India needs a Nodal Agency to oversee Engineering Practice

A US $ 1.0 Tr. investment!

A rapidly developing country like India, has been investing and is going to continue to invest very heavily in the scaling up of our infrastructure, and is looking to make available upwards of US $ 1.0 Trillion in the coming years, which is equal to more than half of the nations’ current GDP value (Nominal, US $ 1.84 Tr. 2011). This is an exceedingly large sum of money which will have to be efficiently and intelligently allocated and spent with a conscience, requiring a very high standard of moral fiber, impeccable ethical conduct and the finest professional capabilities.

Who will spend this humongous amount of money?

Looking at the investment from the perspective of – as to who will actually plan for, and spend that huge sum of money, I have to say that one is a little disconcerted by what is currently the situation prevailing in the country. These funds will be spent by thousands of Engineers from varied fields – like Civil Engineers, Mechanical Engineers, Highway Engineers, Electrical Engineers, Electronics Engineers, Telecommunication Engineers and Engineers of many other specializations working both within the Government Departments as well as in Private Enterprise involved in Infrastructure Projects. Judging from the recent past, and the news stories that seem to break with sordid regularity, this class of professional has not exactly covered him / herself in glory! I’m pretty certain that the Public Works Department (PWD) in any of the States in the country, without a doubt, will have innumerable instances of corruption and unethical practices on record. Similarly, the Departments handling projects of Power Generation and Distribution, Telecom Infrastructure and sadly even the holy grail of Engineering edifices – Space Exploration has recently been tainted by scandal. The nexus between the Technocrat – Bureaucrat – Politicians has ensured that the scale of the scandals is becoming ever larger and the chances of retribution slimmer by the day.

Almost all the decisions in these departments are taken by Engineers of various specializations, and incorrect decisions made with malafide intent calls for the harshest punishment including losing one license to practice. However, it is quite evident that nothing much except for a benign Departmental Slap-on-the-wrist is administered to these wayward professionals. In my view, India does not have the required legislation or the collective will to correct this malaise. Thus, speaking in broad generalization, the poor Human Development Index and the High Corruption Index of this Nation has been administered to and supervised by its Engineers. As I too, am an Engineer by qualification, this situation both infuriates and saddens me.

We as a Nation have been placing our trust in the hands of these professionals who have Embezzled the State, Performed to a Very Poor Professional Standard in terms of the Planning, Design and Execution, indulged in the Dereliction of Duty by allowing substandard quality of work to get approved, indulged in the Lowest of Ethical Behavior by supporting Illegal Mining and Deforestation, and finally even Putting a Spoke in the Wheels of Development of this Nation by consistently delivering Poor Quality Infrastructure. In a poor Nation like India, this constitutes Criminal Behavior to say the least. One only has to closely study the quality of more than 90% of the roads built in this country, to wholeheartedly agree with the above conclusion. Sure, there have been positives too, but these are few and far in between, and they too, will never be able to stand up to a Challenge Scrutiny, where it can be shown that every stage of the project from the Concept to the Inauguration was handled in a flawless professional manner and completed as per the agreed Time / Cost / Quality parameters. I will of course, be delighted to be proven wrong on this!

Engineers in India

While almost every other professional body, be it Architects, Lawyers, Chartered Accountants, Doctors or Company Secretaries are governed by the rules of their Councils which have been set up by acts of Parliament, and follow established Codes of Practice, Ethical Behavior, and is made aware of his or her Professional Responsibility towards the Nation, Engineers are governed by their conscience alone.

All other professionals are expected to toe the line of their Councils and failure to do so could result in the loss of Accreditation or the License to Practice their profession. Engineers have no such Damocles sword hanging over their head.

The malpractice of a lawyer, or a doctor or an auditor may adversely affect an individual or a small group, while malpractice by Engineers has affected a billion people and has kept India backward despite the untold Crores spent on development. Thus, this a body of professionals that desperately needs some supervision.

Why is it that such a critical profession, tasked with the very development of the Nation itself, is not governed by a Council or Nodal Body? Why are Engineers not required to take an Oath of Ethical Behavior and Professional Competence when they are spending the Nation’s wealth? Pertinent questions indeed, and for some reason, unasked often enough for the past 60 years of our existence.

