Volume 1, No. 7, September 2000

Never before has there been such blatant servility to US imperialists’ interests in India, as the Sankhya Vahini project. Never before have both the financial and security interests been sacrificed to the extent seen in this project. Never before have the government’s own rules and regulations, been so blatantly flouted to rush through the signing of the Memorandum of Understanding (MoU), that gave birth to the Sankhya Vahini India Ltd (SVIL).

And the chief promoter of this project is Chandrababu Naidu. With opposition coming from even sections of the ruling classes, due to conflicting interests within the IT sector, Naidu has gone to the extent of threatening to topple the government, if the project is not passed. The most treasonable aspect of this project is that not only are financial terms of the agreement humiliating, but it is also tied up to the US defence department, the Pentagon. Yet the BJP-led cabinet, has approved the project, even though the 45-member parliamentary standing committee on communications, had strongly attacked the project. Though approved, it is yet to be implemented, due to squabbles amongst the rulers.

The Sankhya Vahini project has the objective of providing a broadband data communication network, which will offer internet connectivity 1,000 times faster than the current speed.

The project was conceived of, at a meeting of the Task Force of Information Technology on September 5, ’98. This task force was co-chaired by Chandrababu Naidu. Within just over a month of this meeting on October 16, ’98, the MoU was signed, between the IU Net of the USA and the Government’s DTS (Department of Telecommunication Services — earlier DoT). The agreement was hastily pushed through by the Task Force, without inviting international tenders, and in such secrecy that even the Telecom Commission was not informed.

According to the MoU, control and the major holding over the SVIL will be that of the US company, IU Net. It will have a 49% equity share in the total joint venture of Rs. 1,300 crores. The balance of the equity is to be divided between the DTS-45%, the IITs (Indian Institute of Technology) 4%; and the ministry of Information Technology 2%.

The astounding fact is that none of these participants to the MoU had the authority to sign it. The biggest fraud was the fact that the DTS, signed an agreement with a US company that had not even come into existence. While the MoU was signed in October ’98, the IU Net was incorporated only on January 8, ’99 !! Secondly, the Task Force had no executive authority to decide on specific projects and "even less to specify the joint venture partner." Yet, it was the Task Force that pushed through the project and decided on the US partner. Thirdly, the current policy of the DTS does not allow the leasing of its optical fibre network to any private party. Yet the MoU gives the IU Net, full leeway to utilise the DTS’s vast optical fibre network, which stretches over 60,000 kms, and is the only infrastructure of its kind in India. And finally, the statutes of the IITs do not permit the institutions to partake in such equity ventures, nor do they possess that kind of capital.

While it is being propagated that this is a non-profit educational venture, to promote research and technology in India, the reality is that it is to become a massive money-spinning enterprise. It is estimated that in the very first year the SVIL will make a profit, and by the tenth year the profit will reach Rs. 555 crores on a market capitalisation of Rs. 1,407 crores. The IITs have only been brought in as show pieces to promote the ‘educational’ farce and they are unlikely to take up their 4% equity. The main beneficiary of this highspeed network will be the US TNCs and their Indian IT collaborators. It will basically facilitate the outsourcing of the huge software/DTP business in America, to India. They will thereby be able to utilise cheap Indian labour — no longer needed in the USA, but based in India itself — at a fraction what they pay them in the United States. So today if an Indian computer operator is being paid $3,000 a month (which would be less than their American counterpart) in the US, now the same work would be done from India for, say $700 (i.e., Rs. 20,000) a month, plus the Indian agent’s commission of say Rs. 10,000. Even such high payments are unlikely in the future, with lakhs of computer operators scrambling for the limited jobs. Of course, these projects will be routed through the ‘Indian’ IT giants who also stand to gain crumbs from this imperialist venture—basically as IT labour suppliers.

The question being raised is that why was such a key project, that will have a virtual stranglehold over the internet highway in India, given to a US company, when, according to experts of the Indian Institute of Science, Bangalore, this could have easily been designed by Indian scientists ?

Not only was the MoU an outright fraud, and should be struck down as null and void; not only was the agreement signed in unbelievable haste and under extremely mysterious circumstances; but the deal itself seriously infringes on the country’s sovereignty.

There are three aspects to this. First, the suspicious characters of the US promoters. Second, the security aspects entailed in the deal. And third, the financial and technical aspects of the deal. Let us look at all three aspects of this joint venture.

Firstly, the IUNet Inc. is a wholly owned body, set up by the Carnegic Mellon University (CMU). The CMU is directly linked to the US Defence Department; and was infact one of the main institutions associated with the Pentagon, which was the first to discover the ARPANET, the precursor to the Internet. Next, one of the two chief promoters of the IU Net is one Raja Reddy, a close associate of Chandrababu Naidu. It is said that the entire plan was hatched by the Reddy-Naidu mafia, on instructions from the US administration. It just happens that Raja Reddy is also a co-chairperson of President Clinton’s IT Advisory Committee whose job is to also advise the president "on the defensive and offensive aspects of the information infrastructure security" !! But, the cloak-and-dagger operation does not end with just these dubious links. As we look deeper things get even murkier. The other chief promoter of IU Net is one V.S. Arunachalam. This, former Scientific Advisor to the Indian Defence Ministry, is now linked to the Pentagon, through employment in the CMU. What would such a top official of India’s Defence Establishment, with access to vast secret information, now be doing in the US Pentagon .... and is now also one of the chief promoters of the IU Net !! And ofcourse, both these `Indians’ are now US citizens.

