Month: May 2015

Random ruminations on acche din and oil price

narendra_modi
One of the more interesting books that I have read this year is Humphrey B Neill’s The Art of Contrary Thinking. The book was first published in the early 1950s and remains in print till today. One of the things that Neill talks about in the book is propaganda. Propaganda is essentially the official communication of a government to the public, which is designed in a way so as to influence public opinion.
As per Neill, propaganda that is “brought down to the level of a school child” works the best. Take the case of George Bush Junior and the American attack on Iraq. The American government propaganda(along with some help from the British) justified the attack on the ground that Iraq had weapons of mass destruction, which the country never did.
As Tim Vanech writes in the introduction to Neill’s book: “governments who wish to go to war prepare their case and go about manipulating the masses into required support.” The American government manipulated its masses by putting out the story of weapons of mass destruction in Iraq to justify the attack. The story worked because it was so simple that even a “school child” would have understood it—the Americans were the good guys going out there to save the world by killing the bad guys in Iraq. And who doesn’t want to listen to and believe in such a heroic tale?
In fact, all communication that works is normally very simple and is dumbed down to a level of a school child. Take the case of Narendra Modi’s election slogan — “Achche din aane waale hain, hum Modi ji ko laane waale hain.” The fact that the slogan was as simple as it was, was a major reason for its success.
In an economic environment which was extremely negative because of high inflation and slow economic growth, the positive slogan caught the imagination of the nation. Neill quotes another writer Gustave Le Bon, who wrote The Crowd: A Study of the Popular Mind, as saying: “Given to exaggeration in its feeling, a crowd is only impressed by excessive sentiments”. And the “excessive sentiments” in acche din aane waale hain influenced voters across large parts of India.
In fact, the slogan was not even original. It was lifted from Franklin Roosevelt’s election slogan in the 1932 US presidential elections “Happy Days Are Here Again.” The 1932 election was fought when the Great Depression was at its worst, and Roosevelt’s slogan offered a lot of hope to people and it worked. Roosevelt won and continued to remain President till 1945 (those were days when the two term limit for a US president did not apply).
What worked for Roosevelt, worked for Modi as well and in the 2014 Lok Sabha elections, the Bhartiya Janata Party won 282 seats. The slogan worked because the people believed in it. They believed that “happy days” were about to come. And Modi like a quintessential politician never explained anything, but promised everything. But all that was nearly one year ago. What the “acche din” slogan also did was that it set the bar very high for Modi. And now one year later, whenever anything negative happens, people are likely to ask (and are asking): “kahan hain acche din? (where are the happy days?)”
A Facebook friend recently wrote about his experience of visiting a petrol pump and the petrol pump attendant asking him: “sahab kahan aaye ache din? (Sir, where are the good days?)” He was referring to the price of petrol and diesel having gone up over the last one month. Petrol prices in Mumbai have gone up by more than 11% since mid April to a little over Rs 74 per litre.
And this is where the acche din slogan is likely to cause problems for the government if oil prices keep going up in the months to come. The price of the Indian basket of crude oil has gone up by 52% since mid January 2015. As on May 15, 2015, the price of the Indian basket was at Rs 4,097.73 per barrel.
When the oil prices were falling between May 2014 and January 2015, people close to the government even credited this fall in price to Narendra Modi. As a February 2015 editorial in the Business Standard had pointed out: “The president of the ruling party, Amit Shah, for example, repeatedly took credit on the campaign trail for lower prices, as did the Union home minister, Rajnath Singh. Even the prime minister has mentioned lower fuel prices, though he has specified that it is because of his “luck”.”
In some conversations that I had (along with some material shared over the social media) I realized that many people seemed to believe, that the Modi government has brought down petrol and diesel prices.
Those who believed that the government was responsible for bringing down the price of petrol and diesel, will now ask—if the government can bring down the price of petrol and diesel, it can also ensure that their prices do not go up. And they will also ask, “kahan hain acche din?” if prices continue to go up.
In fact, things are likely to get difficult for the government as and when the price of petrol and diesel crosses the May 2014 level. In May 2014, the price of diesel in Mumbai was Rs 65.21 per litre and that of petrol was Rs 80 per litre. If oil prices maintain their recent rise these levels will be breached very quickly.
The government can control this price rise by cutting the excise duty on petrol and diesel. Since October 2014, the government increased the excise duty on petrol and diesel four times. This was done to spruce up the revenues of the government and control the burgeoning fiscal deficit. Fiscal deficit is the difference between what a government earns and what it spends. What it also meant was that a dramatic fall in the price of oil was not passed on to the end consumer.
Once the petrol and diesel prices cross the May 2014, the pressure on government to control their price will go up. What will not help is the fact some of the top BJP leaders (Modi and Smriti Irani to name two) used the social media extensively in the years running up to May 2014, to criticize the petrol and diesel price hikes carried out by the Congress led UPA government. Also, Bihar elections scheduled for later this year will play a role on this front as well.
My guess right now is that if the oil price continues to rise, the government will have to start cutting the excise duty on petrol and diesel, if they want to ensure that people don’t start asking: “where are the acche din?”. Let’s see how this goes.