Thus, there is enough evidence to back the statement that The Moral Fiber of our Engineers has been seen to be woefully weak. Now, what about standards of professional competence? Engineers in India, unlike those in very highly regulated nations like the US or some of the EU Nations, are expected to intelligently interpret the rules and codes to ensure that the design or specification meets all the stated purposes. In the US for instance, there is a detailed code of practice for almost every Engineering activity, from basic wiring specification for a home right up to a massive engineering project, and Engineers are required to largely conform to the relevant code. While here in India, Engineers are tasked with conjuring up solutions that are largely derived from First Principles, and are expected to intelligently meet the needs of the Client, Local Body, Federal Government, the Environment and Society at large. In such a scenario, how many Engineers have the sagacity of vision to see their work from the above overall perspective, is a question one is forced to ask, and also forced to answer with the response ‘woefully few’. Thus, the professional quality of a vast majority of our engineers also leaves a lot to be desired. Sadly, a majority of our best brains leave for greener pastures or saner work cultures abroad and choose not to repay their debt to the Nation.

Engineering Education in India

While Engineering education in India varies from the highly theoretical and analytical research approach of the IIT’s to the very basic of rote learning for the examinations at some of its far flung colleges, a vast majority of our Engineering Colleges and Technical Universities do manage to deliver a very sound quality of basic Engineering education. Thus, we have large numbers of properly qualified personnel, qualifying for degrees from hundreds of different Colleges and Universities, wherein the quality and capabilities of a good Student of Engineering is seen to be uniformly above average. Thus, it seems that quality of education is not the problem. What then? Once these thousands of technically qualified people enter the mainstream, they are literally let loose on the Nation with nary a control – that really is the problem. Engineers who are expected to perform an enlightened role in an environment vitiated by corruption for the past 60 years and not equipping them with the right perspective – that is the problem. Reasonably well qualified Engineers are swallowed up by a whirlpool of misconduct preexisting in the workplace – that is the problem.

What is required?

India urgently requires the Parliament to pass a law that sets up a Single Empowered Nodal Body or a Supervising Council to which every individual Engineer shall be asked to be a member of. Currently in the Council being planned, only Engineering Associations are planned to be drafted as members, which will not tackle the problem at hand in any satisfactory manner.

·         The Proposed Council shall draw up variously; a Charter, a Code of Conduct and a Role and Responsibilities Manifesto that an Engineer will be required to adhere to.

·         The Proposed Council shall periodically publish the list of Engineering Degrees that it recognizes and also define the Minimum Standards of Education in our Engineering Colleges and Technical Universities.

·         Every Engineer passing out with a recognized degree shall be asked to take an Oath wherein he or she will undertake to Perform his or her Duties to the highest level of Professional Competence and Scrutiny, and also Promise to Abhor Corrupt Practices of any kind, Promise to Protect the Environment, and ensure that all his or her Professional Decisions are always taken keeping the Interests of Society and the Nation paramount.

·         All members of the Proposed Council shall agree to a Charter of Disciplinary Action, where any proven misconduct shall result in the automatic loss of Membership of the Proposed Council. If the Proposed Council is conceived and created in the right sprit, then no employer will want to retain an Engineer who has been rusticated by his own Council. Loss of livelihood will be a serious threat and ensure that Engineers will always walk the straight and narrow path.

·         The Proposed Council shall of course be peopled by volunteers from the profession itself and shall have a Democratically Elected Leadership, who will perform duties related to Accreditation of Educational Institutions, Disciplinary Action, Peer Review and Administration of the Proposed Council itself. In my view, Democratic Leadership is critical for the Proposed Council to be taken seriously.

Conclusion

I look forward to the day when International Agencies monitoring corruption worldwide choose to place India close to the top of the list of countries where the Rule of Law applies and Corrupt Practices are shunned as a culture by its people. Several initiatives by Civil Society are currently being lobbied for, and the adoption of a strong Jan Lokpal Bill (Anti-Corruption Ombudsman) would be crucial to the improvement of our transparency ratings. Further to the Jan Lokpal, the above suggestion to bring all our Engineers under the control of a Proposed Council will further our goal to becoming a corruption-free society. I pray that the day is not too distant in the future.

Suggested additional reading:

http://www.thehindu.com/news/national/article2295573.ece

http://www.iete.info/ECI/ProfDev.htm

http://en.wikipedia.org/wiki/Jan_Lokpal_Bill

Vodafone case – is retrospective promulgation of a new amendment to a law fair?

I must submit upfront that I am neither an expert in taxation nor I am I fully acquainted with all the facts and figures of the case, but write this purely as an Indian layperson observer who has (extensively) been exposed to the news reports of the case and also as a concerned Professional Corporate Citizen worried about the precedent such a move will set, and the consequent adverse impact on investment into our country. I will also readily agree that the Government is empowered to collect tax on various commercial transactions and even for one minute, I have no intention to entertain the thought that somehow the government is not entitled to garnering revenue from any and every legally sanctioned means. However, all such modes of generating revenue have to fall under the ambit of due legal process, and some very basic aspects of the Rule of Law and Principles of Natural Justice have to be served, in my view.

Consider this.

