The “Business” and “Economics” of the Hajj Subsidy
Thanks to RealityCheck for prompting this post. Read on for an amazing story of discretionary powers, patronage, quotas and favours that revolves around the Hajj subsidy. The extracts are from a court order disposing off the special leave petition filed by Union of India (please note that emphasis has been added). They make for a long reading but are well worth pondering upon..
*** CAUTION: Long Post ***
..By this interim order, we (Supreme Court) propose to deal with some of the issues arising from the 2012 Haj Policy on a priority basis leaving others to be dealt with in due course.
THE PTOs (Private Tour Operators)
The dispute between private operators/travel agents and the Government of India for registration as PTO for carrying Hajj Pilgrims is of a recent origin but is tending to become an annual feature. It is, therefore, necessary to address the issue and to conclusively resolve it.
In order to clearly understand the context in which the dispute arises a few facts are required to be taken into account. Under a bilateral agreement ..the Kingdom of Saudi Arabia..assigns a fixed number of pilgrims that are permitted to visit Saudi Arabia for performing Hajj..a relatively small portion is specified for the PTOs and the rest for the Haj Committee of India.
Before 2002, the PTOs were allocated Hajj seats directly by the Kingdom of Saudi Arabia..After Hajj 2001, the Kingdom of Saudi Arabia made it mandatory for the PTOs to come through their respective Governments. From 2002, therefore, the Government of India was obliged to evolve a system under which private operators/travel agents would be registered as PTOs..
…Initially, there were not many private operators/travel agents coming forward to claim any share in the seats..but around the year 2006 more and more private operators/travel agents started claiming allocation from the Hajj seats reserved for PTOs. It appears that it took three or four years for the people in this line of business to realize that this was the opening up of a new highly lucrative commercial venture.
..thus (although)..for the past four or five years the number of pilgrims reserved for PTOs ..has slightly gone down, there has been a large increase in the number of registered PTOs and an even larger increase in the number of applications for registration as PTOs.
..From these facts, it is not difficult to deduce that the dispute between the private operators/travel agents and the Government of India in regard to registration as PTOs arises from a conflict of object and purpose. For most of the private operators/travel agents registration as PTOs is mainly a question of more profitable business. Under the bilateral agreement no PTO can be given a quota of less than fifty pilgrims. Normally, a quota of fifty pilgrims would mean, on an average and by conservative standards, a profit of rupees thirty five to fifty lakhs. This in turn means that any private operator/travel agent, successful in getting registered as a PTO..would easily earn rupees thirty five to fifty lakhs in one and a half to two months and may then relax comfortably for the rest of the year without any great deal of business from any other source.
As you can imagine, where there is a system of quotas, permits and subsidies, can corruption be far behind?
The Attorney General stated that during the 2010 Hajj, the Ministry got complaints from various quarters regarding black marketing of seats by some of the PTOs. It was informed that some of the PTOs after getting registration and allocation of seats instead of carrying the pilgrims themselves sold the seats to other PTOs. The Ministry decided to take action against such unscrupulous PTOs but it found that many of them had no offices at all. The addresses furnished by them were fake and they were all fly by night operators.
With a quota in place and no objective basis for selection, it was going to be a matter of time before the provisioning of service and customer care took a hit. Sure enough,
The Attorney General further informed the Court that it was often seen in the past that PTOs left the pilgrims in Kingdom of Saudi Arabia and what is worse left them unattended even while hospitalised ..There were instances when pilgrims who met with an accident during their stay..were not given any medical aid or any kind of help or assistance. In many cases the PTOs did not provide even the promised facilities.
Let us now turn our attention to what the Supreme Court said about the “Hajj Subsidy”. Please bear in mind that what you read below are the exact words of the order. I have simply reproduced them as they are, albeit with added emphasis to underscore the main points:
THE HAJJ SUBSIDY
As regards the Hajj subsidy, from the figures for the past 19 years..it appears that the amount of subsidy has been increasing every year. This is on account of increase both in the number of pilgrims and the travel cost/air fare. In the year 1994, the number of pilgrims going for Hajj from India was as low as 21035; in 2011, the number of pilgrims increased to 125000. In the year 1994, the cost of travel per pilgrim was only Rs.17000.00; in the year 2011, it went up to Rs.54800.00. As a result, the total Hajj subsidy that was Rs.10.51 crores in the year 1994 swelled up to Rs.685 crores in the year 2011.
…It is further stated in paragraph 24 that the grant of Hajj subsidy by the Government of India was challenged before this Court in a petition under Article 32 of the Constitution of India registered as Writ Petition (Civil) No.1 of 2007 (Prafull v. Union of India). This Court by a reasoned judgment and order dated January 28, 2011, dismissed the writ petition upholding the constitutional validity of the Haj Committee Act, 2002 and the grant of subsidy by the Government of India in the air fare of the pilgrims.