The column appeared on The Daily Reckoning on May 19, 2015

Dear homebuyer, here is another real estate trick you need to be aware of


The National Capital Region(NCR) remains a hot bed of real estate scams. Here is a new one I recently came across. And this is how it operates.
A customer buys an under-construction flat which is in an advanced stage of construction, under a 60:40 scheme. The way this works is that the customer has to pay 60% of the price of flat within 30 days of booking it. The remaining 40% is to be paid when the flat is ready for possession.
Of course, being a part of the middle class, the customer has also taken on a home loan to buy the flat. As is the norm, the housing finance institution from which the loan is taken, finances 80% of the price of the flat and the remaining 20% is put in by the buyer himself.
Given that the flat is still under construction, a pre-EMI, which amounts to 50% of the actual EMI on the loan, has to be paid. The payment of the full EMI kicks-in only after the buyer has taken possession of the flat.
So far so good. Now this is where things get interesting. The pre-EMIs get automatically debited from the buyer’s account for a few months. A visit to the site reveals that the project is moving at a slow pace and will be delayed by a few months.
The buyer is still happy given that many builders in the Uttar Pradesh side of NCR have stopped construction for a long time, due to what they call a “labour strike”. Also, the dream of owning a home is so strong that a delay of few months doesn’t really matter.
A few days after having visited the site, the buyer gets a letter from the builder titled “offer for possession”. The letter simply asks the buyer to pay up the remaining 40% of the amount within the next 15 days. Further, he needs to inform the builder when he wants to take the possession of the flat, so that the finishing touches can be put to the flat before it is handed over.
Also, the letter clearly states that if the buyer doesn’t pay up within the next 15 days, the builder won’t complete the work.
This makes the buyer wonder that how could the builder have completed the work so quickly. The last time he had gone on a site visit, a lot remained to be done. A couple of phone calls to well-meaning friends reveal that this has been a standard operating procedure for the builders in the recent past in the NCR, where they send out offer for possession letters, much before the flat is completely built.
The reason for this is straightforward—the cheapest way for the builder to raise money is from the buyer. On everything else, he has to pay interest. Also, with the real estate sector on a slide (the unsold inventory of homes in NCR is close to 6 years now), this is one way of ensuring that the builder does not put further money into the project.
By putting a 15 day deadline, the builder comes to know exactly who are the people interested in taking possession, and completes only a specified number of flats. The remaining flats can wait till the housing market starts to recover.
The buyer obviously is caught in this now—having already paid 60% of the money, there is no way he can back out. So, he goes to the housing finance company, takes on the remaining part of the home loan and pays the builder the remaining amount.
It is obvious that at this point of time the buyer will want to go visit the site and see how much progress has been made and how soon the flat is likely to be handed over. Given that, there has not been much progress from the last time he had been there, the builder has cordoned off the site completely.
So, there is no way of figuring out how the construction of the flat is coming along. Further, with the buyer now taking on the full amount of the home loan, the full EMI kicks-in. So, the buyer is now paying the rent as well as the EMI, throwing his monthly finances completely in disarray.
Meanwhile, the builder has also managed to collect the first year’s maintenance charges in advance from the buyer. And at the same time, the builder hasn’t paid a single penny for the delay in handing over the possession of the flat. Though, if the buyer delays any payment even by a single day, the builder is very prompt in fining him. And so the story goes.
Given that, there are no quick redressal mechanisms for real estate issues (or for that matter anything else) in this country, the ‘genuine’ buyers who are buying homes to live in and not as an investment, typically tend to go along with whatever the builder wants them to.
As is the case with life, so is the case in real estate—the small guy generally loses.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

The column originally appeared on Firstpost on May 14, 2015 

When US can’t get its black money back, does India have a chance?

