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"Gandhi is dead, Who is now Mahatmaji?"
Solar scam reveals decadent polity and sociery
A Dalit poet writing in English, based in Kerala
Foreword to Media Tides on Kerala Coast
Teacher seeks V.S. Achuthanandan's intervention to end harassment by partymen


27 February, 2018

Banks fail to check fraud

BRP Bhaskar
Gulf Today

Two bank frauds that came to light in the past month have exposed the weaknesses of multiple regulatory mechanisms which make it easy for unscrupulous businessmen to take state-owned institutions for a ride.

The central figure in one of the two fraud cases which the Central Bureau of Investigation is pursuing is “Diamond King” Nirav Modi (no relation of Prime Minister Narendra Modi), who has been on the Forbes list of billionaires since 2013. He slipped out of India with his family and his uncle Mehul Choksi, also a diamond merchant, in January before the public sector Punjab National Bank (PNB) lodged a complaint against them to the CBI.

He, however, turned up at Davos, Switzerland, to join the large delegation of businessmen which was with the Prime Minister at the World Economic Forum. 

The other businessman in the spotlight is Vikram Kothari, promoter of a firm that makes a well-known brand of pens. The complaint against him was filed by the Bank of Baroda (BoB), which too is state-owned.

Vipul Ambani, president of one of Modi’s diamond firms, and Kapil Khandewal, CFO of a diamond firm owned by Choksi, and serving and retired PNB officials are among those whom the CBI has arrested. Vikram Kothari and his son Rahul are in custody in connection with the BoB case.

The PNB puts the amount involved in the dubious Modi transactions at Rs114 billion ($1.8 billion), making it the biggest bank fraud. The amount involved in Kothari’s allegedly fraudulent BoB deals is said to be about Rs 37 billion.

A farmer seeking a loan for agricultural purposes or a parent seeking a loan for his son’s higher education in India or abroad will be required to provide collateral security to cover the loan amount. On the basis of the bank’s assessment of the borrowers’ credit-worthiness, limits are set on the borrowing.

A billionaire seeking a loan to make business deals abroad has an easier route. He gets the bank to issue a guarantee, in the form of a letter of understanding (LoU), for cheap short-term foreign currency loans from banks abroad. Ordinarily the bank providing the guarantee secures from the borrower a fixed deposit, the return from which will be higher than the amount of the foreign loan.

Nirav Modi is reported to have secured loans from about 35 foreign branches of various Indian banks using PNB’s LoUs in the last seven years. As the guarantor, PNB has to reimburse the lending banks in case the borrower defaults.

PNB officials issued LoUs to Modi’s firms without obtaining collateral in some form. Ignoring the Reserve Bank of India’s directive to limit the validity of LoUs to 90 days PNB issued documents with a year’s validity.

The investigations so far indicate that Modi used an LoU of 2011 to raise money from banks abroad to buy diamonds. On selling the diamonds, he was required to remit to PNB the money he owed to the lending banks. He did not do so. Instead he siphoned it off the money to build assets and obtained a fresh LoU and raised more loans with it. Part of the money so raised was used to pay off the old loans.

The process went on for seven years without being detected. Since all previous loans were repaid with interest when new loans were raised, on the PNB’s books he looked like a good customer who promptly paid the dues. It did not get wise to his modus operandi until the loan amount reached the whopping figure of Rs114 billion.

Ten days ago, the Enforcement Directorate said it had seized diamonds and other valuables worth more than Rs57 billion in raids on firms owned by Modi and Choksi. The raids were said to be continuing at that time but no figures of seizures have been released since then.

In fleeing the country Nirav Modi followed a path shown by businessmen like liquor baron Vijay Mallya who had skipped to London two years ago as a consortium of banks initiated steps to recover more than $1 billion he owed them. He is now facing extradition proceedings there.

Bank accounts are audited at three levels — first by the bank itself, then by its external auditors and finally by the Reserve Bank of India. The failure of the triple audit system to check frauds points to collusion between bankers and businessmen. 

