cried out (and still cry out today) for the serious attention of local organizers and foreign musicians visiting this alien land. 

Actually there were many more articles which would have reinforced the above theme, but this exercise in continuity and total concentration on a specific idea had to be halted at some point because it was excluding so many significant articles on different topics which were worth recirculation for the benefit of readers with other expectations.

Thus, whether there has been continuity or discontinuity in building up this body of writing, I haven't been able to fully satisfy any set of readers anywhere in the world.  And of course, the fact that I haven't been able to devote myself exclusively to this task due to other important preoccupations, resulting in wide gaps between posts, has been another source of dissatisfaction.

As I take fresh stock of things at this stage, I find that I haven't included in this collection (or recollection, if you like!) some of my best essays, and not a single one of my articles on audit or cartoons.  So let me change tracks again now, though I know I may be incurring the displeasure of even some of the readers who have taken an extremely tolerant view of the disconnections so far!