By K. Raveendran
Congress and the BJP are playing hide and seek with the people of India by blaming each other for the massive banking fraud by Nirav Modi, the diamond dealer to the world’s glitterati. Originally estimated to cost Rs 12,300 crore, the value of the plunder is now scaled up to Rs 30,000 crore. The BJP has added it to the infamous UPA scam list, and is even claiming credit for the ‘alertness of the banking system introduced by the Narendra Modi government’, which according to the party unearthed the fraud. NDA ministers have fished out a 2013 letter written by one of the then directors of Allahabad Bank, complaining to the Reserve Bank and the then finance secretary against granting loans to Nirav Modi and his uncle Mehul Choksi. Not to be undone by the charge of political complicity, Congress has come out with its own damning evidence to pin down the Modi government by citing a complaint filed by a whistle blower in July 2016 on the entire fraud to Narendra Modi’s office, which, according to Congress, was acknowledged by the PMO.
Irrespective of which side comes out more convincing in this clumsy spat, there is the undeniable fact that if the fraud was committed during the UPA regime, the responsibility for letting the scamsters escape with the loot must be squarely put to the Modi government. In fact, in an extremely biting sarcasm, Congress president Rahul Gandhi has even produced two ‘guides’ on how to first plunder and then escape with the loot. His formula La(Mo) + Ni(Mo) —(with) Na(Mo) = Bha(Go) does sound valid. But the question that begs for an answer is: how did the Modi government allow the kingpin to continue defrauding the banking system for four years out of the seven, which happened to fall within the Modi government’s rule despite the existence of complaints since 2013 and a whistle blower’s account from 2016? If the UPA dispensation failed to act on the complaint or even suppressed it, what prevented the Modi government to act? Especially, when it claims credit for the ‘alertness’ of the banking system. It is even more disturbing that the climax of the fraud, which was the escape part, got enacted just days before Narendra Modi and Nirav Modi were to appear in the controversial Davos photo, irrespective of whether the prime minister was aware of who all he was posing with for the ‘photo-op’.
The story wasn’t any different when Vijay Mallya gave the slip to the law enforcement authorities after his ingenious fraud in which his companies defaulted on Rs 9,000 crores worth of loans the debonair conman never had the intention to pay back. He simply palmed off losses from his ill-fated Kingfisher airlines onto the banks. And the authorities kept looking the other way until he was ensconced in his safe haven. The same was the case with Lalit Modi, the self-proclaimed dictator of instant cricket. All the escapades happened either during Modi’s time or with the active help of BJP leaders, whether in the government or out of it. Even if the frauds were perpetuated at the time of UPA, the NDA government cannot absolve itself of blame in any of the cases. In the absence of a formula to apportion responsibility in such a scenario, the two sides must share the guilt in equal proportions. Maybe an enterprising economist can work out a formula for quantifying responsibility for fraud committed over multiple governments, which could perhaps be a Nobel Prize winning effort. But until such time that we have a formula, the Modi government must stop claiming that it has finally given Indians a scam-free government.
Even more damaging for the Modi government is the latest RBI disclosure that during the past five years, four of which are under Modi, over Rs 60,000 crore worth of fraud had been committed on the country’s public sector banks. According to the data, state-run banks have reported 8,670 ‘loan fraud’ cases totalling Rs 61,260 crores over the last five financial years up to March 31, 2017. The total number could be even higher since these include only cases reported to the RBI and involved loans of Rs1 lakh or more.
Just as in the case of Nirav Modi, it is a no-brainer that such massive fraud could not have been possible without the connivance of bank officials. In fact, bankers have been steering funds to politically connected business tycoons, without due diligence, or after being pressed by government officials. Nirav Modi managed to transact thousands of crores of rupees, with bank officials making no proper entries, or vetting the credit limits of companies to which the huge amounts were being sanctioned. So much for the efficiency of our celebrated banking supervisory system.
The RBI also cannot be above blame. The latest disclosure of the massive frauds emerged only after an enterprising Reuters reporter approached the RBI with an application under the RTI Act. And this means that if there was no RTI query, the information would have stayed with the RBI. How can the RBI justify itself if anyone accuses it of being a party to the cover-up?
All this looted money belongs to the people of India, which could have been used for their welfare and progress. How can the country achieve progress when national wealth is plundered like this and the entire Establishment is engaged in a grand cover-up operation, subjecting people to untold miseries in the form of price increases and ever new tax burdens year after year? Our finance ministers keep blaming rising international crude prices for all our economic woes and reel out fancy statistics to show how every $10 per barrel increase in the price of oil reduces economic growth by 0.2-0.3 percentage points. Have our government economists ever calculated the rate of growth such plundered astronomical amounts could have induced to the economy, or the reduction in tax burden it could have made possible if the moneys had remained in the system?
(Also published in IPA Newspack)