Tag: Rahul Gandhi | Vivek Kaul

1 November, 2017

Will Narendra Modi Win 2019?

I am writing this on Sunday, October 22, 2017. The prime minister Narendra Modi will visit Gujarat the third time this month. In the runup to the state assembly elections, he will inaugurate and lay the foundation stones to a number of projects.

The prime minister’s multiple visits to Gujarat have led to the question—is the BJP on a weak wicket in Gujarat? A strong anti-Bhartiya Janata Party (BJP) front seems to be emerging in the state. The leader of the other backward classes(OBCs) Alpesh Thakor is expected to join the Congress on October 23, 2017. Hardik Patel, the leader of the Patidar Patels, through his tweets seems to have indicated his preference for the Congress, though some of his aides have joined the BJP. Also, Patel currently is not old enough to fight elections.

On the flip side, Gujarat (unlike many other Indian states) has always been a two-horse race between the BJP and the Congress. And in this race, the Congress has gone nowhere in the recent decades. It’s vote share has moved between 33-38 per cent of the votes polled and hence, India’s grand old party has not managed to displace the BJP. The extra 5 per cent vote that the Congress would need to give tough competition to the BJP, have never really come.

How will things turn out this time around? Honestly, I am not a political analyst and don’t know the answer to this. But what I do know is that the BJP has built a formidable election management system under its president, Amit Shah.

Prashant Jha in his new book How the BJP Wins—Inside India’s Greatest Election Machine describes this election management system in detail. And after reading this book I can say with reasonable confidence that displacing BJP at the state level (in the various assembly elections scheduled up to 2019) and in the Lok Sabha elections scheduled in 2019, will be no cakewalk.

This, despite the fact, that the Modi government has managed to screw up the economy big time through the disastrous decision to demonetise Rs 500 and Rs 1,000 notes, and a terrible implementation of the Goods and Services Tax.

I will not get into the details of the election management system of the BJP that Jha writes about in his book, given that a single Letter cannot do justice to it. Hence, dear reader, if you do have the time and the inclination, do check out the book.

Nevertheless, in this Letter I will talk about the factors that go in favour of the BJP and Modi, and the factors that go against them, when they fight an election in the days to come and this includes the Lok Sabha elections of 2019. Let’s look at these factors one by one.

1) Let’s start with the performance on the economic front. The promised acche din are nowhere in sight. In fact, the informal part of the economy which forms around 40 per cent of the GDP and employs more than three-fourths of the labour force, has collapsed. Economic growth has collapsed from more than 9 per cent to now less than six per cent. As far as the non-government part of the economy is concerned, which forms close to 90 per cent of the economy, it is now growing at just 4.3 per cent. So, there clearly are issues on the economic front. Having said that the government has time up until 2019 to set it right.

2) Also, more importantly does economic performance of the nation, really matter to the core supporters of Modi and the BJP. Or are they simply happy with the stand that the government is taking on the Ram temple in Ayodhya and all the rhetoric that surrounds the protection of the cow.

This will be a really important factor in any election. It remains difficult to figure out to what portion of the voters are these issues important. Not surprisingly, a narrative is already being built around these issues, for the core support base. And as May 2019 approaches, things could get murkier on this front.

As Evan Davis writes in Post Truth—Why We Have Reached Peak Bullshit and What We Can Do About It: “Like-minded groups of individuals share a narrative about many things… These narratives are sometimes true, sometimes not, but they are often like stereotypes… Once embedded in our minds though, they can easily gain excessive traction and trample over truth as willing believers put too much weight on propositions that conform to their narrative without looking for evidence in support of them.”

3) Further, it is worth asking whether voters vote based on the economic policy being practiced by the government. As Davis writes: [The] argument that who you are matters more than the substantive point you are making is especially true about politicians. Voters focus on character rather than policy partly because they are better able to judge character and are relatively uninformed on policy… So, for a politician, having a good reputation is worth a hundred quick victories in specific arguments.”

Modi’s personal brand still remains strong, though it may have been battered a bit. Over and above this, his brand will always be compared to those he is competing against and on that Modi wins hands down.

4) Expanding on the third point, the question is who will be the leader of the opposition parties. Will it be Rahul Gandhi? Or will it be a leader like Mamata Banerjee? As Jha writes in How the BJP Wins: “Will Rahul Gandhi accept a regional leader? Will a powerful regional leader like Mamata Banerjee accept a Rahul Gandhi?”

It will be imperative for the united opposition (if anything like that emerges) to have a consensus candidate and fight their elections under him, because a presidential style contest is likely to emerge, in the fight against Modi.

5) Other than choosing the right candidate, the opposition parties will have to build a credible narrative around him and what they have to offer. The narrative will be necessary to expand the core base. Just saying that we are there to displace Modi is unlikely to work. As Jha writes: “If ‘remove Modi’ is the only message, and the glue that binds them together, then they have a problem. Modi will project it, much like Indira Gandhi did, as a battle between him – a man committed to removing India’s poverty, man committed to India’s vikas – against a conglomeration of small, scattered, disparate units – united only by their hatred for him.”

