Robert Vadra’s got vision; rest of the world wears bifocals


Vivek Kaul
If ever there ever was a paisa vasool western it was Butch Cassidy and the Sundance Kid which starred Paul Newman and Robert Redford. The film other than having great visuals, a fast paced story line, brilliant background music and excellent performances by its lead cast, also had what is my favourite one liner from an English movie.
In a rather non-descript scene as Butch and Sundance head into the sunset, Butch says “Boy, I got vision, and the rest of the world wears bifocals.”
Nowhere is the statement truer currently than in the case of Robert Vadra, who has earned hundreds of crore without putting much of his own money at risk. As a line from a song in the movie Gol Maal (the original one made by Hrishikesh Mukherjee and not the recent Rohit Shetty series) goes “ke paisa kamane ke liye bhi paisa chahiye”.
Vadra broke the age old wisdom inherent in the phrase. He had the vision of figuring out how to make profits of hundreds of crore by putting very little of his own money into the business. Of course this clarity of vision wouldn’t have been possible to execute if he was not married to Priyanka Gandhi (now Vadra) India’s perennial politician in waiting.
The story started with Sky Light Hospitality, a company in which Vadra owns 99.8% stake, zeroing on 3.5 acres of land in Shikohpur, ten kilometers from Gurgaon, in February 2008. This land was bought from Onkareshwar Properties, then majorly owned by Satyanand Yajee, a man known to be close to Haryana Chief Minister Bhupendra Singh Hooda.
Yajee sold the land to Vadra for Rs 7.5 crore. The balance sheet of Vadra’s Sky Light Hospitality as on March 31,2008, clearly reveals that the company had a capital base of only Rs 1 lakh. Also the company did not have any loans on its books. So how did a company with a capital of Rs 1 lakh buy a piece of land worth Rs 7.5 crore? Over and above this stamp duty also needed to be paid, where did that money come from?
Vadra’s Sky Light Hospitality issued a cheque without having the requisite money in its bank account. Yajee did not deposit the cheque and supposedly also paid up the stamp duty. Soon Vadra sold the piece of land to DLF which valued it at Rs 58 crore. DLF gave an advance of Rs 50 crore on this. The first Rs 5 crore of this advance was paid out in early June 2008.
This money was used by Vadra to pay off Yajee. He also used the money to go on a major property buying spree across Rajasthan and Haryana, two states ruled by the Congress party and made a killing on it.
But some recent revelations made by the Outlook magazine show that Vadra could not have sold the land to DLF in the first place.Documents seen by Outlook reveal that, till recently, the land did not have the required permission to be sold, leased or used for any other purpose (than for which it was sold to the buyer). In short, Vadra’s company (Sky Light Hospitality) could not by law sell the land (as it claims to have done in 2008) to DLF,” the article points out.
The land that Vadra had bought in February 2008 was agricultural land and agriculture land can’t be used for commercial use. The change of land use (CLU) was approved by the Haryana government in late March 2008. As The Hindu had reported earlier “A little more than a month later, on March 28, 2008, the Town and Country Planning Department issued Mr. Vadra’s company a licence to develop 2.701 acres of the land into a housing colony.”
So Vadra got the permission to develop the land into a housing colony in March 2008. But did that permission allow him to sell the land along with the licence? The answer is no.
As Outlook points out “As per one set of official records of the state government for 2008, 2009 and 2010, the permission the Shikohpur plot had was a ‘CLU’, which makes farmland fit for commercial use. This ‘licence’, officials say, could not have been transferred. Nor could a plot with CLU have been sold, sub-let, sub-divided, broken into plots, or developed in any way other than the CLU was originally meant for. In Skylight’s case, the permission is understood to have been for developing residential properties, though it is not yet known whose name exactly it was taken in. Subsequently, Skylight may indeed have decided to tie up with a builder such as DLF to develop homes—but would the company be permitted an outright sale, along with the licence? That’s something officials say can’t be done.”
What this means is that if Vadra wanted to build homes on the piece of land and sell them, he could do that. He could have even tied up with a builder and built homes. But he couldn’t have sold the land along with the licence to DLF. And that is precisely what he did.