When two individuals enter into a transaction that involves the transfer of ownership of a Capital Asset for a particular financial consideration, and it is established that the seller has earned a profit from this transfer or has ‘accrued Capital Gains’, then he or she should be liable for the payment of Capital Gains Tax. Perfectly legal and completely tenable, as this is clearly sanctioned by law. One assumes that it is natural for the asset that changes ownership to be located in India of course, for Indian Tax Laws to have jurisdiction. Now, in as far as I was able to ascertain, as per the existing laws, it is the seller that needs to file his returns after making a provision for the Capital Gains Tax, and the buyer has no role at all to play in this. Also, with basic research, it did not become clear as to whether it is the responsibility of the buyer of the asset to withhold the Capital Gains Tax, and hence I am inclined to accept that in any event, the seller has the sole responsibility to fulfill his obligations to society as a Corporate Citizen by honestly paying up his taxes.

Now, in this case, Vodafone was the buyer who paid enormous sums of money to acquire a so-called attractive asset that they had very high hopes about, in a country that they were sure was a democracy that had all the Pillars of Democracy well entrenched. Like any company, I’m sure they would have commissioned meticulous research to determine what the asset would cost ‘on road’ as it were, and thus, would have made pretty accurate provisions for a war-chest to fund the acquisition. Typically, they would have included all known and expected expenses including the Equity, Legal Consultancy, Speed Money (sadly a critical component when doing business in India), taxes, travel costs, etc. as per the then, known laws of the land. Now that the money has been spent, where is the justification in springing a proverbial bunny out of the hat and demanding an additional US $ 2.3 Billion?

If that were not enough, what about all the other costs?

• We see a protracted battle in the Courts costing each party several hundred Crores in litigation expenses – will the Government make good these expenses to Vodafone?
• We now find the government saying that it will amend the law and make that amendment applicable with retrospective effect, much like a sulking, petulant child that says that the last goal does not count because the goal post was not defined by the tree and the lamppost but something else altogether.
• We note with concern the shock being expressed by other Governments the world over saying that they expected better from India.
• We also see with profound sadness that all multinational companies doing a double-take on their investment plans in India due to a hostile policy and taxation climate, what with the FDI in Retail imbroglio, the cancellation of 122 Telecom Licenses and now this.  

While it is true that some of these are only notional costs, think of the cost of a negative impression the world business community will have about India. I wonder what the cost of that would work out to.

In my opinion, the whole unfortunate incident should never have taken place and surely, this is the result of some silly over-smart bureaucrat somewhere saying something like ‘oh no, we forgot to collect from the seller, so why can we not ask the buyer to pay?’ The more I look at it, the more it just looks like a foolish and an ill-considered move with its intention seemingly to have been one of just bringing into play, the Governments’ awesome nuisance value. Perhaps they expected Vodafone to buckle and settle out of Court, is the strong impression one carries. Now, instead of waking up and smelling the coffee, the Government is covering itself with more muck and ignominy by promising new laws with retrospective promulgation like as though it is a game of Cops and Robbers amongst 8-year olds. The person or the team that cooked up this tax claim on Vodafone needs to be hauled up to judicial scrutiny by the appointment on an inquiry committee and dealt with in the harshest manner possible to dissuade other Zorro’s in the department from attempting such stunts in the future. A public apology to Vodafone and the corporate world at large will not be entirely out of place, for sure.

Since it was the other party in question, Hutchison Whampoa that apparently evaded the payment of Capital Gains Tax, would it not have been more appropriate for the Tax authorities to make the demand on them instead of Vodafone? Just because Vodafone was an entity based in India now, and Hutch was not, was it justifiable to haul Vodafone over the coals? The correct approach would have been – to file a case in a competent Hong Kong Court by the Government, seeking recovery of their legitimate dues. Sure, this may have got thrown out at the first instance or may have taken forever to conclude, but at least the Government would have been hunting with the correct party of hounds, instead of simply shooting the closest fox.

Finally, touching on the aspect of the amendments to the law – the Government is again well within its right to amend any law as long as it follows due process, but again common sense dictates that all amendments would be applicable from the day they are passed by Parliament and is incorporated in the Gazette. Not one single day prior to that. Entities entering into any agreement that comes under the purview of the above amendment would then have the opportunity to make a provision for the same in their war-chest or in their list of responsibilities and hence enter into an agreement with all parameters known and defined. This is a basic given in a democracy where the Principles of Natural Justice and the Rule of Law are expected to apply. If this is not ensured by our Government, it will be no different from some despotic dictator of some tin-pot banana republic. I hope to god that we will not be disappointed.

August 6, 2021.

I’m happy to note that after losing a slew of cases in arbitration all over the world and exposing India to ridicule with sovereign assets being tagged for attachment, the government has seen the folly of its ways, and has decided to scrap the controversial law. See clip attached.