After registering a 12-month high in January, India’s services sector has reported weak output in the last two months. However, service providers remain optimistic about the future
The headline HSBC Services Business Activity Index stood at 51.4 in March, down from 54.2 in February. Though the services output has grown in March, the growth has eased to its lowest level since October 2011.
“Growth in service sector activity slowed notably due to a deceleration in new business flows,” HSBC chief economist for India & ASEAN Leif Eskesen said adding that the backlogs of work and hiring rose at a slower pace.
Earlier data showed that India’s manufacturing sector also witnessed the slowest rate of expansion in 16 months in March as power outages hampered production activity along with a decline in new business orders.
Service sector firms as well as manufacturers added to their staff numbers during March, but the rate of job creation was ‘moderate’.
After registering a 12-month high in January, India’s services sector has reported weak output in the last two months. However, service providers remain optimistic about the future.
The degree of confidence among service providers was the strongest registered since December 2012 and service sector firms linked positive sentiment to expectations of stronger demand and planned investment in marketing, HSBC said.
On inflation, the report said input prices in the Indian service sector rose but moderately during March and subsequently, services companies increased their selling prices.
“Encouragingly, input prices and prices charged inflated less fast. Despite this the scope for further rate cuts is limited, and the next cut may well be the last,” Eskesen said.
While allowing an appeal, the CIC noted that refusal of the information in the first instance had been in good faith and hence there will be no costs. This is the 69th in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi (this decision was given by a two-member bench) that can be used or quoted in an RTI application
A two-member bench of the Central Information Commission (CIC), while allowing an appeal directed the Public Information Officer (PIO) of Indian Institute of Management, Ahmedabad to provide information agreed upon to the appellant.
While giving this important judgement on 20 April 2010, the bench of Wajahat Habibullah, the then Chief Information Commissioner and Shailesh Gandhi, the then Central Information Commissioner said, “The information, as agreed, will now be provided to appellant Rakesh Kumar Dubbudu within 10 working days of the receipt of this Decision Notice. But because the refusal of the information in the first instance had been in good faith, there will be no costs.”
Hyderabad resident Rakesh Kumar Dubbudu, on 5 September 2009, sought information under the Right to Information (RTI) Act from the PIO of Indian Institute of Management, Ahmedabad. He sought information about the grant of contract to conduct online Common Admission Test (CAT) to Prometric. Here is the information he sought and the reply provided by the PIO...
1. Copy of the tender notice
PIO's Reply: Enclosed.
2. List of companies that put in tenders for this contract.
PIO's Reply: Enclosed.
3. Copies of all tender documents put in by the various companies.
PIO's Reply: Information is exempt from disclosure under Section 8(1)(d)
4. Copy of all complete file including the file noting of the tender finalization and selection of Prometric.
5. Copy of the contract document signed with Prometric.
6. Value of the Contract signed with Prometric.
7. Copy of the concessional agreements signed with Prometric.
PIO's Reply: There is no concessional agreement signed with Prometric.
8. Is HRD ministry funding this initiative and providing the contract amount?
PIO's Reply: The HRD ministry is not funding this initiative and not providing the contract amount.
9. Provide breakup of amount and parties that are sharing the contract funding.
PIO's Reply: There is no sharing of the contract funding.
10. Reasons for selection of Prometric.
PIO's Reply: Reasoning of decision does not come under the ambit of RTI Act.
Not satisfied with the reply, Dubbudu approached the CIC, which remanded the matter to the First Appellate Authority (FAA) of IIM, Ahmedabad.
The FAA in its order noted that the PIO had informed that the CAT Centre had written to the fourteen firms which had applied for the contract asking them to respond if they had any objections if their tender documents were disclosed to the RTI Applicant. Nine firms did not respond and therefore it was assumed that these firms had no objection to parting with this information.
Accordingly, the PIO informed the applicant (Dubbudu) that he could obtain the photocopy of the documents on payment of additional fees of Rs1,326. The PIO informed the applicant that the remaining five firms had categorically stated that the documents relating to them should not be revealed. The technical details, computerization processes laid out and financial modalities are service provider specific and are proprietary information and therefore, disclosing this information would breach commercial confidentiality, and by providing this information, the Institute may be exposed to potential legal action by firms, the PIO said.