The RBI’s immediate response to the PNB fraud, which some have dubbed Niravgate, has been to set up a committee to study the issue of frauds and bad loans dogging the banking sector. It is headed by Yezdi Hirhi Malegam, an octogenarian chartered accountant who was a member of the RBI board for many years. While his credentials are sound, critics point out that his connection with certain rating and auditing firms raises issues of conflict of interest. - Gulf Today, Sharjah, Febriary 27, 2018

20 February, 2018

Towards cleaner politics

BRP Bhaskar
Gulf Today

India’s Supreme Court last week enlarged the scope of the legal framework, much of it designed by itself, to reduce the scope for political corruption. 

Money power and muscle power have been identified since long as the bane of electoral politics in this country, which, by virtue of its population, is the world’s largest democracy.

The Representation of the People Act, enacted in 1951, ahead of the first general elections, provides that persons convicted of certain charges, including corruption, will incur certain disqualifications. The law has undergone some revision since it was first enacted but undesirable persons continue to be elected. 

In 1999, the Association for Democratic Reforms (ADR), set up by a group of professors of the Indian Institute of Management, Ahmedabad, initiated public interest litigation which resulted in a Supreme Court judgment directing all candidates to file affidavits disclosing information relating to their educational qualifications, involvement in criminal cases, if any, and the family’s assets. 

Since then all candidates have been filing affidavits on the lines mentioned by the court and the authorities have been promptly posting them on the web. But there has been no improvement in the quality of the elected representatives. On the comtrary, there are indications of deterioration.

After analysing the affidavits filed by those elected in the last three elections, the ADR reported that the number of Lok Sabha members with criminal cases had gone up from 24 per cent in 2004 to 30 per cent in 2009 and to 34 per cent in 2014. 

Over one-third of the 282 members of Prime Minister Narendra Modi’s Bharatiya Janata Party were accused in criminal cases when the party picked them to contest the elections, and over one-fifth were facing serious charges. Of the 18 members of BJP ally Shiv Sena 15 were involved in criminal cases.

All four members of the opposition Rashtriya Janata Dal and four of the five of the Nationalist Congress Party were facing criminal charges. Congress MPs had a comparatively low criminal record: 18 per cent were involved in cases, and those facing serious charges were only seven per cent. 

Another ADR report said comparison of affidavits showed that the assets of 165 MPs who won re-election in 2014 had risen, on an average, by 137 per cent in their previous term. 

In 2013, The Supreme Court, modifying a disqualification clause, ruled that a member of Parliament or of a state legislature will lose his seat immediately if convicted and sentenced to a jail term of two years or more.

Parliament had earlier provided for keeping disqualification in abeyance until the member exhausted the avenues of appeal. The Manmohan Singh government planned to enact legislation to nullify the court verdict but dropped it as Rahul Gandhi was against it.

On Friday the apex court ruled that a member of Parliament or of a State legislature will lose his seat if found to be in possession of assets disproportionate to his known sources of income. It wanted the candidates’ affidavits to include the assets of their dependents, besides those of the spouses.

“If assets of a legislator and his/her associates (spouses and dependents) increase without bearing and relationship to their known sources of income, the only logical inference that can be drawn is that there is some abuse of the legislator’s constitutional office,” it said. 

The court passed the order on a petition filed by Lok Prahari, a non-governmental organisation. It had alleged there has been an increase in the assets of 26 members of the Lok Sabha, 11 of the Rajya Sabha and 257 of state legislatures. 

The Central Board of Direct Taxes, which scrutinised the affidavits of some of the elected members, informed the court that there were discrepancies in the statements of seven Lok Sabha members and 98 MLAs. There was prima facie evidence of huge increase in their assets and the matter needed to be probed further.

While the measures devised by the court may help to remove some corrupt elements, they do not offer a solution to political corruption, which is a systemic problem. When Lalu Prasad in Bihar and Jayalalithaa in Tamil Nadu were forced to step down they retained their hold on the administration through handpicked chief ministers. While Jayalalithaa chose a trusted colleague to hold the fort for her, Lalu Prasad’s choice was his wife, Rabri Devi. She came to office with no political experience and served as chief minister for six and a half years. 

