Were elements of the ruling party in West Bengal complicit in the chit fund scheme which swindled thousands of crores from hapless, poor people? Left economist Prasenjit Bose joined IBNLive readers for an interaction on the issue.
Q. Who is responsible for this? Asked by: sridhar gutam
A. hi sridhar, I think the main culpability lies with the party in power, i.e. the Trinamul Congress. this telegraph report is quite revealing: http://www.telegraphindia.com/1130425/jsp/frontpage/story_16825376.jsp#.UXj5l7X-El0 the central government also has to be asked why it has failed to act on the complaints so far. as far as the last LF government is concerned, there may have been some lapses on their part too. overall, the anarchy that is going on in the real estate and financial sector of the economy is to be blamed.
Q. Higher level of literacy,more ideology oriented,better thinkers, good at analysis, general characters associated with Bongs. Why does it not help in their getting into such mess? Asked by: sundar1950in
A. The problem lies both in the economy and politics of West Bengal. They are on a wrong track.
Q.Does it need a big economist to analyse and tell that such investments are risky and being taken at the risk and perils on the investors. Why in the event of failure do they flock at police station and government for compensation,when the administration had not guaranteed any act of such cheating funds? Asked by: sundar1950in
A. Well, investors can be blamed to an extent for getting lured by the promise of absurdly high returns. but the nexus between unscrupulous business and politics has to be primarily blamed for this mess.
Q. Without the direct or indirect abetting of the party in power scam of such magnitude will not happen. What we are seeing is a dirty mudslinging between the parties? Asked by: S ESHWAR
A. Agree with you completely. Accountability must be fixed.
Q. Mr. Bose, How can you blame only the Trinamool for this. In my opinion the Left people and the Congress are also involved. I am not a supporter of Trinamool. I agree with Narendra modi ji regarding the damage done by Left Rule of 32 Years to West Bengal. Your opinion please? Asked by: G. Ramadas
A. Please see the number of companies in Gujarat which has vanished after mobilising deposits from people: http://164.100.47.132/Annexture/lsq15/13/as244.htm so much for Modiji's "good governance".
Q. Do you think Sudipta Sen would be coerced by the State Police to retract his statement on TMC? Asked by: Ritaja BasuMullick
A. I suspect that Sudipto Sen's statement to the CBI conceals more than it reveals. there are many more persons at high places involved. not merely the ones named in that letter. the truth can only be unearthed if there is an impartial and unbiased inquiry. That is a big thing to expect in our country though.
Q. What about other ponzy schemes like MPS, Rose Vally, Sumangal ect...shall we wait till their bubble burst or take some preventive measures? If yes how? Asked by: Sourav
A. You are right...see the West Bengal based companies named by the union ministry of corporate affairs in this starred LS question: http://164.100.47.132/Annexture/lsq15/13/as244.htm the following groups have been named; action should be immediately initiated against them: https://www.rosevalleyindia.com/aboutus.html http://rahulhirise.co.in/Content.aspx?id=frm http://urogroup.net/index.php?mid=8&pid=5 http://www.prayag.co.in/com_profile.html http://saradhagroup.com/realty/aboutus.php
Q. Simply, how can this happen without patronage? Asked by: Kelly
A. Agree...political patronage.
Q. How badly will this effect TMC's chances in the upcoming polls and also the 2014 elections? Asked by: JK
A. People of West Bengal should decide.
Q. Saradhas association with TMC leaders is reported to be even before that of the party becoming a ruling one.. Does that not rule out a complicity and the relationship a friendly one without any complicity to do wrong? Asked by: sundar1950in
A. Strange question...channel 10 was the biggest campaigner for the TMC in 2011 elections...they have been rewarded for their service.
Q. Sudipto an Ex naxalite .says a report.Is it true? Asked by: sundar1950in
A. Can't say.
Q. Will the investigation report on this scam go up in smoke as and when it gets published? Asked by: sundar1950in
A. There has to be a serious investigation in this entire episode. the SFIO, ED and IT department must coordinate. What has the Union Finance Ministry been doing for so long?