The Appellate Authority ordered that information on nine service providers which had not responded to the CAT centre query may be given to the applicant once he makes the payment @ Rs2 page. Regarding other information on the other five service providers, the PIO was requested to take up the matter with the CAT centre keeping in mind the spirit of the Act as well as section 10(1) of the Act.
The matter then came to the CIC. During a hearing on 22 January 2010, both the parties submitted various arguments. Both Dubbudu and Prof Satish Deodhar, Convener of CAT sent the submission.
In his submission, Dubbudu, the applicant stated that “There is huge public interest involved in this case. The 2.41-lakh students who took CAT this year and the public in general have a right to know how and why Prometric was selected and the basis on which the others were rejected. The way CAT was conducted this year and the number of court cases already pending on this matter further strengthen the argument for disclosure.”
Prof Deodhar, in his submission stated “Disclosure of the information would harm the competitive position of the IIMs. In the absence of maintaining the confidentiality, private institutes would access to IIMs innovative ideas. Other stakeholders in the society would be interested in misusing the confidential information that is being requested for by the appellant. For example, the coaching class industry would certainly like to know more about how IIMs generate questions for the computerised test, how they are securely stored, and what the methodology of delivering them to the candidates is. If the confidentially of such information were violated then that would compromise the ability to discriminate candidates.”
“Given the market dynamics, continued intention of IIMs to hold computerized test and the possibility of knowing of each other's financial strategies, collusion may emerge among firms when the contract is to be renewed, re-negotiated, or fresh proposals are sought. Revealing rival financial strategies may lead to weak bargaining position for IIMs. As a result, financial considerations may turn out to be expensive for public institutions like IIMs. This certainly will not be in the larger public interest,” he added.
The Commission said, on consideration of the facts during the hearing and through the written submissions received from the parties, the bench was of the opinion that the matter warrants the constitution of a larger bench as there is considerable public interest involved and the legal position is not entirely clear-cut. The matter was then reserved for decision.
The Division Bench then heard the appeal on 23 February 2010 through videoconference.
During the hearing, Prof Deodhar submitted that it is not in the public interest to disclose how the test is conducted and if the coaching classes were to learn of these details, it would disrupt the entire process of the CAT examination structure.
Prof Deodhar further submitted that CAT examination is intellectual property of the IIM and if the manner of existing tender offers together with the costs accepted from year to year is known; this could lead to collusion in rising of prices.
In a separate letter, Prof Deodhar brought to the notice of the Commission that the appellant Dubbudu was an employee of Oracle India (P) Ltd, one of the competition firms, which is the address that he has given in his RTI application.
Dubbudu took objection accusing the respondent of character assassination and stated that he has mentioned that address of Oracle India (P) Ltd. because that is his official address, but as he has clarified in the initial application “this application is in my personal capacity as a citizen of India”.
Prof Deodhar then clarified that this fact had been given only for the information of the Commission to make of it as it would and that no accusation was made.
During the hearing, Mr Gandhi enquired of the respondents whether this system was unique to IIMs to which he received the response that there are other organizations that also rely on the CAT system.
The Commission noted that in the information sought, the impugned response was only with questions 3,4,5 and 10.
In its earlier decision in other matters, the Commission had ruled on the question of disclosure of bids on offer after the contract has been awarded, in light of the exemption allowed under Section 8(1)(d).
In a decision (Complaint No CIC/WB/C/2006/00176) on 13 June 2006, the Commission had held that...
“A contract with a public authority cannot be categorised as 'confidential' after completion. Even if some confidentiality is involved, public interest in a matter of the nature of the present case will warrant disclosure. Had it been a case of quotations, bid or tender or any other information prior to conclusion of a contract, it could be categorized as trade secret, but once concluded the confidentiality of such transactions cannot be claimed. Any public authority claiming exemption must be put to strictest proof that the exemption is justifiably claimed. This is not so in the present case.”