The public have evinced little interest in verifying claims made by candidates in affidavits. Modi and his Cabinet colleague Smriti Irani have dodged efforts to check their educational qualifications. 

There can be no clean politics while elections are an expensive affair and the voters are not ready to take a close look at the antecedents of candidates seeking election. -- Gulf Today, Sharjah, February 20, 2018.

14 February, 2018

High on promise

BRP Bhaskar

Finance Minister Arun Jaitley unveiled in this year’s Central budget an ambitious programme which, he claimed, is the world’s biggest health care project. Critics have found it high on promise and low on deliverables.

The programme, labelled the National Health Protection Scheme (NHPS), will cover 100 million poor families —or about 500 million people — with an allocation of Rs 500,000 per family, he said.

Essentially it is a medical insurance scheme of which the premium will be paid by the government. The Centre and the states are to share the cost on 60:40 basis.

According to the UN Development Programe, India has cut poverty by half since 1990 but nearly 300 million people in the country still live in extreme poverty. There is, therefore, a felt need for schemes to help the vulnerable sections of the society. 

Ruling party members dutifully welcomed Jaitley’s announcement in the Lok Sabha with thumping of desks. Many of them were probably unaware that they had cheered him at two previous budget sessions for making similar announcements. 

In the 2016 speech, he said the government would launch a new health protection scheme which would give medical cover of up to Rs 100,000 per family to one-third of the population. Although an allocation of Rs 15 billion was made for the programme, the actual spend was less than Rs 5 billion and the extent of cover per formally was only Rs 30,000.

Last year, Jaitley fixed the outlay for the programme at Rs 7.5 billion. This year it has been raised to Rs 20 billion. The experience of the last two years leaves no room to believe the new scheme will fare any better.

One of the measures proposed in the budget to raise resources for new projects is the levy of a 4% health and education cess in place of the present 3% education cess. This is estimated to yield additional revenue of Rs 110 billion. Yet the budgetary allocation for NHPS is only Rs 20 billion. This raises the question how serious the government is about this grand scheme.

According to Alok Kumar, an adviser to Niti Ayog, the Centre’s policy think tank, the NHPS will cost Rs 100 to 120 billion annually.

Mita Choudhary, an assistant professor of the National Institute of Public Finance and Policy, says the resource requirements will be much higher. In a paper, she points out that even if one assumes a conservative 2% premium on the insured sum, the scheme will cost about Rs 1,000 billion a year. Under the proposed cost sharing formula, the Centre will need to find Rs 600 billion for the scheme.

At present, the combined allocation for the Ministry of Health and Family Welfare and the Ministry of Ayush, which deals with systems other than modern medicine, is only Rs 550 billion.

Other health programmes in the budget have also been drawn up with no sense of realism. An example is the proposal to create 150,000 health and wellness centres. This is also a scheme which was first announced last year. 

The budgetary allocation for this scheme is Rs 12 billion. This works out to Rs 80,000 a year, or less than Rs 7,000 a month, for a centre. What kind of service can the centre provide with such a paltry amount?

Both the minister and Niti Ayog spokesmen dismiss questions about the low allocation of funds, and blandly assert that there is no money constraint.

Apparently all the schemes rolled out in the three budgets have come out of a proposal placed before the Prime Minister in 2016 by a committee of officials, including the Secretaries of the Ministries of Health and Ayush. It envisaged universal health cover, free of cost to 100 million deprived families and on payment basis to the rest of the population.

The committee estimated that the scheme, to be implemented through empanelled private and public health service providers, would cost about Rs 100 billion and suggested that the Centre and the states should bear the expenditure in the 60:40 ratio. 

Critics are of the view that the scheme has been introduced without making adequate financial provisions in the hope that it will yield electoral dividends when Modi goes to the people next year for a fresh mandate.

Studies have shown that the various insurance-based schemes run by the Centre and the state governments have not helped to reduce the out-of-pocket expenses incurred during hospitalisation. Against this background, some critics argue that NHPS will actually be more beneficial to private hospitals than to the poor.