Q. As a left economist do you agree that West Bengal has traditionally been a favourite small place for such operators and they had a golden harvest, whilst only a few have had a peerless record? Such few had come to the assistance of the government of the day also? Asked by: sundar1950in
A. Well, West Bengal has historically been the biggest mobiliser of small savings (post office savings) in India. see page 191 and 192 of the West Bengal economic review: http://www.wbfin.nic.in/writereaddata/EconomicReview11_Part2.pdf there has been a sharp drop in public collection of small savings in 2011-12. the figures suggest that around Rs. 9000 cr. of small savings were mobilised by these chit funds from the people in that year (instead of post offices). this should have raised alarm bells earlier.
Q. Hi Prasenjit..will this incident have a ripple effect on all the other similar schemes? You expect more companies to go bust? Asked by: JK
A. Quite possible..there may be contagion.. American left wing economist Hyman Minsky had a "financial instability hypothesis", where he argued that such Ponzi schemes start proliferating at the peak of a business cycle.. see page 7 of this paper: http://www.levyinstitute.org/pubs/wp74.pdf
Q. Can a Government agency monopolise and take over and conduct the business of chit fund and prevent loot & scoot of private persons? Asked by: sundar1950in
A. The properties of all these companies should be attached first. please note that all these "chit fund" companies started as real estate players. then they "diversified" using explicit political patronage. they have been mobilising deposits in violation of all laws, rules and regulations of the RBI/SEBI etc. the depositors have to be compensated by expropriating the ill-gotten wealth of these Ponzi players. Not by raising taxes as the Chief Minister is doing.
Q. Blade company, Cheating Funds, Ponzi scheme and so on - all live on the factor of greed- Is it not the greedy citizens who are to take the blame on themselves for having taken a risk of high nature, knowingly? Asked by: sundar1950in
A. Greed is surely a factor. but that greed is encouraged by the capitalist ideology - "more is always better".
Q. The alleged letter of Sudipto makes a mention of politicians of all places and shades. Does that strike a bell with IT/RBI & SEBI. They must be readying for a post mortem? Asked by: sundar1950in
A. What we need is not a post-mortem but ACTION on 4 areas: 1. Penal action must be initiated against Saradha and all the other companies running these Ponzi schemes. Their properties should be attached and their executives sent to jail. 2. The politicians who have links with these companies should be identified and stripped of their positions, especially if they are elected representatives. MPs like Kunal Ghosh, Srinjay Bose etc. must resign. They should also be prosecuted. 3. The depositors should be compensated (on a case by case basis) and made aware not to fall prey to such Ponzi schemes again. 4. The nexus between real estate mafia and politicians must be broken. That is vitiating our democracy.
Q. In my opinion Jangipur is going to repeat in other parts of Bengal because of this. Left has failed after 32 years chance. Trinamool is failing after 2 years chance. BJP may emerge your opinion please. Asked by: G. Ramadas
A. BJP is a communal party and the majority people of West Bengal, who cherish a long held secular and syncretic tradition, will never opt for majoritarian communalism. as far as corruption and the BJP is concerned, why did Nitin Gadkari have to resign? he was doing similar things isn't it? What West bengal needs today is a vibrant and rectified, pro-people Left and Democratic alternative. I am confident of its emergence, sooner or later.
Q. Do you see financial inclusion as one of the solutions to avoid such scams in future? Whats steps can government take in this direction? Asked by: Himayan Das
A. Very good point. Financial Inclusion has been a big casualty of the financial liberalization process. Bank branches are being closed down in the rural areas. The solution is to expand the banking system in the public sector and the cooperative sector in the rural and semi-urban areas. The thousands of youth who registered as "agents" of sharadha and other such chit funds are educated unemployed. unless there is economic revival of west bengal, such youth will be misused by vested interests for their nefarious and socially unproductive activities.
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