Indian PM Modi's clean image takes a hit with Rafale claims

Latest revelations refresh memories of Bofors scandal that rocked the Congress govt nearly three decades ago.

The 2016 Rafale fighter jet deal between India and France's Dassault aviation comes at a bad time for Indian Prime Minister Narendra Modi. Like the April 1987 Swedish radio broadcast revealing alleged kickbacks in the Bofors gun deal - a controversy that toppled the then prime minister Rajiv Gandhi - the critical Rafale revelation blow came from abroad on Friday. Former French president Francois Hollande, speaking to a French media website, was addressing a question that was raised in an Indian newspaper, and in the process he indicted Modi.
The Rafale deal was originally negotiated for 126 fighter jets. This was done by the government of former prime minister Manmohan Singh, over a decade - with rigorous testing, exact specifications, and pricing. The government wanted some money to return to India, so its premier public sector player, Hindustan Aeronautics Limited (HAL), was going to manufacture 108 of those aircraft under licence from Dassault, in India itself. This total deal was $10.2 billion. In 2015, Modi went to France and met with Hollande, who had pushed for nuclear commerce with India and was thus seen as India's ally in the area of strategic cooperation.
Without the apparent knowledge of defence minister Manohar Parrikar or finance minister Arun Jaitely, Modi renegotiated the deal. India would buy 36 Rafale fighter jets on a "flyaway" basis; the deal would be worth $8.8 billion, which made it costlier per jet than the earlier deal. Also, Dassault would no longer partner with HAL, but with the privately owned Reliance Defence Ltd, headed by Anil Ambani, that was set up 13 days before the deal was announced. Reliance Defence had no prior experience in defence production. Indeed, unlike the Reliance group headed by Mukesh Ambani, the Anil Ambani group's track record was poor - it abandoned a metro project in Delhi, for instance.
For a year, Congress president Rahul Gandhi has attacked Modi on the Rafale deal. The reason: Modi, while campaigning in 2013-14, had contrasted himself with the United Progressive Alliance which was then mired in scams - a telecommunications scam, a coal scam, a Commonwealth games scam - and he had declared na khaoonga, na khaane doonga (won't loot, won't let anyone loot). Part of Modi's strongman image derives from his perceived incorruptibility. The Rafale deal allegations undermine the very core of Modi's image.
Modi has remained silent on the deal, but his ministers have counter-attacked as and when required. This includes Jaitley, railways minister Piyush Goel, and current Defence Minister Nirmala Sitharaman. Their first defence was that the new deal cost more because there were India-specific add-ons that raised the cost (such as weapon systems for each plane); when asked for details, they took recourse in a secrecy agreement between the two governments. The French promptly announced that the secrecy deal did not pertain to the deal's commercial aspects.
Then next counter-attack was on the unsuitability of HAL, without proving any suitability on the part of Reliance. To this former HAL Chief TS Raju said that HAL could easily have manufactured the aircraft had the original deal been sealed. (Leave aside the fact that all defence manufacture in India of foreign-origin equipment is basically just assembly.) The government merely responded that Raju, who retired on September 1, was factually "incorrect".
The focus became Reliance. Not only did it have zero experience, but it came from a capitalist believed to be close to Modi, and from his home state Gujarat. It is as blatant an example of crony capitalism as the other Reliance group getting an "institute of eminence" tag for its Jio Institute, even though it remains on paper. Modi's na khane doonga has gone for a toss.
Hollande's statement that Reliance Defence Limited was thrust upon the French as the "offset partner" for Dassault, and that the French had no choice, is a bombshell. Dassault, keen to protect its commercial interests, denied that it was forced to choose Reliance. The ministry of defence has also denied this, saying that the Dassault-Reliance hook-up was a private party matter. However, Hollande has stood by his statement. Being a former head of state - and not a former chief executive of an arms company -  his statement has cast a pall over Delhi. Those of us who remember how the Bofors scandal broke will recall an eerie similarity to the unfolding Rafale scandal. Modi must be ruing the Republic Day of 2016, when he hugged the guest - Hollande.
Since Hollande's statement, opposition leader Rahul Gandhi has held a press conference and has gone to the extent of declaring chowkidar chor hai (the watchman is a thief), recalling Modi's 2014 promise to guard the nation's wealth. Modi's ministers have retaliated by saying that Rahul's entire khandaan (clan) is full of thieves. A year ago, no one would have dared utter such a pointed statement about Modi. Today, Modi has been pulled down to the level of other politicians in India, whose corruption the common man takes for granted. It is yet another sign that 2019's parliamentary election is going to be keenly competitive and that all bets are off.
Aditya Sinha is a senior journalist based in India and author, most recently, of 'The Spy Chronicles: Raw, ISI and the Illusion of Peace'

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