The powerful Public Health Foundation of India, packed with corporate and government luminaries, has come up with dubious and contradictory information about its structure and formation when subjected to Right to Information scrutiny
In a significant decision dated 14th February, the Central Information Commission (CIC) noted “with some dismay that the highest levels of public servants in India did not accept the citizen’s enforceable right to information in PHFI, despite the government substantially funding it and exercising some control”.
It was referring to Public Health Foundation of India (PHFI), a powerful body that has received generous land and funding from the central government to chalk out India’s public health policy. PHFI remained outside the purview of the Right To Information (RTI) Act 2005 for six years since its inception in February 2006 despite the presence of a galaxy of government luminaries including TKA Nair (Advisor to the PM) and Dr Montek Singh Ahluwalia (Deputy Chairman, Planning Commission) on its governing board. This writer had previously written a series of articles in Moneylife (Will PHFI be any different under Narayana Murthy?, Will PHFI become transparent and accountable under Narayana Murthy?, Mr Narayana Murthy, PHFI reply to questions about the authority and functioning of the organisation, and PHFI’s reply gives hope, not confidence) about PHFI’s structure, lack of transparency and conflicts of interest when it was headed by Rajat Gupta, the former McKinsey chief who quit after being accused of insider trading (he has since been convicted for securities fraud in the US and seems likely to serve a jail term).
The CIC ruling in PHFI’s case declared it a public authority under Section 2(h) of the act and ordered it to start complying with the law. Interestingly, the phrase “highest levels of public servants in India” used by the CIC may well apply to Prime Minister Manmohan Singh himself, who implanted PHFI into the heart of India’s public health policy and administration and described it as a “public-private partnership” (PPP). RTI queries however reveal a scandalous and deliberate lack of transparency in its creation and clearance.
Fabrication given away
In response to my RTI query on 5th July, Kalpana Swamy, the public information officer (PIO) at PHFI had sent me a document on 13th August that is wrong and contradictory to the point of being a forgery. The 5-page ‘Annexure B’, purportedly a photocopy of an officially certified document has strangely asynchronous information on something as simple as the composition of the governing council of PHFI as on 31 March 2006. The original document was ostensibly stamped and signed by president K. Srinath Reddy on 03 August 2006. But consider this:
(a) Dr RA Mashelkar who was Secretary, DSIR (Department of Scientific and Industrial Research) and Director General of CSIR (Council of Scientific and Industrial Research) in March 2006, has been listed as ‘CSIR Bhatnagar Fellow, National Chemical Laboratory’, which he became only after his retirement in December 2006.
(b) K. Sujatha Rao has been listed as ‘Former Secretary, Ministry of Health & Family Welfare’. Ms Rao retired from her post as Secretary of the health ministry in November 2010.
(c) Rajat Gupta – prime mover in the formation of PHFI and its chairman until March 2011 – is listed as ‘Former Partner, McKinsey and Co.’. However, according to publicly available information, he was Senior Partner at McKinsey & Co. in the year 2006.
There is more. While the ‘Annexure-B’ lists 24 persons as part of the governing body that came into effect on 27 March 2006, the same PIO at PHFI had earlier informed Kishan Lal, a Mumbai-based RTI applicant ,that “The Governing Council with 21 members came into effect on March 27, 2006”. (I had represented Kishan Lal before the CIC Shailesh Gandhi in that case -decision No. CIC/SG/C/2011/001273/17356)
The date of 27 March 2006 is important, because it is the eve of PHFI’s “launch” by Prime Minister Manmohan Singh. ‘Annexure-B’ lists four top bureaucrats − Nirmal Ganguly, Prasanna Hota, K. Sujatha Rao and R.K. Srivastava − as members of the PHFI board on 27 March 2006, even though there is nothing in the public domain that attests to the government authorizing these four to join the board on or before that date.
There are more such mysteries about the composition of the board and the contradictory information provided to the RTI query on13th August, but we will come to those later.
In a separate RTI query to the Union health ministry, I asked whether it recognized PHFI as ‘autonomous body’ and, if it did, whether the union Cabinet had approved its formation as an ‘autonomous body’. On 16th August, I received the CPIO’s response. Strangely, the ministry had forwarded my query to PHFI and sent me a reply labeled the “PHFI Response”. Needless to say it is full of misleading information.
The larger deception
The 14th February order subjecting PHFI to RTI scrutiny has exposed several uncomfortable facts, or downright deception.
For over six years the government has described the PHFI as a “public-private partnership (PPP)”, an “autonomous body” or an “autonomous PPP” (a special coinage) – depending on its convenience – in formal statements to the Parliament and a parliamentary committee. For example:
* In mid-2006, PHFI was introduced as a PPP to the Parliamentary Standing Committee on Health and Family Welfare, which was considering a demand for grants (2006-07).
* On 24 November 2006, Panabaka Lakshmi, then minister of state for health, described PHFI as an “autonomous body” to the Rajya Sabha.
* On 31 August 2007, Lakshmi described PHFI as an “autonomous public-private partnership” while speaking in the Rajya Sabha.
