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.
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.
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