N.Ram in The NewYork Times

The New York Times carries an article by N.Ram captioned "A Murky Arms Deal Haunts Modi". The gist as provided in the newspaper is "India's prime minister faces charges of bypassing procedures, causing loss in public funds, compromising national security and using the arms deal to offer a lucrative contract to an ally."

The article is a brief summary of the 'exclusive' report that had earlier appeared in The Hindu. The biased and non-exclusive nature of that report is now common knowledge.

Unsurprisingly, the NYTimes article makes no reference to the findings of the Supreme Court in the Rafale case. Either Ram does not read the Supreme Court judgements or he has scant regard for Supreme Court. Either of these ill behoves a journalist.

Times of India stated as follows on December 14, 2018:

" The Court gave the clean chit on  three aspects:

1)Decision-making process to purchase 36 Rafale jets instead of 126 by UPA

2)Pricing of Rafale jets

3)Selection of Indian offset partners including Anil Ambani- owned Reliance Defence by Dassault."

The Supreme Court has pronounced its judgment on three out of four factors highlighted in the gist given above. What remains is compromise of national security. Manmohan Singh could not take a decision even after seven years of negotiations with Rafale. Narendra Modi took only a year to come to a conclusion. Manmohan Singh could not place orders even for a single aircraft because his Defence Minister admitted, "We have no money." Narendra Modi placed orders for 36 planes by prioritising funds for defence of the country. Yet Ram claims that national security has been compromised. 

The New York Times introduces Ram in its byline as "the author of 'Why scams are here to stay: understanding political corruption in India.' " If a biography of Ram were ever to be written, it would fittingly be titled, "Why biased journalists are here to stay: Understanding media malaise in India."

It is said (it is not my 'exclusive' finding) that a lie if repeated over and over again is accepted as the truth. Ram is aiming at that truth.

Let us await Ram's next 'exclusive'.

N.Ram's report in The Hindu.

I wrote a letter to the editor of The Hindu on January 21st on a vainglorious report by Shri N.Ram. This letter predictably was not published. I followed up with two letters to the readers' editor of The Hindu. These three letters are reproduced below.

To

The Editor,

The Hindu , Chennai.

Dear Sir,

I request you to publish my letter given below in your newspaper's 'Letters to the Editor' columns.

                                                                              Rafale Contract

The Hindu has published an 'Exclusive' report on "Modi's decision to buy 36 Rafales shot the price of each jet up by 41%". The caption was arresting and I could not resist the temptation to read it in detail.

The report claims that this 'article is based on information exclusively available to The Hindu.'  This claim is untrue because all the details covered in this report have found a place in many reports appearing in various newspapers earlier. For example, one may refer to two articles in Economic Times one by Raghav Ohri and Manu Pubby on September 29, 2018 and the other by Manu Pubby on August 23, 2018.

In addition, the caption is unusually too sensational to appear in The Hindu since it is also stated in the report that the increase in price per aircraft is 14.20% if the comparison is with the 2011 escalation cost factored in. Even this is subject to the assumption that 2011 prices hold in 2016. I wonder how this misleading caption and unfair comparison escaped the editor's eagle eyes.

Regards,

K.R.Srivarahan,

Chennai.

From: K.R.Srivarahan
To: "readerseditor@thehindu.co.in"  
Sent: Thursday, January 24, 2019 1:40 PM
Subject: Exclusive report on Rafale

Dear Sir,

I wrote to the Editor on 21st inst. regarding the captioned subject. This was not published in the newspaper. A copy of my letter is attached for your kind reference.

Any exclusive report by Mr.N.Ram attracts attention. A front page report with a sensational headline must contain something significant. I was disappointed to find that the report was not exclusive to The Hindu. The details contained in the report had earlier been published by many newspapers as mentioned in my letter to the editor. I am surprised that there is no clarification on this by Mr.Ram despite the fact that the misleading information has been pointed out by many.

You have quoted Aidan White in your space on January 21st , "When media act ethically and have systems in place for monitoring their journalism, admitting their mistakes and explaining themselves to the public, they create loyalty and attachment." Neither the newspaper nor the reporter has admitted the egregious deceptions contained in the report. Am I to infer that The Hindu is not concerned about loyalty of its readers?

I hope you will respond to this.

Regards,

K.R.Srivarahan

Dear Sir,

I pointed out the misleading nature of 'exclusive' report by Shri N.Ram and of the sensational headline of the report in my communications to you as well as the Editor. My allegation is serious because it casts aspersion on credibility of the newspaper. When such a serious charge goes unresponded, the only conclusion possible is that the newspaper does not want to own up its responsibility. During the 50+ years of my association as a reader and occasionally as a contributor, I have all along thought that The Hindu is a responsible and authentic newspaper.