RTI queries now reveal that PHFI was never intended to be a “PPP” or an “autonomous body” in the normal sense of those descriptors. Responding to another query by activist Kishan Lal, the health ministry not only denied the existence of any PPP initiated by the government in the health sector, but also the existence of any “PPP policy for the social sector, viz. education and health”. This matter was before the CIC too. Needless to say no contractual agreement was ever signed between the supposed ‘private partners’ and the supposed ‘public partners’ to form PHFI.
In other words, PHFI is not only a law unto itself, but is meant to be a durable, flexible, arrangement for powerful bureaucrats and corporate houses to use as convenient.
The claim that PHFI is an “autonomous body” seems more dubious. Responding to my RTI query on 16th August (which was forwarded to PHFI), the health ministry clearly said that “PHFI cannot be defined as an autonomous body”. But describing it as an autonomous body allowed it to obtain a massive “grant-in-aid” of Rs 65 crore approved as a “one-time contribution” to PHFI’s corpus on 06 July 2006. The government had never envisaged PHFI as an ‘autonomous body” because that would need to meet the very elaborate conditions laid down by the General Financial Rules 2005 (GFR 2005) for forming such bodies.
One of those conditions is a prior Cabinet approval, which was never obtained and never intended to be obtained. In fact, the so called “grant-in-aid” of Rs 65 crore was rendered illegal from the moment it was conceived because it was provided in violation of GFR 2005. As for “autonomous PPP”, this special coinage was merely to pull wool over the public’s eyes.
(PART -2 – More wool over public eyes – tomorrow)
(The writer is a Delhi-based freelance journalist who has written about PHFI in the past. He has written a formal complaint about forgery, in the form of first appeal, to PHFI. He has also sent letters of complaint to at least a dozen members of PHFI’s governing body, including T K Nair, Dr M S Ahluwalia, P.K. Pradhan (Secretary Health), Amartya Sen and Mirai Chatterjee, but has received no acknowledgement from any of them.)
The cement industry’s volumes are likely to grow 8%-9% in FY13, driven by individual housing and expected infrastructure push, says a Motilal Oswal report
Motilal Oswal Financial Services hosted ACC, Ambuja Cements and Grasim/ Ultratech at the Motilal Oswal 8th Annual Global Investor Conference. Based on the conference and the inputs from the brokerage firm, the following observations have been made about the cement industry: (a) Volumes are likely to grow 8%-9% in FY13, driven by individual housing and expected infrastructure push. Seasonal price correction has been sub-normal till August due to delayed monsoon (b) Capacity addition should slow down to about 60 million tonnes (MT) over FY13-15. Increase in capex cost necessitates sustenance of higher profitability; downside risks are limited. (c) The costs of power, fuel and freight, which have been rising, are likely to stabilize at elevated levels. The focus would remain on enhancing operating efficiencies and maintaining margins.
Motilal Oswal observes that Ambuja and Grasim/Ultratech among large-caps and Shree Cement among mid-caps are the bright performers in the industry.
Other issues in the cement industry which have been pointed out by Motilal Oswal include that pre-election infrastructure spending has the potential to boost growth to over 9.5%, while expectations from organized real estate remain subdued. Delayed monsoon has resulted in lower seasonal price moderation till August 2012. The cement majors expect demand-supply equation to improve, with slowdown in capacity addition. Only about 60 MT capacity addition is planned over FY13-15 and there could be delays, given the prevailing challenges in approvals and execution. While most players have exhausted their brownfield capacity addition potential, the economic feasibility of greenfield capacity is limited at current profitability.
In this context, Motilal Oswal states clearly that high capex cost necessitates sustenance of higher profitability. The companies guided greenfield capex cost at Rs7,000-Rs7,500/tonne (excluding captive power). Downside risk to prices is limited, given elevated capex and operating expenses. EBITDA/tonne of Rs1,200-Rs1,300 is required to earn reasonable RoIC (return on invested capital) and address 12%-14% cost of capital.
On the cost of production side, Motilal Oswal says that for the cement industry as a whole, the cost pressure is stabilizing; and there is conscious effort on the part of industry players to improve efficiencies. The costs of power, fuel and freight, which have been rising, are likely to stabilize at elevated levels. To combat inflation and high capex, the focus would continue to be on maintaining margins. Achieving energy efficiency, use of alternate fuels, increasing CPP (captive power plant) load factors, technical de-bottlenecking, etc, would be the key focus areas to enhance operating efficiencies.
Finally, as a prediction for the cement industry, Motilal Oswal says, “We believe that the worst is behind for the cement industry and a gradual and consistent improvement in capacity utilization and operating performance is impending. After the recent outperformance, cement stocks are trading at historical average valuations, leaving limited room for further re-rating. We expect strong earnings growth to drive stock performance, hereon.”
Reliance Industries had projected an output of 27.6 msmcmd for FY13. However, the fields have seen the output drop to 27.65 mmscmd in August itself even as the company shut eight wells due to water and sand ingress