Similarly, in a decision (CIC/SM/A/2009/000981) on 4 November 2009, the CIC ruled that...
“The Respondent reiterated the same arguments and claimed that the quotations offered by various bidders for the renovation/repair work as well as the bills which were reimbursed to the contractor were in the nature of commercial confidence, the disclosure of which would affect the competitive position of the concerned parties and, therefore, should not be disclosed. We do not at all agree with this line of argument. The tender process cannot remain a confidential affair after the tender is finalized and the successful bidder selected and appointed. When the bidders take part in a tender process, they do so in response to an open public invitation of bids.
“To argue that their quotation is a confidential transaction between them and the public authority even after the tender is finalized is totally contrary to the objective of transparency expressly sought to be promoted by the government in the area of procurements of goods and services. In fact, such information should be suo moto placed in the public domain by the public authority without having to be told to do so. Similarly, the application of an individual for securing a job cannot be a confidential document by itself. If it contains details other than what was strictly excepted as per the recruitment rules for the post, those details can, however, be severed before parting with the document.”
The Commission said, in light of the above decisions, and in view of the submissions of both parties before the CIC, it felt that in this case the IIM claiming exemption must in its turn be put to strictest proof that the exemption is justifiably claimed. The CIC then directed Prof Deodhar to present these documents before the Commission on 12 April 2010.
On 12 April 2010, Prof Deodhar presented the documents sought by the Commission. He also submitted a petition, in which he showed willingness to share some documents, like...
1. Pre-qualification proposals by nine service providers who did not respond to us to withhold their proposals (pages 707).
2. Minutes of the meeting held to short-list service providers (pages 5).
3. Minutes of the meeting held for final selection of a service provider including all the appendices except appendix II (pages 9).
While refusing to provide remaining information, Prof Deodhar made following arguments.
B 1. Harms competitive position of third parties—Section 8 (1) (d)
a. Five service providers have sent official letters clearly mentioning their reservation for information disclosure. Some clearly allude to harming of their competitive position.
b. Both at the pre-qualification stage and short-listing stage, service providers have printed clear instructions at the bottom of each page of their proposals that the information provided in the pages is private, confidential and proprietary.
B2. Harms competitive position of IIMs—Section 8 (1) (d)
a. Domestic competition: There are quite a few domestic organisations in private sector with their own entrance tests for management education (e.g. XMAT, NMAT, MAT, etc). IIMs certainly do not want them to know the financial and technical strategies followed for CAT computerization as brought out in the proposals and contract documents. Under the garb of RTI public are asymmetrically duty bound, vis-à-vis domestic private institutions and are completely disarmed in their efforts to retain competitive edge.
b. Foreign competition: International organizations which conduct their own aptitude/ entrance tests for management education (e.g. GMAT) are vying with CAT to capture the Indian educational testing market institutions like IIMs. For example, after establishing their offices in US and UK, GMAT has recently set up its third international office in India. IIMs certainly do not want them to know the financial and technical strategies followed for CAT computerization which are quite India specific. Leads and hints of these strategies get revealed in the proposals and contract documents. Under the garb of RTI, Indian, national, public institutions like IIMs are asymmetrically duty bound vis-à-vis foreign institutions and is completely disarmed in their efforts to retain competitive edge.
B 3. Not Serving (Harming) Larger Public Interest—Section 8 (2)
a. IIMs are established to serve larger interest of society.CAT is conducted to select thousands of innately good candidates and train them for a few years so that they will serve the society. Moreover, CAT scores are also used by 155 non-IIM institutions spread all over India to select many more thousands of candidates who will get training in management education. If CAT processes and computerization strategies become available to stakeholders such as coaching classes and candidates, ability of 155 management institutions and of IIMs in selecting innately good candidates will be thwarted and this is not in the larger public interest.