Nothing gives a newspaper reader more pain than the fact that the newspaper he reveres has chosen to abdicate its accountability as a truthful purveyor of news and reports and has taken to sensationalisation of headlines. Coincidentally, a disclaimer appears in page 2 of The Hindu today. "Readers are requested to verify and make appropriate enquiries to satisfy themselves about the veracity of an advertisement before responding to any published in this newspaper. --------- In no event can the owner, publisher, printer, editor, directors, employees of this newspaper / company be held responsible / liable in any manner whatsoever for any claims ------". I am afraid this disclaimer is required for your presentation of news and reports also. (You may notice the pun in the word 'claims'.)

Regards,

K.R.Srivarahan

Rafale and Chidambaram

P.Chidambaram has questioned the purchase of Rafale on two vital issues. 1) Why did the government settle for 36 fighter jets instead of 126 and thereby jeopardise our security and 2) Since payment is made over 3 years instead of 10 years the net present value of money received by Dassault is higher and therefore they are 'laughing all the way to the bank'.

Both are good questions, but not good enough to come from a former Finance Minister.

1) The relevant comparison is not between 36 jets and 126 jets. There was no contract for 126. The UPA government lost 10 years dillydallying on the proposal and never reached any finality. The government was comatose. So the comparison is between 36 jets and 0 jet. The answer is obvious.

2) Fixed cost incurred by the supplier has to be recovered through pricing. If more jets are bought, fixed cost per jet will obviously come down. One may argue that if we buy 252 jets instead of 126 jets, price per jet will come down further. But the moot question is how much money can we afford to pay. The trade-off between security needs and cost affordability has been struck at 36 aircraft. Chidambaram's argument is the present value of money given in the 10th year is less than the same money given in the third year. Up to this point the argument is genuine. But we also should take into account the fact that in one case we will receive the jet only in the 10th year whereas in the other case the product is received in the 3rd year itself. These are actually 'forward' transactions and money is paid when supply of jet is made. Comparison is not between money paid in the tenth year and the one paid in the third year. The composite comparison is between the jet received and money paid both in the tenth year on the one hand and the jet received and money paid both in the third year on the other. Obviously getting the jet in the third year is better than getting it in the tenth year. If we calculate the present value of price paid, we must also calculate the present value of the aircraft received. Going further, the risk of the product becoming obsolete is much more in the tenth year than in the third year. Therefore the 3-year contract is better than the 10-year contract.

The honourable former minister may also fallaciously argue that the forward price for a 10-year transaction is cheaper than the same forward price for a 3-year transaction assuming there is no further premium for the intervening 7 years. But actually there is a huge premium paid by the purchaser because of product obsolescence risk in the intervening 7 years.

Chidambaram is too smart to be ignorant of these simple principles. But he is under political compulsions to make unprincipled and dubious arguments. Intellectual integrity has never ever suffered such a sharp debasement..

Rafale and Ram

Only yesterday Arun Jaitley posted his highly readable "Compulsive Contrarians" in Facebook. As if to lend more credibility to Jaitley's view, N.Ram has written in his newspaper today on "Modi's decision to buy 36 Rafales shot the price of each jet up by 41%" in an accusatory tone. He has converted a simple Accounting Principle into an allegation.

Fixed cost incurred by Rafale to design and develop the jet for India is slated to be Euro 1.3 billion. As we all know, total fixed cost remains the same irrespective of levels of production. Fixed cost per unit is higher when sales are low and it is lower when sales are more. If 126 aircraft are purchased / made as per UPA's original plan, fixed cost per aircraft would be Euro 10.32 million (but shown as Euro 11.11 million in Ram's report). If 36 aircraft are bought as envisaged now, fixed cost per aircraft is Euro 36.11 million. Any seller has to recover its total fixed cost as well as variable cost. This is simple business logic. There is no scam in this.

Ram compares Rafale acquisition with Bofors purchase. He claims, "The process of decision-making on a vital defence acquisition in 2015-16 does bear an eerie resemblance to how decisions were made in 1985-86; but unlike Bofors, where journalistic investigation was able to uncover corruption disguised as 'commissions' paid secretly into Swiss bank accounts, no money trail has been discovered so far in the current case." Therefore, should not the likes of Ram wait till some money trails, if at all,  are spotted instead of jumping the gun and thus proving that they are 'compulsive contrarians'?

The basic difference between the Bofors journalism and Rafale journalism is that in the former case, evidence was painstakingly discovered bit by bit and then conclusions arrived at. In the case of Rafale, the compulsively contrarian journalists have concluded that there is corruption and are now desperately looking for evidence of possibly non-existent corruption.

Of course, we cannot blame Ram. In 1985, the spade work for him was done by Chitra Subramaniam, an analytical journalist who values objectivity. Now, Ram is probably assisted by his sycophants who feed him with whatever views he likes. However, as an experienced journalist, Ram is expected not to let his morbid dislike for Modi run riot and mislead his readers.