This is proved by the statement issued by DLF on October 6, 2012. “M/s Skylight Hospitality Pvt Ltd approached us in FY 2008-09 to sell a piece of land measuring approximately 3.5 acres just off NH 8 in Village Sikohpur, Dist Gurgaon. This was licensable to develop a Commercial Complex and the LOI from Govt of Haryana to develop it for a Commercial Complex had been received in March 2008 itself. DLF agreed to buy the said plot, given its licensing status and its attractiveness as a business proposition for a total consideration of Rs 58 crore.”
So what DLF was paying for was essentially the licence that Vadra had to develop the land for commercial use from the Haryana government. The company has clearly said this.
This admittance by DLF raises another interesting question. The company has practically built a new city Gurgaon, often referred to as the Millennium City, from scratch. Given that why were they so naïve as to not be aware what the law as it stands was? Or was it just an attempt on their part to be nice to the first son-in-law of this country?
Vadra used the Rs 50 crore advance that he got from DLF to build a mini land empire for himself between 2008 and 2011. But all this had only been possible because he had the ‘vision’ to marry Priyanka Gandhi. The rest of us in the meanwhile were caught wearing bifocals.
The article was originally published on www.firstpot.com on November 17,2012.
(Vivek Kaul is a writer. He can be reached at [email protected])

Wiser after Stockguru: 5 ways to spot a Ponzi scheme


 
Vivek Kaul
So a Ponzi scheme is in the news again. Last time it was the emu Ponzi scheme. Before that there was Speak Asia. Now it’s the turn of Stock Guru to take investors across the county for a ride. The modus operandi as is the case with all Ponzi schemes is the same: the lure of high returns. In the end more than the frauds who ran Stock Guru it’s the investors who invested in the scheme have only themselves to blame.  There greed did them in.
While one Ponzi scheme differs from another, but despite the details changing, the structure abides. Let’s first try and understand what exactly is a Ponzi scheme and why is it so called.
Charles Ponzi
Chalres Ponzi was an Italian immigrant who landed in America in 1903. Sometime in August 1919, in the process of starting an export magazine, he realised that there was money to be made through an arbitrage opportunity that existed. Ponzi sent an offer to a person in Spain requesting him to subscribe to the magazine. The subscriber agreed and sent Ponzi an international postal reply coupon. This coupon could be exchanged at the post office for American stamps which would be needed to send the magazine to the Spanish subscriber. The coupon in Spain cost the equivalent of one cent in American currency. In America when Ponzi exchanged the coupon, he got six cents worth of stamps. And this set Ponzi thinking.
What was the plan?
The plan was very simple. Ponzi could buy international postal reply coupons convert them into American stamps and sell those stamps and make money. So he would need one cent to buy an international postal reply coupon in Spain. That coupon could be exchanged for stamps worth six cents in America and those stamps could then be sold for six cents. Hence there was a clear profit of five cents, assuming there were no other charges, to be made on every one cent that was invested. The trouble of course was that Ponzi needed money to get started.
Double your money in 90 days
So Ponzi launched an investment scheme asking people to invest. He promised them that he would double their money in 90 days. Ponzi would make a profit of five cents for every one cent that he invested. That meant a profit of 500%. As far as investors were concerned he was only promising to double their money and that meant a return of 100%. Hence, on the face of it looked like a reasonably safe proposition. At its peak, the scheme had 40,000 investors who had invested around $ 15 million in the scheme.
What went wrong?
As if often the case what sounds great in theory cannot be put into practise. The idea was brilliant. But Ponzi had not taken into account the difficulties involved in dealing with various postal organizations around the world, along with other problems involved in transferring and converting currency. Also with all the money coming in Ponzi couldn’t stop himself from living an extravagant life and blowing up the money investors brought in.
But soon doubts started arising on the legitimacy of the scheme. The Boston Post newspaper ran a story on July 26, 1929, and within a few hours, angry depositors lined up at Ponzi’s door, demanding their money back. Ponzi settled the obligations of the people who had gathered. The anger subsided, but not for long.  On Aug 10th, 1920, the scheme collapsed. It was revealed that Ponzi had purchased only two international postal reply coupons and was using money brought in by the new investors to pay off old investors.