rupee
Over the week, the Parliament passed the Undisclosed Foreign Income and Assets (Imposition of New Tax) Bill, 2015, which up until now has been better know as the foreign black money Bill. Now it has become an Act. The ministry of finance 2012 white paper on black money defines black money as: “any income on which the taxes imposed by government or public authorities have not been paid.”
In my past columns on DailyO I have maintained that while chasing black money that has left the shores of the country might seem possible it is not feasible. The reason for this is fairly simple. The money could be absolutely anywhere in the world.
In India, we like to believe that the money is stashed away in Swiss Banks. But that isn’t the case. Data released by the Swiss National Bank, the central bank of Switzerland, suggests that Indian money in Swiss banks was at around Rs 14,000 crore in 2013. In 2006, the total amount had stood at Rs 41,000 crore.
There are around 70 tax havens all over the world and the black money that has left the shores of this country could be stashed almost anywhere. An estimate made by the International Monetary Fund suggests that around $18 trillion of wealth lies in international tax havens other than Switzerland, beyond the reach of any tax authorities. A 2013 estimate in The Economist pointed out: “Nobody really knows how much money is stashed away: estimates vary from way below to way above $20 trillion.” Some of this money definitely originated in India.
And given that the black money that has left India could be absolutely anywhere, chasing it isn’t the best way of going about things. There would be more bang for the buck by concentrating on black money that is still in the country.
This, in short is the argument I have made against trying to get the black money that has left the Indian shores, back to India. A standard response to this on the social media is that if the United States can do it why can’t we. So here is the answer.
The foreign black money Act passed by the Parliament this week is inspired by the Foreign Account Tax Compliance Act (FATCA) of the United States. This Act was passed in 2010. The Act was brought in after it was revealed that Swiss banks were helping American citizens hide their earnings.
As per the Act, American taxpayers are required to file a new form (Form 8938) declaring their foreign financial assets with a value greater than $50,000. This form needs to be filled up along with the annual tax return. If the taxpayer does not file the Form 8938 , he can face a fine of $10,000, which can go up to $50,000 for subsequent offences. Any tax payer who pays lower tax because he does not disclose foreign financial assets could be subject to a penalty of 40%.
The provisions of the foreign black money Act passed by the Parliament are along similar lines. One of the provisions of the Act allows undisclosed foreign income as well as assets to be taxed at the rate of 30%, without allowing for any exemptions or deductions which are allowed under the Income-Tax Act, 1961. This will be accompanied by a penalty equal to three times the amount of tax.
Getting back to FATCA—as per the Act, every financial institution outside the United States needs to figure out whether it has American citizens as clients. Having done that it needs to report the information to the Internal Revenue Service of the United States.
Due to this, the conventional view now seems to be coming around to the idea that tax havens are now cooperating with the United States and handing over information regarding their clients to the United States.
Hence, the question is, if the United States can do it, why can’t India? And the answer lies in the fact that the United States is a global superpower. In 2013, the military expenditure of the United States amounted to $640 billion. This was nearly 36.5 percent of the global military expenditure of $1.75 trillion. In comparison, the total budget for the Indian defence services in 2015-2016 is around $2.5 billion.
With so much money being spent by the United States, the military apparatus of the United States can drop bombs anywhere in the world at a few hours’ notice. As David Graeber writes in Debt: The First 5000 Years: “The U.S. Military … maintains a doctrine of global power projection: that it should have the ability, through roughly 800 overseas military bases, to intervene with deadly force absolutely anywhere on the planet.” It is this military might of the United States that has led to the tax havens cooperating with it.
Nevertheless, as the Americans like saying: “show me the money”. Or to put it simply, how much revenue has the Internal Revenue Service of the United States managed to collect because of FATCA? Jane G. Gravelle writing in a research paper titled Tax Havens: International Tax Avoidance and Evasion for the Congressional Research Service estimates that FATCA is expected to “have a relatively small effect, $8.7 billion over 10 years, when compared with estimated costs of international evasion of around $40 billion a year.” So on an average the United States expects to recover $870 million per year, when the international tax evasion by Americans is around $ 40 billion per year. Hence, the recover rate for FATCA is 2.2%.
What this clearly tells us is that even the United States does not expect much out of FATCA, initially. This, despite being the only global superpower. In this scenario, how much chance does India have of recovering the black money that has left its shores?
As Bob Dylan once said(or should I say sang): “The answer my friend is blowin’ in the wind”.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

The column appeared on DailyO on May 14, 2015

Why economic growth cannot be taken be for granted

safety-of-chit

Mrs. Lintott: Now. How do you define history Mr. Rudge?
Rudge: Can I speak freely, Miss? Without being hit?
Mrs. Lintott: I will protect you.
Rudge: How do I define history? It’s just one fuckin’ thing after another.