Besides these dubious dealings, with the CMU’s control over India’s internet highway, the SVIL project will open the floodgates for espionage, interception of scientific data, telephonic conversations, faxes and e-mail. This was stated by no lesser person than the former Additional secretary in the Cabinet Secretariat, B. Ramen. In an article in the May 19th issue of Business India he wrote that "India’s security would be threatened through the ‘software package’ to which the CIA would have access, provided to the SVIL by IU Net."

And finally, the financial aspects of the deal, are virtually written at the dictates of the IU Net, in its interests. The terms and conditions are not only humiliating but outright traitorous in every aspect. Only a thoroughly servile and despicable agent like Naidu, could have pushed through an agreement with such disastrous implications.

The entire IU Net’s 49% equity is to be provided by equipment and know how (i.e., intellectual input and services) but no CASH. Also the entire responsibility of identifying this equipment and technologies has been entrusted to IU Net, with the Indian partners having no say whatsoever. In other words the IU Net will get a free hand to dump US materials at inflated costs, and also charge exorbitant rate for its ‘know-how’, and set the entire amount off against its capital contribution.

What is particularly nauseating in the MoU is that, while IU Net is allowed to treat charges for know-how as capital; the same is not being allowed to the Indian IITs. The IITs had pleaded that they too be allowed this right, as they do not have that type of capital and have been contributing to the technological needs of the project. This was firmly opposed by the Reddy-Naidu combine, thereby making it impossible for the IITs to participate in the share capital of the project.

Besides this, within 90 days of the agreement, DTS will have to transfer 10,000 kms of its optical fibre network to the company; in addition it will have to provide crores worth of real estate, free of charge to Sankhya Vahini.

The most strange clause of all in the MoU, is the repeated reference to the fact that, UNDER NO CIRCUMSTANCES can the government’s equity in SVIL exceed 49%. Such a condition is unbelievable, that the Government of India puts a cap on its own investment in a joint venture, rather than on that of the foreign partner. Till now the government has been systematically reducing or removing caps on foreign investment in various sectors of the economy. Now, for the first time, the very process is being reversed. On the other hand, after five years, the CMU, which holds 100% of IU Net equity, has been given the right to offload its equity to any TNC it likes.

This Sankhya Vahini project is a crude example of the extent to which the Indian comprador rulers will go to sell our country’s interests to the US imperialists. In fact in this project, while the US dumps its equipment here, the Indian government will have to spend a massive Rs. 585 crores. Besides, by involving three IITs and the Indian Institute of Information Technology (Hyderabad) in this project, the government is promoting the utilisation of their research capabilities, for the interests of the CMU and the US Defence establishment.

In all aspects this project is highly dubious and must be forthwith scrapped, and instead of spending such huge sums on promoting the SVIL, the funds should rather be spent on people’s welfare. With the IT infrastructure costs swallowing up gigantic sums of both central and state governments, little is left for the welfare of the masses.

Though a section of the opposition and even the ruling party have been making some noises against it; they speak not in the interests of the people and country; but for a section of the IT lobby which feel threatened by the monopoly control the IU Net will be able to assert over the internet in India. Naidu, of course, with his 29 MPs able to determine the fate of the government, is aggressively pushing for the passing of the SVIL project.

That Naidu has been working as a tool of the World Bank is well established. But, of late, not only the SVIL but also a number of other secret deals disclose the extent of his links and dependency on the imperialists.

Recently, Naidu was caught for assisting the US administration breach India’s security. The AP government contracted with a US firm, Space Imaging Inc., for mapping 970 kms of Andhra’s coast through satellite.... without informing the defence ministry. The Defence ministry conveniently turned a blind eye to this breach of India’s security, and took objection only when the issue got exposed in the Rajya Sabha. By the time the contract was cancelled, ‘Space Imaging’ had already passed on satellite pictures of sensitive defence installations to the Pentagon. Besides, Naidu could have utilised the satellites photos to monitor PW squad movements. Conveniently, the imaging was done in the summer months when the tree/forest cover is the least. Already, on May 16, satellite photos displayed at a press conference by the Federation of American Scientists are said to have come from the ‘Andhra Contact’. The government has not even bothered to demand the return of the photos taken.

In addition Naidu’s massive hike in electricity charges, is an indication of the extent to which he is willing to prostrate before the World Bank. The huge hike, which will affect 1.1 crore families, will extract Rs. 1,095 crores from them. The major burden will be borne by the agriculturists and domestic consumer, while there is relatively little increase for the industrialist. And this he plans to extract at gun-point. Simultaneous to this hike he plans to introduce a draconian legislation against so-called power pilferage !! For not paying up, you will be tried in special courts and can face imprisonment from 3 to 5 years plus a fine varying from Rs. 5,000 to Rs. 50,000. Such taxation and laws are reminiscent of British colonial rule, who rack-rented the peasantry even in times of famine. Naidu plans to outdo the British — either pay up or face prolonged jail sentences. Enron will be the happiest, that Naidu is showing the way to the rest of the country, on how to extract the maximum from the people, in order to pay their high unit charges.

Naidu must be tried before a people’s court for his role in assisting the US establishment penetrate the country; for his role in selling out the people’s interest to foreign TNCs like Enron; for his role in subverting the national interests by implementing World Bank dictated policies; and for his role in the fascist suppression and extermination of the people of AP, in order to make it safe for foreign capital. If found guilty, he must be given the punishment that is meted out to any traitor or fifth-columnist within the country.

<Top>