So what is a Ponzi scheme?
Robert Shiller, an economist at Yale University in the United States defines Ponzi schemes as “A Ponzi Scheme involves a superficially plausible but unverifiable story about how money is made for the investors and the fraudulent creation of high returns for initial investors by giving them money invested by subsequent investors. Initial investor response to the scheme tends to be weak, but as the rounds of high returns generate excitement, the story becomes increasingly believable and exciting to investors. ( Adapted from Shiller 2003).” Hence, a Ponzi scheme is essentially a fraudulent investment scheme where money brought in by the newer investors is used to pay off the older investors. This creates an impression of a successful investment scheme. Of course as long money entering the scheme is greater than the money leaving it, all is well. The moment the situation is reversed, the scheme collapses.
This kind of financial fraud happened even before Ponzi’s name came to be attached to it. And it continues to happen more than ninety years after Charles Ponzi ran his scam.
Any Ponzi Scheme will differ from another Ponzi Scheme. But if one may borrow a French phrase, Plus Ca Change, Plus C’est La Meme Chose, the more things change, the more they remain the same. The details might change from scheme to scheme, but the structure abides. Here are some characteristics of Ponzi schemes.
The instrument in which the scheme will invest appears to be a genuine investment opportunity but at the same time it is obscure enough, to prevent any scrutiny by the investors.
In case of the emu Ponzi scheme an investor was supposed to rear emus and then sell their meat, oil etc. In order to become a member of Speak Asia one had to invest Rs 11,000. This investment was for subscribing to the electronic magazine issued by the company called “Surveys Today”.
This also allowed the member to participate in two online surveys every week and make Rs 500 per survey or Rs 1000 per week. This when converted into a yearly number came to Rs 52,000 (Rs 1000 x 52). So an investment of Rs 11,000 ensured that Rs 52,000 was made through surveys, which meant a return of 373% in one year.
And this was basically the main selling point of the scheme.  So the business model of the company was pretty vague. The legal advisor of the company Ashok Saraogi said at a press conference “The company is not selling any surveys to panellists but e-zines (electronic magazines) to its subscribers. Surveys are offered as additional benefit and can be withdrawn anytime if the company’s contract with clients comes to an end.”
Stock Guru also worked along these lines. The company claimed to be making money by investing in stocks and had this to advise to its customers: “We advise our clients to buy shares at a low price and sell them at a higher price. Selecting the right share at the right price and entering the capital market at the right time is an art. We help all our clients to make huge profits by investing in good shares for very short/short/medium/long term depending upon the client’s requirements.” Very sane advise when it comes to investing in the stock market but nothing specific about how the company plans to help its clients make a huge profit.
Most of the Ponzi Schemes start with an apparently legitimate or legal purpose.
Let’s take a look at some of the Ponzi schemes of yore. Hometrade started off as a broker of government securities, Nidhis were mutually beneficial companies and Anubhav Plantations was a plantations company. They used their apparently legitimate or legal purpose as a façade to run a Ponzi Scheme. Same stands true for the present day Ponzi schemes. Speak Asia was in the magazine and survey business. Emu Ponzi schemes were in the business of rearing and selling emus. And Stock Guru helped investors make money by investing in stocks.
The most important part of a Ponzi scheme is assuring the investor that their investment is safe.
This is where the meeting of initial obligations becomes very important. Early investors become the most important part of the scheme and spread it through word of mouth, so that more investors invest in the scheme and help keep it going. Ironically enough, in many cases it is their own money that is being returned to them. Let us say an investor invests Rs.100 in a scheme that promises 20% return in 60 days. So Rs.20/- can be paid out of investor’s own money once every two months up to ten months. The Ponzi scheme can keep going by essentially returning the investor his own money. Speak Asia did this by returning around Rs 250 crore to the investors from the Rs 2000 crore it had managed to collect. This gave the scheme a greater legitimacy.