– Alan Bennett, The History Boys


Economists these days do not give much importance to economic history. As Cambridge University economist Ha-Joon Chang writes in Economics—The User’s Guide: “Many people consider economic history [emphasis in the original], or the history of how our economies have evolved, especially pointless. Do we really need to know what happened two, three centuries ago.”
Nevertheless, a good understanding of economic history is necessary to ensure that we don’t take things for granted. Take the case of economic growth. In the times that we live in we take rapid economic growth for granted. But for much of humankind that wasn’t the case. As best-selling author and economist Tim Harford put it in a column “Economic growth is a modern invention: 20th-century growth rates were far higher than those in the 19th century, and pre-1750 growth rates were almost imperceptible by modern standards.”
Chang makes this point in his book. Between 1000AD and 1500AD, per capita income, or the income per person, grew by 0.12% per year in Western Europe. What this means is that the average income in 1500 was only 82% higher than that in 1000. “To put it into perspective, this is a growth that China, growing at 11 per cent a year, experienced in just six years between 2002 and 2008. This means that, in terms of material progress, one year in China today is equivalent to eighty-three years in medieval Western Europe,” writes Chang.
Further, at 0.12% Western Europe was growing at a very fast pace in comparison to other parts of the world. Asia and Eastern Europe during the same period grew at 0.04% per year. Hence, by 1500 the per capital income in these parts of the world would have been 22% higher than that in 1000.
Things did not improve in the centuries to come. Between 1500 and 1820, the per capita income in Western Europe averaged at 0.14% per year, which wasn’t very different from 0.12% per year, earlier. Some countries like Great Britain and Netherlands which were busy building a global empire and had also got a central bank going, grew a little faster at 0.27% and 0.28% respectively. So by modern standards the world was in a depression between 1000AD and 1820AD.
Things improved over the next 50 years. Between 1820 and 1870, the per capita income for Western Europe grew by 1% per year, which was significantly higher than anything the world had seen earlier.
One reason for this turbo-charged growth was the start of the industrial revolution. In the years leading to 1820 many new production technologies were invented. “In the emergence of these new production technologies, a key driver was the desire to increase output in order to be able to sell more and thus make more profit,” writes Chang.
Along with this, the evolution of banks and the financial system also helped. “With the spread of market transactions, banks evolved to facilitate them. Emergence of investment projects requiring capital beyond the wealth of even the richest individuals prompted the invention of the corporation, or limited liability company, and thus the stock market,” writes Chang. And this helped enterprises raise the money required to start a business, something which is at the heart of capitalism.
After 1870, the production technologies kept improving. The economist Robert Gordon divides invention and discoveries into three eras. The second era came between 1870 and 1900 and according to him had the maximum impact on the economy in particular and the society in general.
As he writes in a research paper titled Is US Economic Growth Over? Faltering Innovation Confronts the Six Headwinds “Electric light and a workable internal combustion engine were invented in a three-month period in late 1879…The telephone, phonograph, and motion pictures were all invented in the 1880s. The benefits…included subsidiary and complementary inventions, from elevators, electric machinery and consumer appliances; to the motorcar, truck, and airplane; to highways, suburbs, and supermarkets; to sewers to carry the wastewater away,” writes Gordon.
