The Week That Was:

From: Vartaa Editorial Team on May 8, 2016

The Agusta saga continues

The political battle over the Agusta Westland saga continued in Delhi with the Congress and the BJP going back and forth at each other. PM Modi hit out at the Congress party on the campaign trail while the then Defence Minister AK Antony defended the UPA II regime's role. Congress President Sonia Gandhi also adopted a combative tone and invited the BJP to make fresh revelations. The Congress party has demanded a Supreme Court monitored probe into the deal as a way to corner the government. Defence Minister Manohar Parrikar meanwhile has stressed that unlike the Bofors scandal, the investigation in this deal will be taken to its logical end.

Raghu Rajan's warning

RBI Governor Raghuram Rajan added to the debate on the quality of education in post-graduate colleges of India by sounding a warning to students of not falling in the trap of taking education loans for 'useless degrees'. Rajan stressed that unscrupulous schools who dupe students should be weeded out. On the question of whether he would seek a second term as the RBI Governor, Rajan deflected the issue by pronouncing that it was the Modi government's prerogative to offer him an extension first.

Corporate Loans in India and 'fire sales' of assets

The weak balance sheets of corporate India are getting a shake up as the RBI begins to crack a whip of state owned banks for recovering the huge amounts of loans they have outstanding from their customers. State run banks have seen a massive growth in Non-Performing Assets and RBI's push is now forcing top corporate names like Jaypee, Adani and GVK to offload some of their assets at fire sale values to repay their lenders. Clearly, the Vijay Mallya saga seems to have taken an effect on India's banking sector and loan recovery process.

Opinions you must read:

  • Brahma Chellany, one of India's leading security analysts, has some harsh words to offer on Modi government's China policy.
  • Is the Congress party facing political oblivion? Anil Padhmanabhan poses the question in Mint.
  • Fali Nariman pens a light hearted portrait of former President Late Giani Zail Singh on his 100th birth anniversary.

Chart of the Week

Couple weeks ago we discussed the importance of Aadhar and Jan Dhan (Bank Accounts) to avoid leakage of disbursement of funds. Several high profile corruption scandals involving misappropriation of public funds (UP Rural Health Mission scam and Public Distribution System scam in Assam) highlight this need further. At Vartaa we thought we should examine some of the largest high-profile scams: the amounts involved, some background, and whether arrests were made. Each scam deserves a chart and story of its own but an aggregate view highlights the extent of the problem India faces.

No prizes for guessing which one has the notorious distinction of being the largest ever scam- The 2G scam resulted in 176,000 Crore Rupees (over 300,000 if adjusted for inflation) in losses for the country. Next are the Coalgate and Antrix-Devas scams with losses estimate at close to 280,000 Crore Rupees (inflation adjusted) suffered by the country. Although the Fodder scam pales in comparison with these mind-boggling numbers given that its scope was a mere 950 Crore in 1992 (almost 4,500 Crore adjusted for inflation), we included it here. Firstly, it is the grand daddy of the big corruption scandals. Even Bofors which came less than a decade before it had a small scope of 64 Crore Rupees. Secondly, it goes on to show that the corruption scandals of today have become much worse in terms of both scope and public money involved.

This is by no means an exhaustive list and we encourage our readers to provide suggestions and contrary view in the comments section. Informed readers may notice that the Adarsh, scam, Assam PDS scam, and Tarta/ Scorpene bribery cases do not feature here. A quick note about the sources- we assembled the estimates from publicly available data, news articles and Comptroller General of India (CAG) estimates. We used an average 8.5% rate of inflation throughout although this may be true only for the last 10 years.