October 4, 2021
To: either/view subscribers
Good morning. Using one search engine to search for another is a strange phenomenon. However, that’s exactly the case here.
Recently, it was revealed that the top searched topic on Microsoft’s search engine Bing is “Google.” The news came as part of a recent hearing where Alfonso Lamadrid, a lawyer representing Google’s parent company Alphabet, revealed the data. The hearing was for an antitrust case where Google appealed to overturn a $5 billion antitrust fine from the European Union (EU).
📰 FEATURE STORY
Dismantling of Ordnance Factory Boards
Thanks to the Ordnance Factory Board (OFB), the Indian armed forces have access to a large chunk of military supplies like weapons and ammunition. The government has decided to transfer the factories and personnel under the OFB into seven Defence Public Sector Units (DPSUs), essentially into corporate entities. The move isn’t surprising given the government’s pro-business and ‘less government more governance’ mantras. As with any initiative to corporatise, it hasn’t gone down well with some stakeholders, while the government insists employees have no reason to worry.
Let’s look at a brief overview of what the OFB is and its components. The OFB is an old institution with the first unit set up in 1801. The primary components of the OFB are industries. What do they make? Everything from civilian and military-grade weapons, ammunition, explosives, military, and armoured vehicles, to name a few. Their customers are the armed forces and even paramilitary and police forces. Apart from the manufacturing facilities, it has nine training institutes, three regional marketing centres, and five regional controllers of safety.
The calls to corporatise the OFB aren’t new. Over the past two decades, at least three expert committees, the TKS Nair Committee in 2000, the Vijay Kelkar Committee in 2005, and Vice Admiral Raman Puri Committee in 2015, have recommended, in some shape or form, for privatisation. The government’s wish finally came to fruition on June 16 when the Union Cabinet approved the restructuring proposal.
So, it’s a plan to corporatise a two-hundred-year-old institution. Of course, there was opposition to it, primarily from employees and unions. It’s important to note that the OFB employs more than 80,000. Understandable, given concerns about their employment status and livelihoods once a corporate entity takes charge. The government didn’t exactly play nice in the aftermath of the decision. The Law Ministry issued a notice prohibiting employees from participating in any strike, which they threatened to do so.
It will improve efficiency and quality of output
The OFB operates under the Ministry of Defence, specifically the Department of Defence Production (DDP). It isn’t a stretch to state that government units aren’t the most efficient, profitable, or innovative. There’s always been an air of inferiority relative to private or corporate entities. The OFB isn’t an exception, at least from the Centre’s point of view. So, what’s the government’s case?
For starters, let’s take the OFB’s functioning. Operating under the defence ministry, the units under the OFB weren’t able to retain profits. The Centre contends that production costs are high, and the upper management isn’t exactly flexible. The government’s concern has some validity here. A Comptroller and Auditor General (CAG) report from 2019 showed that production fell short of targets, and supervisory costs from 2013-18 increased by 36%. Keep in mind the army is the primary buyer. Needless to say, in case of any conflict, they can’t be battle-ready with substandard equipment. An internal report submitted to the Defence Ministry doesn’t help matters for the OFB. It stated 27 deaths and 159 injuries due to faulty ammunition since 2014.
Coming to the management and business side of things, the OFB has little autonomy. Important decisions are taken outside the organisation. There’s little appetite for innovation or risk-taking. It’s very much a traditional ‘stick to the rules’ way of functioning. Also, the OFB has a monopoly, and the products aren’t sold at a profit. What’s the cost to the government? They shell out ₹5,000 crores annually for salaries and ₹3,000 crores as operational costs.
Corporatisation is the right move here. Again, given the main customer is the armed forces, you want them equipped with the best. Under the new plan, the entities will be governed by their own board of directors with minimal government intervention. To bolster the government’s case, the decision has the support of two people who know what they’re talking about concerning defence necessities and capabilities – Lt Gen P.R. Shankar, former Director General of Artillery, and Colonel KV Kuber, an Indian army veteran. Both made the case for the move citing, among other reasons, the need for modernisation, better functioning and competing with other countries. That’s a good thing, given the need for flexibility, innovation, autonomy, and preparing for the future.