Based on Gordon’s research paper, Martin Wolf wrote in the Financial Times: “Motor power replaced animal power, across the board, removing animal waste from the roads and revolutionising speed. Running water replaced the manual hauling of water and domestic waste. Oil and gas replaced the hauling of coal and wood. Electric lights replaced candles. Electric appliances revolutionised communications, entertainment and, above all, domestic labour. Society industrialised and urbanised. Life expectancy soared.”
In fact, Gordon makes an interesting observation regarding this increase in productivity by comparing motor power to a horse. As he writes: “Motor power replaced animal power. To maintain a horse every year cost approximately the same as buying a horse. Imagine today that for your $30,000 car you had to spend $30,000 every year on fuel and repairs. That’s an interesting measure of how much efficiency was gained from replacing the horses.”
And all these inventions drove economic growth. As Bill Bonner told me in an interview I did with him a few years back: “Trains were invented 200 years ago. Automobiles were invented 100 years ago. Aeroplanes came on the scene soon after. Electricity – fired by coal, oil…and later, atomic power – made a big change too. But all the major breakthroughs date back to a century or more. Even atomic power was pioneered a half century ago. Since then, improvements have been incremental…with diminishing rates of return from innovations.”
These game changing inventions are now a thing of the past. Harford explained this to me through a couple of brilliant examples when I interviewed him for The Economic Times a few years back. As he told me: “The 747 was a plane that was developed in the late 1960s. The expectation of aviation experts is that the Boeing 747 will still be flying in the 2030s and 2040s and that gives it a nearly 100 year life span for its design. That is pretty remarkable if you compare what was flying in 1930s, the propeller aeroplanes. In the 1920s they didn’t think that it was possible for planes to fly at over 200 miles an hour. There was this tremendous progress and then it seems to have slowed down.”
The same seems to be true for medicines. “Look at medicine, look at drugs, antibiotics. Tremendous progress was made in antibiotics after 1945. But since 1980 it really slowed down. We haven’t had any major classes of antibiotics and people started to worry about antibiotic resistance. They wouldn’t be worried about antibiotic resistance if we thought we could create new antibiotics at will,” Harford added.
So the basic point is that growth of economic productivity has petered out over the last few decades because game changing inventions are a thing of the past. These game changing inventions changed the Western countries (i.e. the US and Europe) and helped them rise at a much faster rate than rest of the world. But that might have very well been a fluke of history.
Nevertheless, what these game changing inventions did was that they led to the assumption that economic growth will continue forever. But will that turn out to be the case? As Gordon wrote in his research paper: “Economic growth has been regarded as a continuous process that will persist forever. But there was virtually no economic growth before 1750, suggesting that the rapid progress made over the past 250 years could well be a unique episode in human history rather than a guarantee of endless future advance at the same rate.”
And this might very well come out to be true. The core of Gordon’s argument is that modern inventions are less impressive than those that happened more than 100 years back. “Attention in the past decade has focused not on labor-saving innovation, but rather on a  succession of entertainment and communication devices that do the same things as we could do before, but now in smaller and more convenient packages. The iPod replaced the CD Walkman; the smartphone replaced the garden-variety “dumb” cellphone with functions that in part replaced desktop and laptop computers; and the iPad provided further competition with traditional personal computers. These innovations were enthusiastically adopted, but they provided new opportunities for consumption on the job and in leisure hours rather than a continuation of the historical tradition of replacing human labor with machines,” writes Gordon.
And that isn’t happening anymore.

