George Orwell, in ‘Animal Farm’ stated that ‘all animals are equal, but some animals are more equal than others’.
This statement resonates with individuals in India, victims of fraud and scams, denied justice by a system that is inefficient, collusive and often corrupt.
Recently a few high profile cases seem to suggest, superficially at least, that the investigative/ prosecutorial/ judicial system was getting tough on fraudsters. The most high profile case, of Vijay Mallya, lost his appeal against extradition and is expected to be brought to India to face justice for having defrauded PSU banks and run away (though he may still use some legal strategies to delay it).
Rana Kapoor, the founder of YES Bank, is under arrest and the Enforcement Directorate is investigating over 100 firms for diverting money as a ‘gift’ to his wife. YES Bank lent money to non-creditworthy companies, in return, it is alleged, for kickbacks, and the founder was gradually reducing his stake in it. One of its borrowers was DHFL, whose founders, the Wadhawans, have been sent to jail. These were the persons who ‘managed’ to obtain passes to travel to Mahabaleshwar during a severe lockdown; investigation into the issuer of those passes has not been fully completed.
Should these cases come to their logical conclusions, and should these people be found guilty and punished severely (their deeds have caused thousands of investors to suffer financial hardship for their personal pleasure — a mansion in Lutyens Delhi or a bungalow in Mahabaleshwar) then one can say that the investigative/ prosecutorial/ judicial system is getting to be fair.
But there is many a slip between the cup and the lip, and many an envelope, too. Too often, when public memory fades, the system succeeds in letting them go.
Some animals are more equal than others.
This is even truer when one examines these cases. The common thread is the banks were defrauded, including PSU banks and, in the case of YES Bank, a private bank now rescued by PSU banks.
But in the case of Ponzi schemes, like NSEL, Sarada, Rose Valley, where it is not Bank money but private individual money, that is stolen, the Government couldn’t care less.
Their banks are not involved, you see!
Some animals are more equal than others!
So long as the investigative/ prosecutorial and judicial systems do not deliver justice equally and fairly, India will continue to be downgraded, as rating agency Moody’s did last week, for the first time in 22 years. India is now at the lowest investment grade rating, Baa3, and one more downgrade moves it into junk category. Institutional money (pension funds, and endowment funds, among others) cannot invest in non-investment grade instruments; so one more downgrade would hugely increase the borrowing cost of Indian government and for companies.
The ratings downgrade is not entirely due to Covid-19. A newspaper article analysed that the main reason was the government’s failure, since 2017, to continue with structural reforms pertaining to land, labour and product markets, and rising financial risk.
Land records are often kept by ‘tehsildars’ and ‘talatis’ in hand written records and often, if the hands are greasy, mistakes occur. They can, and should, be made electronic, or perhaps, kept securely in a block chain. But that can expose the actual ownership and lead to investigation into source of income to acquire the land, hence it is not done. Result? India suffers a downgrade.
So, those with political clout can get away with gaming a system (as they do with the tax-free status for ‘agricultural income’ even if it means the country rating suffers.
Those with political clout, such as the Ponzi scheme scamsters, can loot others without adverse consequences. Who cares?
Those with political clout can manipulate government policies for their personal gains. In the agricultural sector, for example, encouraging sugar cultivation in Maharashtra, a water-scarce region to grow a water guzzling crop, is an economically insane decision. Yet it continues.
What happens if such policies favouring some animals continues for long?
Well, the riots in the US are an example, of a people expressing angst against it. The killing of Floyd by a police officer was the trigger to a rage against an unfair society.
If we do not wish that to happen in India, the government, the bureaucracy and the judiciary must remove their biased blinkers and start to deliver justice fairly and equitably. They must stop fiddling around with ‘ chalta hai ’ solutions that let scamsters go scot free. Remember Nero, fiddling whilst Rome burnt?
They must get real! Enough of crony capitalism and ‘ chalta hai ’. Get down to governance.
The writer is India Head — Finance, Asia/Haymarket. The views are personal.