It is bad news for OFB employees
It’s not every day you see organisations affiliated with the RSS, Congress, and the Left come together in opposition. The government’s move to dismantle the OFB into DPSUs and corporatise them was the issue this time around. Their case was that the government’s move would be a boon for private corporations and foreign manufacturers.
The government hasn’t been honest in its proceedings concerning this case. The DDP gave the green light to consulting firms to work on a plan to dismantle the OFB. It violated the conciliation agreement between them and the three federations representing the Congress, RSS, and the Left. Unions, after all, represent the interests of the employees. The government is more than happy to take them head-on.
The concern for employees needs to be paramount. The government’s assurances don’t exactly inspire confidence, and there isn’t much clarity on their future status. Let’s look at one issue. The ministry stated OFB personnel will serve as government employees for two years post-transfer to the new entities. During this time, they will bear the pension liabilities. What after this two-year period? It’s unclear, and there’s a lack of clarity here. It could become a contentious issue down the road.
Corporatisation is the term used now. But it’s very much a path towards privatisation, despite what the government says. That isn’t a good thing as far as employees are concerned. Once again, no clarity on whether there’ll be layoffs, remuneration packages, etc. Overall, there seems to be a lack of focus on the government’s part here. It’s very much driving the pro-privatisation train and wants everyone on board without weighing the pros and cons. It could be a recipe for disaster.
🕵️ BEYOND ECHO CHAMBERS
For the Right:
The case of the missing jobs; government report on employment hasn’t met expectations
For the Left:
Western academia progressing into Hindu hatred
🏴 STATE OF THE STATES
Parle-G Surge (Bihar) – Shops in several districts in Bihar saw people crowded waiting to buy Parle-G biscuits. The reason is supposedly a rumour that said if children didn’t eat the particular biscuit, something bad could happen to them. It comes at the time of ‘jitiya vrat’, a day of fasting observed by Hindus. The demand was so high that some shops ran out of stock.
First Indigenous Chief Secretary (Meghalaya) – A bit of history was made recently in Meghalaya. In a state known for its matrilineal society, it now has its first indigenous woman as Chief Secretary. Rebecca Suchiang, the first Khasi-Jaintia woman, took over responsibilities in the wake of the outgoing MS Rao, who retired. Also, she is only the second woman in the post after PP Trivedi, who held the job in the late 1980s.
Price Woes (Jammu and Kashmir) – In the past year, prices of walnut kernels have dropped by 50%. Farmers in the Kupwara district in North Kashmir are bracing for losses as a result. Earlier, the produce would fetch Rs. 1000/kg. Now, they sell for Rs. 500-600/kg. Farmers in the region have also had to deal with hail storms that destroyed their crops earlier. To provide some context, the Union Territory produces around 2.66 lakh metric tonnes of walnuts which is 98% of the production in the country.
Opposition To Homeopathy Drugs (Kerala) – As various states and cities put forward their plans to resume in-person classes in schools, there is no doubt that the safety of children and teachers is paramount. In an instance of modern medicine putting its foot down, the Indian Medical Association (IMA) has criticised the Kerala government’s plan to give children a homeopathic preventive drug (Arsenicum Album 30 CH) against COVID-19. The worry is that giving kids untested drugs could have serious ramifications.
Final Gandhi Jayanti (Gujarat) – For 250 families residing in the vicinity of the famed Sabarmati Ashram, this Gandhi Jayanti might be the last. They will have to vacate as the government will go ahead with its plan to redevelop the precincts. For some, their connections go back to the time when Gandhi himself lived at the Ashram. The project has received opposition in the form of over 130 personalities stating their disapproval.
🔢 KEY NUMBER
₹7.18 lakh crores – Estimated net worth of Reliance Industries Chairman Mukesh Ambani, according to the recently released IIFL Wealth Hurun India Rich List 2021. He’s ahead of Adani Group Chairman Gautam Adani. Reliance became the first Indian company to cross $200 billion in market cap driven by its telecom and retail businesses.