The column originally appeared on The Daily Reckoning on May 14, 2015

Mr Rahul Gandhi, what about jijaji Robert Vadra and his closeness to DLF?

rahul gandhi
Rahul Gandhi seems to have taken a liking to calling the Narendra Modi government a “suit boot ki sarkar”. He made that jibe again in the Parliament yesterday where he said: “This government is anti-farmer, anti-poor. This is a suit-book ki sarkar.”
Rahul, as he did in the past, was trying to suggest that the Modi government was essentially batting for the corporates and not for the farmers of this country. But what the Gandhi family scion is forgetting in the process is that only a few years back India’s largest listed real estate company DLF was batting for his brother-in-law Robert Vadra.
Let’s recount what happened in the case of DLF and Vadra. DLF gave a Vadra and advance of Rs 50 crore for more than three years, and this advance was the money used by Vadra to go on a land buying spree in Rajasthan as well as Haryana, with more than a little support from the respective Congress governments in both these states. As we shall see Vadra had very little of his own money in the business and without the money from DLF he wouldn’t have been able to do anything. What does Rahul Gandhi have to say about this link?
In October 2012, the Daily News and Analysis(DNA) reported that between July 2009 and August 2011, Vadra bought at least 20 plots of land with an area of more than 770 hectares in Bikaner district in Rajasthan. In fact Vadra was willing to pay Rs 65,000 per hectare of land when the going rate was not more than Rs 30,000 a hectare
The Gandhi family son-in-law made these purchases through companies which included Real Earth Estates Pvt Ltd, North India IT Park Pvt Ltd, and Skylight Realty Pvt Ltd. As the DNA report pointed out: “A clutch of investors, including Vadra, apparently privy to information on upcoming industrial projects in the vicinity, reaped huge profits with land values appreciating by up to 40 times since 2009 [the italics are mine]…These companies together invested Rs2.85 crore in barren land here during this period.”
So, Vadra bought land being privy to information that ensured that the value of the land would go up many times in the days to come. And he made a killing in the process. Vadra bought land through his companies just before a memorandum of understanding was signed between the Rajasthan government and private firm for a “Rs45,000-crore project to manufacture silicon chips for the telecom industry.”
Vadra was essentially trading on insider information, which wouldn’t have been difficult to get given that a Congress government led by Ashok Gehlot was in power in the state.
The interesting bit here is how Vadra went about financing the purchase of land. The money for it came essentially came from DLF. One of the Vadra companies which bought land in Rajasthan was Real Earth Estates Private Ltd. The company had an issued capital of Rs 10 lakh as on March 31, 2010.
Nevertheless, as on March 31, 2010, the company had 10 plots of lands listed under fixed assets. These plots were worth were bought for Rs 7.09 crore. Of these three plots were in Bikaner in Rajasthan and had been bought for Rs 1.16 crore. How did a company with an issued capital of Rs 10 lakh manage to buy land which cost Rs 7.09 crore in total?
This is where things get even more interesting. The balance sheet of Real Earth Estates as on March 31, 2010, shows that it had an unsecured loan of Rs 5 crore from DLF. An unsecured loan is a loan in which the lender does not take any collateral against the loan and relies on the borrower’s promise to return the loan. Why was DLF being so generous to Vadra? Can Rahul Gandhi give us an answer for that?
Real Earth Estates also had borrowed another Rs 2 crore from Sky Light Hospitality Private Ltd, another Vadra company. The total loan amounted to Real Earth Estates amounted to Rs 7 crore. And this money was used to buy 10 plots of land, of which three plots were in Bikaner.
Where did Sky Light Hospitality get the money to give Real Earth Estates a loan of Rs 2 crore? As on March 31, 2010, Sky Light Hospitality had an issued capital of Rs 5 lakh. How did a company with an issued capital of Rs 5 lakh, manage to give a loan of Rs 2 crore, which was 40 times more.
Enter DLF—the company had given Vadra’s Sky Light Hospitality an advance of Rs 50 crore. When the controversy first broke out DLF had said in a statement: “Skylight Hospitality Pvt Ltd approached us in FY 2008-09(i.e. the period between April 1, 2008 and March 31, 2009) to sell a piece of land measuring approximately 3.5 acres…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 crores. As per normal commercial practice, the possession of the said plot was taken over by DLF in FY 2008-09 itself and a total sum of Rs 50 crores given as advance in instalments against the purchase consideration.”
The first instalment of the Rs 50 crore advance that DLF gave Vadra was paid on June 3, 2008. An October 2012 report in The Hindu points out that “ the 3.531- acre plot…M/s Sky Light Hospitality,…[was] sold to DLF Universal Ltd on September 18, 2012.”
Hence, the Rs 50 crore advance stayed with Vadra’s Sky Light Hospitality for more than three years.
An advance unlike a loan is made interest free for a short period of time. Further, Vadra had access to a part of the Rs 50 crore advance for more than four years, given that the first instalment was paid by DLF in June 2008 and even though the sale was registered only in September 2012.
DLF in its statement tried telling us that this was par for the course. But how many other such advances did the company make. As The Financial Express wrote in an October 2012 editorial: “DLF has not been able to cite other instances of where interest-free advances have been given, and over such long periods of time.”
So clearly DLF had a soft corner for Robert Vadra, who is the son-in-law of Sonia Gandhi and the brother-in-law of Rahul Gandhi, the president and the vice-president of the Congress party. The Congress led UPA government was in power between 2004 and 2014.
This Rs 50 crore was at the heart of Vadra’s operation and was used by him to buy land as well as flats. Rs 2 crore out of this Rs 50 crore available with Sky Light Hospitality was used to give a loan to Real Earth Estates Private Ltd. Effectively DLF gave money amounting to Rs 7 crore to Real Earth Estates Private Ltd to buy land. Of this Rs 1.16 crore was used to buy land in Bikaner.
What does Rahul Gandhi have to say about this? Now that he has accused the Modi government of being a “suit-boot ki sarkar” and being close to corporates, he could possibly explain this closeness of his brother-in-law Robert with a corporate? After all, Caesar’s wife must be above suspicion.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

The column originally appeared on Firstpost on May 13, 2015