b. As academic institutions, IIMs and their faculty have the responsibility to come up with novel, innovative concepts that will enhance their contribution to society. Computerization of CAT, particularly in the typical Indian market conditions, is one such concept initiated by IIMs. Under the garb of RTI queries, if their ideas get shared with free riding stakeholders of the society (competing testing organizations, coaching classes and candidates), IIMs ability to build ability to intellectual capital in the area will be seriously compromised. This will affect their ability to improve processes to select innately good candidates not only for themselves but for 155 non-IIM member institutions. Public interest is harmed in the process by thwarting improvements in selection process for IIMs and non-IIM member institutions.
c. As public institutions serving the society, IIMs would like to economize on the nations resources. While engaging with private service providers, public institutions serving the society, IIMs would like to economize on the nations resources. While engaging with private service providers, public institutions negotiate hard to get best possible pecuniary and technical benefits and save precious resources for the society. It is important to know that even now the competing service providers who bid for the computerization contract do not know each other's financial or technical strategies. If these are made public, then there is distinct possibility that when the contract is due for renewal or fresh bids, the competing service providers may either collude or will not submit financial proposals as economical as they would have if they had not known the financial strategies of others. In the process additional, precious financial resources of the society would be wasted as the bargaining position of public institutions like IIMs would be weakened due to the disclosure.
B4. Applying Severability is extremely difficult & risky—Section 10 (1)
a. We understand that a public institution may part with those texts of the documents, which can be severed from the ones that are confidential and/ or the eligible for exemption from disclosure. However, in our opinion, disproportionately large and substantive texts are confidential in nature and any attempt to sever such text from about 2500 pages would be extremely difficult and risky.
b. Technical details regarding server and lab security standards, Applying Severability is extremely difficult & risky (Section 10 (1)
c. infrastructure solutions, test centre networking, organizational structure and execution plans, statistical procedures, equations, sealing of scores, phasing and scheduling of test days, description of process to assist in generating thousands of questions ,discussion about ownership of questions ,tests, software programmes, data collection, key descriptions of specialized personnel and their responsibilities in the execution of project, and candidate care services are highly confidential, and, important are spread and cross-referenced throughout the documents. It is extremely difficult and risky to attempt severing two kinds of information.
d. Details of financial strategies in terms of fees, method and duration of fee collection, pecuniary incentives for psychometric research, project management, question bank development, public relations, and extent of liabilities negotiated by each of the service provider are highly confidential, and importantly, are spread and cross-referenced throughout the documents. It is extremely difficult and risky to attempt severing two kinds of information.
B5. Risk of exposure due to petitioner's work place association.
The Commission noted that the entire case hinges around the subject of computerization of CAT exams. Prof Deodhar also submitted that the competitive position of the party does not end with the award of contract, since contracts are also subject to review and this could compromise the competitive position of the winner of the contract.
Prof Deodhar also submitted the computerization of the CAT exam is a new experiment and is looked upon with a degree of jealousy by institutions across the world. In this context, he cited the example of US based G-MAT which has recently opened its offices in India and would wish to compete with CAT in supplying computerized examination systems to IIMs and other institutions. He also submitted that at the time of the initial response to the application of appellant (Dubbudu), he had spoken to the third parties only on the telephone. Subsequently, he had written to third parties and obtained their responses.
On the question of the highly competitive area of computerization of examinations, although it would be ready to disclose the information, if and as directed by the Commission, Prof Deodhar was of the view that this could dangerously compromise the whole examination structure, given the positions of competitive vendors, those using the systems to obtain the best quality of student material and the candidates themselves.
Prof Deodhar also sought an opportunity to consult with other experts in the field and to revert to the Commission with the report through email addressed to [email protected] and [email protected] by or before 20 April 2010, after which the Commission would be free to issue its decision. The Commission agreed to the request.
The bench of Mr Habibullah and Mr Gandhi, accordingly allowed the appeal filed by Dubbudu.
CENTRAL INFORMATION COMMISSION
Decision No. CIC/SG/A/2009/003128/7504
Appeal No. CIC/SG/A/2009/003128
Appellant - Rakesh Kumar Dubbudu
Respondent - Indian Institute of Management, Ahmedabad
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