Stock Guru also worked along similar lines. As an article in the Money Life magazine pointed out “You pay Rs10,000 as investment and Rs1,000 as registration fees. There is no limit on the maximum amount one can invest. Stockguruindia.com offered a return of 20% per month for up to six months and the principal amount invested is returned in the next six months. It also gave post-dated cheques of the principal and a promissory note as security.”
As a story in The Times of India points out “People invested between Rs 10,000 and Rs 60 lakh at one go in Stock Guru India as Ulhas promised to double their capital…He (i.e.Ulhas Khaire who ran the scam) also returned money to some investors to win their trust so that they would recommend Stock Guru to others,” said an officer. In fact this initial lot of investors become brand ambassadors and passionate advocates of the scheme. When this writer wrote about Speak Asia being a Ponzi scheme he got stinkers from a lot of people who had invested their money in Speak Asia at the very beginning and made good returns.
The rate of return promised is high and is fixed at the time the investor enters the scheme. So the investor knows in advance what return he can expect from the scheme. The promised returns were substantially higher compared to other investment avenues available in the market at that point of time. The rate of return was also fixed in advance. So there was no volatility in returns as is in other forms of investment. This twin combination of high and fixed returns helps in attracting more and more investors into the scheme.
In Speak Asia the investor knew that he would get paid Rs 1000 per week for conducting surveys. And by the end of the year he would earn Rs 52,000 on an initial investment of Rs 11,000.
In case of Stock Guru a minimum of Rs 10,000 was to made as an investment. And Rs 1,000 was the registration charge. The company promised a return of 20% per month against the investment for the first six months. For a person investing Rs 10,000 that would mean a return of Rs 2,000 per month or Rs 12,000 after the first six months. The principal amount of Rs 10,000 would be returned over the next six months. Hence on an investment of Rs 11,000, a profit of Rs 12,000 was being made in a very short period of time. These were fantastic returns.
Brand building is an inherent part of a Ponzi Scheme.
MMM, a Russian Ponzi scheme marketed itself very aggressively. In the 1994 football World cup, the Russian soccer team was sponsored by MMM. MMM advertisements ran extensively on state television and  became very famous in Russia.  Hometrade also used the mass media to build a brand image for itself. It launched a  high decibel advertising campaign featuring Sachin Tendulkar, Hrithik Roshan and Shahrukh Khan. When the company collapsed, the celebrity endorsers washed their hands off the saying that they did not know what the business of Hometrade was. Anubhav Plantations also ran a huge advertising campaign. Film stars also advocated investing in the emu Ponzi schemes.
Speak Asia ran a huge ad campaign. The irony was it advertised extensively in newspapers which dealt with personal finance. Stock Guru did its level of brand building as well. As a report in the Times of India points out “ Ulhas Prabhakar Khaire andRaksha Urs, masterminds of the multi-crore Stock Guru fraud, would organize their promotional events in Macau, Malaysia, Mauritius and several other countries, taking only a few premium investors on expenses-paid trips, say Delhi Police sources. The events were reportedly organised regularly in five-star hotels, and Ulhas made all the arrangements, including booking flights for investors and celebrities. Ulhas is learnt to have named two Bollywood celebrities he invited to his promotional events.”
All these things lead to people investing in these schemes. The attraction of easy wealth is something that investors cannot resist. Ponzi schemes offer huge returns in a short period of time vis a vis other investments available in the market at that point of time. With good advertising and stories of previous investors who made a killing by investing in the scheme, investors get caught in the euphoria that is generated and hand over their hard earned money to such schemes going against their common sense. Greed also results when investors see people they know make money through the Ponzi scheme. As economic historian Charles Kindleberger  once wrote  “ There is nothing so disturbing to one’s well being and judgment as to see a friend get rich.”
Given this, even though a lot of questions can be asked they are not asked. Ponzi schemes have not been eliminated. This is sad because for the economy as whole, they are undesirable. The world has not learned from its experience. “Mundus vult decipi-ergo decipitaur-The world wants to be deceived , let it therefore be deceived ”. (Winkler 1933 as quoted in Kindlberger 2000).
All Ponzi schemes collapse in the end once the money leaving the scheme becomes greater than the money entering it. Stock Guru was no different.