From the statement made..the affidavit..it is clear that the Government..has no control on the cost of travel for Hajj. The air fare to Jeddah for traveling for Hajj is increased by airlines to more than double as a result of the regulations imposed by the Saudi Arabian Authorities. It is illustratively stated in the affidavit that in the year 2011, the air fare for Hajj was Rs.58,800/- though the normal air fare to and from Jeddah should have been around Rs.25,000/. In the same paragraph, it is also stated that for the Hajj of 2011, each pilgrim was charged Rs.16,000/- towards air fare. In other words, what was charged from the pilgrims is slightly less than 2/3rd of the otherwise normal fare. We see no justification for charging from the pilgrims an amount that is much lower than even the normal air fare for a return journey to Jeddah.
..Nevertheless, we are of the view that Hajj subsidy is something that is best done away with.
This Court has no claim to speak on behalf of all the Muslims of the country and it will be presumptuous for us to try to tell the Muslims what is for them a good or bad religious practice. Nevertheless, we have no doubt that a very large majority of Muslims applying to the Haj Committee for going to Hajj would not be aware of the economics of their pilgrimage and if all the facts are made known a good many of the pilgrims would not be very comfortable in the knowledge that their Hajj is funded to a substantial extent by the Government. We remind ourselves that the holy Quran in verse 97 in Surah 3, Al-e-Imran ordains as under:
“ 97. In it are manifest signs (for example), the Maqam (place) of Ibrahim (Abraham); whosoever enters it, he attains security. And Hajj (pilgrimage to Makkah) to the House (Ka’bah) is a duty that mankind owes to Allah, those who can afford the expenses (for one’s conveyance, provision and residence); and
whoever disbelieves [i.e. denies Hajj (pilgrimage to Makkah), then he is a disbeliever of Allah], then Allah stands not in need of any of the Alamin (mankind, jinn and all that exists).”
We, therefore, direct the Central Government to progressively reduce the amount of subsidy so as to completely eliminate it within a period of 10 years from today. The subsidy money may be more profitably used for upliftment of the community in education and other indices of social development..
Not finished yet. Read on to find out what the Supreme Court had to say on the system of patronage and favours also known as the “Goodwill Hajj Delegation”.
THE GOODWILL HAJJ DELEGATION
The issue of the Goodwill Hajj Delegation raises two questions; one in regard to the reasonableness and justification for sending an official delegation..and the other about its composition and the manner in which people are nominated as members..The primary purpose of the delegation, according to the affidavit, is “to convey goodwill on the auspicious occasion of Hajj to the Government of Saudi Arabia as well as to the Indian Pilgrims”
Just why such “goodwill” ought to be communicated at the general tax payer’s expense is beyond me (note that this is beyond the usual goodwill very ably conveyed by our normal diplomatic activities and embassy in Saudi Arabia). But we may be getting ahead of ourselves..
..in 1967 the Goodwill Delegation consisted of three members. Till 1973, there was no material increase in its size and till 1987 the number of its members remained under ten. Thereafter (from 1987), the delegation started steadily increasing in size and in 1997 the Goodwill Delegation was of 31 members...In the year 2011, the number was marginally reduced to 27.
..The affidavit does not disclose any criteria or guidelines on the basis of which persons are selected for being included in the Goodwill Delegation. From the list of the members..for a period of 10 years no rational basis is discernible for selecting members for the delegation. The list shows a disparate group of persons randomly put together..
What is more surprising is that there are some people who were able to go as member of the Goodwill Delegation more than once, some even three or four times…the nomination to the Goodwill Delegation evidently works on patronage and granting of favours.
On the basis of the materials..we have no doubt that the way people are nominated as members of the Goodwill Delegation is in complete violation of Article 14 of the Constitution…
The Supreme Court further observed that the reason/purpose of the delegation appears to be meaningless:
..the Goodwill Hajj Delegation is justified on two other counts (1) to convey goodwill..and (2) to oversee and facilitate..the arrangements made for pilgrims… Dealing first with the second reason, we are constrained to say that it appears quite unconvincing.
..the making of arrangements for the pilgrims is the duty and responsibility of Haj Committee of India, a statutory body,,The arrangements are further over seen by the Consulate General of India, Jeddah and the Embassy of India, Riyadh. The arrangements are, thus, looked after by competent professional people..We are unable to accept the second reason given as justification for sending the Goodwill Hajj Delegation.
Coming now to the first reason, that is, to convey goodwill..we completely fail to see how even that purpose can be served by sending such a large, unwieldy, amorphous and randomly selected delegation.
On a careful consideration..we are quite clear that the present practice of sending Goodwill Hajj Delegation must come to stop.
..In this interim order we have primarily dealt with the issues of PTOs, Hajj Subsidy and the Goodwill Hajj Delegation. There are other issues which we propose to deal with in due course.
In the affidavit filed on behalf of the Union of India, it is stated that from the overall number of 1,70,000 pilgrims fixed under the bilateral agreement, the Government of India sets apart a quota of 11,000 seats to be reserved..
..We would like to know in greater detail how the special quotas under the heads (i) to (vii) are allocated…We would specially like to examine the functioning of the Haj Committees of the States where the number of applicants exceed the quota allotted for the state.
We direct the Haj Committee of India to file a detailed affidavit giving full details of the process of selection of pilgrims from the applications made to the State Haj Committees. The affidavit should also give details of the charges realized from the pilgrims and the facilities made available to them.
The Court fixed 23rd July as the next date for the hearing. I am looking forward to the replies by the state governments and Hajj Committees (although not holding my breath)..