Which is why it comes as more than a bit of a surprise to see the Cabinet clear the Rs 4,676 crore new Kolkata metro project as a 50:50 joint venture between it and the state government. How could the Left, which is the champion of accountability, promote a taxpayer-funded project which can't be monitored by either the central government, which is contributing nearly three-fourths of the funds (20 per cent through an equity share, another 51 per cent by way of guaranteeing the loan which will be raised from the Japan Bank for International Cooperation, and some portion through the taxes it gives up), or the state government, which is contributing the rest (20 per cent through equity, 3 per cent through the cost of land made available for the project and some portion through the taxes it gives up)? The law is very clear, for an entity to be monitored by an administrative ministry, by a public accounts committee, or by a department of public enterprises, at the state or at the Centre, the government shareholding has to be 51 per cent.
In the absence of this, what happens? How does the company run? The two shareholders nominate an equal number of directors to the board while, according to the agreement, the state government will nominate the managing director. Thus, the state will control the project, but its agencies that monitor PSUs (the ministry, the state vigilance board, the public accounts committee etc) will have no control over the project! So, there could be well laid-down government guidelines on how tenders are to be called for, on how wages are to be determined, and so on, but none of these is really mandatory for the new metro project. How these vital decisions are to be taken will now be dependent on the good intentions of the management. Since the JBIC is putting in good money and would ordinarily hope that this would translate into some good business for Japanese firms, a government oversight mechanism, for instance, could perhaps ensure there is no bias in awarding contracts.
It gets worse. What happens when there's a difference of opinion between the shareholders, on raising the fares, for instance? Who'll have the casting vote? No one. In case you think this is an unlikely event, you'd do well to see how the 50:50 Maruti Udyog got crippled in the years the government and Suzuki were at loggerheads