To conclude, any investment scheme promising more than 15% return a year has to be a very risky proposition. It may not always be a Ponzi scheme, but the chances are that it is more often than not.
The article originally appeared on www.firstpost.com on November 15, 2012.
(Vivek Kaul is a writer. He can be reached at [email protected])

Deficit Crisis: Hope Chidamabaram is praying to goddess Lakshmi


One of the many Diwali traditions that have come up over the years is the idea of leaving the doors and the windows of the house open. This is done to facilitate the entry of Lakshmi, the goddess of wealth, into the house.
The Union Minister of Finance, P Chidambaram, hopefully is a believer, and had left the doors and windows to his house open yesterday, in the hope that Lakshmi will come into the coffers of the government he is a part of.
The way the finances of the government of India are placed, it’s time for Chidambaram to do what most Indians do when they are stretched and stressed. Pray to god. And hope for the best. So if he isn’t a believer it’s high time he becomes one and starts praying that Lakshmi doesn’t give the government a slip.
The fiscal deficit of the government of India for the year 2012-2013(i.e. the period between April 1, 2012 and March 31, 2013) has been targeted at Rs 5,13,590 crore or 5.1% of the gross domestic product. Fiscal deficit is the difference between what the government earns and what it spends.
Targets need to be met and it’s unlikely that the government of India will meet the fiscal deficit target it has set for itself. As the Kelkar committee on fiscal consolidation recently pointed out “A careful analysis of the trends in the current year, 2012-13, suggests a likely fiscal deficit of around 6.1 percent which is far higher than the budget estimate of 5.1 percent  of GDP, if immediate mid-year corrective actions are not taken.” The committee estimated if the government continued to function as it currently is it will end up with a fiscal deficit of Rs 6,15,717 crore.
In order to control this burgeoning fiscal deficit the government can do two things, increase its income or control its expenditure. But some recent developments show that the government is more than faltering on both the fronts.
Take the case of the auction of the 2G telecom spectrum. The government expected to raise Rs 30,000 crore from this. But the actual number is nowhere near that. The other big entry into the revenue figure was supposed to come from the disinvestment of shares that the government holds in public sector enterprises. Not a single rupee has been raised on that front.
Also what does not help is the fact that the amount of tax collected seems to be slowing down. As economist Shankar Acharya recently wrote in the Business Standard “By end September the government’s tax receipts amounted to less than 40 per cent of the year’s Budget target.”
So things are looking bad on the income front. The other big headache for the government has been the fall of the rupee against the dollar. As I write this one dollar is worth around Rs 55.
And this means increased expenditure on the oil front. Oil is sold internationally in dollars and when rupee loses value against the dollar that means Indian oil companies have to pay more in rupee terms to buy the same amount of oil. Currently the price of crude oil for the Indian basket is at $106.09 per barrel. At Rs 55 to a dollar this means Rs 5835 per barrel in rupee terms. Compare this to October 4 when the rupee touched a recent high against the dollar. On that day one dollar was worth Rs 51.5. At that price crude oil would have been at Rs 5464 per barrel in rupee terms, much lesser than what it is today.
Hence, as rupee loses value against the dollar, the oil bill goes up. This wouldn’t have been a reason for worry if products made out of oil i.e. petrol, diesel and kerosene, were sold at their market price. But they are not. The government subsidises the oil marketing companies (OMCs) for selling diesel and kerosene at a loss. It also subsidises the OMCs for selling cooking gas at a loss. As the rupee loses value against the dollar it means increased losses for the OMCs unless prices of the products they sell are raised. And in the process it also means increased expenditure for the government and hence a greater fiscal deficit.
Also recent numbers released by Controller General of Accounts project a worrisome picture. Fiscal deficit for the first six months of the year (i.e. between April 1 and September 30) was at Rs 3,36,00 crore. This means that for the first six months of the year the fiscal deficit stood at 65.6% of the estimated fiscal deficit of Rs 5,13,590 crore. This clearly is not a good sign. If the government continues at the same pace it will end up with a fiscal deficit of Rs 6,72,000 crore or 6.7% of the GDP.