06 February, 2018

Modi has cause for worry

BRP Bhaskar
Gulf Today

The Bharatiya Janata Party’s poor showing in three recent by-elections in the Hindu heartland state of Rajasthan is a sign of the declining appeal of Hindutva politics which catapulted Narendra Modi to power four years ago.

The small gains the party made in two by-elections in the eastern state of West Bengal are a poor consolation for Modi and his party as they prepare to face assembly elections in eight states this year and parliamentary elections next year.

The Congress made a clean sweep of all the three seats at stake in Rajasthan and the Trinamool Congress took both the Bengal seats. 

Three Lok Sabha constituencies, two from Rajasthan and one from Bengal, were among the five that went to the polls. With 55.61 per cent of the valid votes polled, the BJP had won all of Rajasthan’s 25 Lok Sabha seats in 2014, leaving none for the Congress which had a vote share of 30.73 per cent. The by-election victories have given the Congress two seats from the state in the present house for the first time. 

The Congress party’s impressive victory margins point to a change in the mood of the electorate. At Alwar, its candidate got 196,496 votes more than his BJP rival. At Ajmer, its nominee defeated his BJP opponent by 84,414 votes. The Congress won the Mandalgarh assembly seat with a margin of 12,976 votes. 

Rajasthan is one of the northern states where the Congress and the BJP are involved in a virtual direct contest and the two parties have been alternating in power there since 1998. In the last assembly elections, the BJP had bagged 162 of the 200 seats.

State Chief Minister Vijayaraje Scindia’s performance has been dismal, but Modi and BJP President Amit Shah cannot shove the entire responsibility for the party’s current plight on her. 

Rajasthan was one of the states which had witnessed organised violence by Hindutva gangs. In April last year, Pehlu Khan, a dairy farmer from Haryana, was lynched to death by self-proclaimed cow protectors while he was returning home from a cattle fair in Jaipur. The incident led to an uproar in the country and invited sharp criticism from abroad too.

The government of Rajasthan, like those of other BJP-ruled states, treated the goons with kid gloves and foisted cases against Pehlu Khan’s sons, who were with him, on charges of cow smuggling.

After keeping mum for long on the violence, directed mostly against Muslims and Dalits, Modi expressed disapproval of the social tension, but it was too little and came too late.

During the by-election campaign, BJP candidate Jaswant Singh Yadav, who, incidentally, is a minister in the Rajasthan government, unabashedly played the communal card. In a video which went viral on the social media he could be heard telling the voters: “If you are a Hindu vote for me, and if you are a Muslim vote the Congress.” 

Even as the ruling Trinamool Congress demonstrated its continuing hold on the Bengal electorate, the BJP, which is making a bold bid to emerge as a major player in the state, took the second position in both the Lok Sabha and assembly constituencies. 

The Communist Party of India (Marxist), which had ruled the state for more than three decades before the Trinamool Congress displaced it in 2011, was in the third place and the Congress in the fourth. 

Since the political scenarios of Rajasthan and West Bengal differ so widely, it is not possible to draw a common conclusion from the by-election results. 

The Congress party’s successes in Rajasthan have come close on the heels of the fright it gave to the BJP in Modi’s home state of Gujarat in the assembly elections last December. The previous month, the party had retained the Chitrakoot seat in the Madhya Pradesh with improved majority in a by-election.

All this suggests that the Congress, under its new president, Rahul Gandhi, is in a position to pose an effective challenge to the BJP in the states where they are the contenders for power. Four such states – Rajasthan, MP, Karnataka and Chattisgarh — figure in this year’s election calendar. 

The lesson of the Bengal by-election results perhaps is that the ability of the regional parties which displaced the Congress from power at various points of time to hold their ground against the BJP must not be underestimated.

Unless Modi can keep the Hindutva hotheads in check the backlash generated by their unbridled violence against Muslims and Dalits is bound to grow and upset his 2019 Lok Sabha poll calculations. -- Gulf Today, Sharjah, February 6, 2018.