A high fiscal deficit is worrying. As the Kelkar report points out “High fiscal deficits tend to heighten inflation, reduce room for monetary policy stimulus,  increase  the risk of external sector  imbalances and dampen private investment, growth and employment.”
Over and above that a high fiscal deficit can also lead to a “likely…sovereign credit downgrade and flight of foreign capital.” As foreign money leaves India this would put further pressure on the rupee against the dollar, leading to a higher oil bill and in process a higher fiscal deficit. So a higher fiscal deficit will lead to an even higher fiscal deficit.
Hence, the government has to either increase its income in some way or control its expenditure. One way of doing that is controlling on subsidies which can be done by increasing prices of oil products as well as fertilizer. But that is unlikely to happen given that it is politically enviable.
So that leaves the government with only one way out and that is to get aggressive on the disinvestment front. Very little action has been seen on that front. But with the government getting a massive amount of bad press over the last few months for being involved in a variety of scams, whether investors pick up shares in public sector companies that the government decides to disinvest, remains to be seen.
In this scenario the government’s one and only hope is the Life Insurance Corporation (LIC) of India. The government can direct LIC to pick up shares of companies it decides to disinvest. When it comes to LIC it is best placed to carry out such operations in the last three months of the financial year (i.e. between January and March).
At that point of the year people start seriously thinking about their tax saving investments and in large parts of the country that means buying a new LIC policy or paying the premium for the existing ones. And that’s when the insurance behemoth has a lot of cash which can be used to rescue the government by picking up shares of companies that it decides to disinvest.
Till then Chidambaram can at best continue to pray to Lakshmi, the goddess of wealth and hope that it blesses the government.
The article originally appeared on www.firstpost.com on November 14, 2012.
(Vivek Kaul is a writer. He can be reached at [email protected])

Cong trying to do a Romney in Gujarat by attacking Modi


Vivek Kaul

The Congress campaign in Gujarat is getting desperate. Sample this.
“When it comes to GDP growth, Gujarat is lagging behind states like Bihar, Odhisa and Chhattishgarh,” the Union Commerce and Industry Minister Anand Sharma said while addressing a public meeting in Gandhinagar. “Narendra Modi says Gujarat is most progressive, but if you have been to other states, Bihar, Odisha and Chattisgarh are much ahead,” he added.
When Indian politicians start using terms like Gross Domestic Product growth with voters you know that they don’t have much else to talk about.
Data from the planning commission shows that the state gross domestic product (GDP) at current prices (which does not adjust for inflation) of Bihar, Odisha and Chattisgarh grew at the rates of 20.4%, 16% and 15.3% in 2011-2012.
In comparison Gujarat grew at 15.8%. So the economic growth (which is what the state GDP measures) of Bihar and Odisha was faster than that of Gujarat. But Gujarat grew faster than Chattisgarh.
But as the old saying goes we should be comparing Apples with Apples and not Apples with Oranges. And to add to that as one of my teachers used to say “percentages should be used carefully lest we draw the wrong conclusions”.
Let me deviate a little and give an example to explain what I am basically trying to say.  Let us say you earn Rs 10,000 a month and your income jumps to Rs 20,000 a month, a gain of 100%. On the other hand let’s say you earn Rs 1 lakh a month and your income jumps to Rs 1.3 lakh a month, or a gain of 30%.
So even though the percentage gain in the first case is more, the absolute gain is more in the second case. Hence, when we are talking percentages it is important to keep the base number in mind. So Bihar did grow faster than Gujarat but it was because of what economists like to call the “base effect”.
Gujarat’s state GDP in 2010-2011 was Rs 5,13,173 crore. It went up by 15.8% to Rs 5,94,369 crore in 2011-2012. In comparison Bihar’s GDP for 2010-2011 was Rs 2,17,814 crore. And it grew by 20.4% to Rs 2,62,230 crore in 2011-2012.
The point being Bihar is growing on a lower base and that’s why the percentage growth is higher. The same argument holds for Odisha as well.
The other point that comes here is the population of the state. Bihar’s state GDP went up by Rs 44,416 crore to Rs 2,62,230 crore. This gain of Rs 44,416 crore was spread across a population of 10.38 crore people. This implies a gain of Rs 4,279 per individual who lived in Bihar.
Now let’s do the same calculation for the state of Gujarat. The GDP of the state went up by Rs 81,196 crore to Rs 5,94,369 crore. This gain of Rs 81,196 crore was spread across a population of Gujarat is 6.04 crore as per the 2011 census. Hence, this implies a gain Rs 13,447 per individual who lives in Gujarat.
This basically means that the growth in Gujarat at an individual level was three times that of Bihar in 2011-2012. Hence, Sharma’s argument that Bihar grew faster than Gujarat doesn’t really work.
And Sharma is not the only one attacking Modi. Ajay Maken, the youngest minister in the Union Cabinet alleged at a rally that the ruling BJP government was neck-deep in corruption in the name of development. Well that’s like the pot calling the kettle black. As has been proven time and over the last few years, India hasn’t seen a more corrupt government than the current UPA government ruling the country.
Mani Shankar Aiyer, a former minister in the UPA government, called Modi Ravana and asatya ka saudagar. He also called him a paani purush. Congress Rajya Sabha MP Hussain Dalwai, said “Modi is just a mouse before Sardar Vallabhbhai Patel”.
Bharat Solanki, Union Minister for Drinking Water and Sanitation, decided to beat all the abuses being hurled at Modi and termed him as “Nathuram Godse” and alleged that “under the BJP rule in Gandhi’s Gujarat not truth but lies carry more currency”.
Elections campaigns can get nasty. But the Congress doesn’t seem to have learned from its 2007 blunder when Sonia Gandhi called Modi a “maut ka saudagar”. While it might have sounded like a brilliant turn of phrase to the Congress speechwriter who wrote Sonia’s speech, it clearly backfired on the party.
The issue here is what does the Congress attack Narendra Modi with? Economic development as I showed above is healthy in Gujarat. It is one of the few states in the country which has a power surplus. The roads are ‘just’ fine and the cities are largely clean. Modi doesn’t really have any big corruption charges against him unlike the Congress government as well as the party.
So what do you do in a situation like this? You get personal and attack on Modi’s big blip, the 2002 riots in the state, and hope that it creates enough fear in the minds of the voter and he decides to vote for the Congress.
But does the issue really matter to the major portion of the voters in Gujarat? The answer is no. As Aakar Patel, a known Modi baiter, recently wrote in the Open magazine “Gujaratis like to think they are great national­ists. It doesn’t occur to them that India suffers every time they triumphantly keep memories of the massacre alive, by backing the man first unwilling or unable to stop it, now too incom­petent to prosecute its participants. They are voting Caesar(i.e. Modi) back to power.”
Hence, Congress’ negative campaign isn’t really going to work. In fact, it might work in  favour of Modi, who will continue to espouse the cause of Gujarati Asmita and portray himself as a lone gladiator taking on the Congress baddies.
Also negative campaigns do not really work. Take the case of the recent Presidential elections in the United States. Romney’s attacks on Obama got too personal towards the end of the campaign. Donald Trump, a Romney supporter, wanted to see the college records of Obama. The insinuation here was that Obama may got into college in America as a foreign exchange student from Indonesia.  Trump also wanted access to Obama’s passport. The insinuation here was that would allow him (i.e Trump) to prove something Muslim about Obama.
As marketing guru Al Ries told me in a recent interview on Firstpost “Mitt Romney spent most of his time attacking Barack Obama. That’s the wrong strategy. What a politician needs to do is to offer a positive concept first and then point out that his or her opponent lacks this concept.”
Some of the biggest state elections in India have seen winning parties run extremely positive campaigns. Akhilesh Yadav ran the umeed ki cycle campaign in Uttar Pradesh and Mamata Banerjee ran the poriborton campaign in West Bengal.  While they are busy making a mess of the states after coming to power, but then that is a different issue all together.
In comparison. the Congress party doesn’t really have any strategy in place when it comes to taking on Narendra Modi. And what it is doing clearly won’t work.
The article originally appeared on www.firstpost.com on November 12, 2012.
(Vivek Kaul is a writer.  He can be reached at [email protected])