6) Also, do these parties have the organisational muscle to take on the organisational muscle of the BJP and the Rashtriya Swayemsevak Sangh (RSS). The BJP always had access to the organisational muscle of the RSS, but the Sangh in the past, has not always deployed those resources totally, to help the BJP. That has changed now because of the personal relationship that Modi shares with the Sangh boss Mohan Bhagwat.
Narendra Modi was practically brought up in the RSS. And as Jha writes: “To top it all, Modi’s mentor in the Sangh happened to be Bhagwat’s father.” How do you tackle an equation like this?

7) In many states, like Gujarat, Rajasthan, Madhya Pradesh, Chhattisgarh and Karnataka, any election will be a direct contest between the Congress and the BJP. Does the Congress have the organisational strength to take on BJP and the RSS?

The bigger problem for the Congress is that it does not have full time politicians at the top. Narendra Modi and Amit Shah are full time politicians. They don’t have any other interests in life. The same cannot be said about the Congress leadership. Whatever people might say about the recent revival of Rahul Gandhi, he just doesn’t inspire enough confidence. I am just waiting for him to take his next holiday at a point of time, when he should be in the country.

The Congress Party for the last many years has always been led by a Gandhi. The Gandhis brought in the votes. But now that is no longer the case. So, the question that is being asked can a non-Gandhi lead the Congress. For a moment, let’s assume that the Gandhis take a backseat. Will the other leaders of the Congress be ready to work under the leadership of a non-Gandhi? I don’t think so. Without, the Gandhis at the top, the glue that holds the party together, the party is likely to break up and if not that the factionalism is bound to increase dramatically.

8) A big advantage that the Modi government has, and which the opposition doesn’t, is that it can use the official machinery in its favour. Recently, the Election Commission announced the election dates for the assembly elections in Himachal Pradesh, but did not do so for the assembly elections in Gujarat and offered a very flimsy reason for it. This gave Modi and the BJP more time to launch more new projects in the state and offer more sops to the voters, something they wouldn’t have been able to do, if the election dates would have been announced.

Over and above this, the government (like the previous governments) can continue using taxpayers’ money to keep building their brand. They can also announce waive offs closer to the election date. I have a feeling that sometime in late 2018, early 2019, a big Mudra loan waive off is on its way. More than 9 crore Mudra loans have been distributed till date. And any waive off of these loans, will give a huge push to the electoral chances of the BJP in 2010, given that it will impact 45 crore individuals in total (assuming a family of 5 per household) are likely to be impacted by the move.

9) Up until now, I have offered reasons which go for the BJP. Now that doesn’t mean that all is well with the BJP. The section of the population is clearly not happy with the economy not doing well. A million youth are entering the workforce every month and the job scene continues to remain bad. The trouble is that the government is simply unwilling to recognise this problem and keeps talking about self-employment opportunities that it has created. These claims are rarely based on any data. The problem with trying to be too clever all the time is that ultimately you get found out. This something that the BJP leaders need to seriously think about.

So, it remains to be seen whether this issue emerges as a strong political issue. It further remains to be seen whether the opposition parties are able to tap into the frustration of the youth who are entering the workforce and not been able to find decent jobs.
Many land owning communities like Marathas, Jats, Patidar Patels and Kapus, have launched protests in the recent past, demanding reservations in government jobs. This remains a tricky issue to handle.

10) In states like Uttar Pradesh, where the BJP has done well, it has built a broad coalition of castes. In Uttar Pradesh, along with the support of upper castes, the BJP was able to reach out to backwards particularly those who did not like the rise of the Yadavs under the previous regime, and the Dalits, particularly those who did not like the rise of the Jatavs under Mayawati. The trouble is that the any government has only so many resources to share and distribute.

As Jha writes: “Caste groups end up competing with each other for state patronage, resources, access to power. There are limited opportunities available and so certain caste groups and, within the caste groups, certain individuals end up cornering more than their share of positions… A road is constructed or schemes are more effectively implemented depending on whether the constituents of that village are supporters of the regime in power. Given weak institutions, access to political power often determines if a person of a specific caste has access to the local police station.”

If sabka saath sabka vikaas has to become a reality, then the current governance structures will have to be changed. Local police officials need to respond to various complaints, irrespective of the caste of the individual making the complaint. This remains very difficult to implement.

Already, in Uttar Pradesh there are accusations of Thakurs, the caste to which chief minister Yogi Adityanath belongs to, taking over the police administration.

11) For a very long time, the BJP was a party supported by the upper castes and the business castes. Under Modi and Shah, the support base of the party has expanded and includes a large section of the poor as well. While, this has benefitted the party tremendously, the party organisation hasn’t changed to reflect this new reality. As a top BJP leader told Jha: “The party organisation has still not transformed itself. At the moment the party’s character and the PM’s support base may slowly diverge. You cannot have an SUV driving rich contractor as your district president if your target is the poor voter.”
This can lead to a situation where the party’s political messaging is neither here nor there.

To conclude, these are the factors which will matter in the runup to the 2019 elections. While, BJP is on weaker wicket in comparison to 2014, a small industry seems to have emerged in writing off the electoral chances of BJP in 2019, on the basis of a few recent losses in assembly, Lok Sabha, and a few other smallish elections. But they are really jumping the gun, on the basis of very little evidence.

The BJP’s election machinery is very strong, and it will take on these defeats in its stride.

The column was originally published in Equitymaster on Nov 1, 2017.

21 March, 2016

Rahul Gandhi Needs a Lesson in Inflation

Rahul Gandhi, in his new avatar, as the angry young man (yes at 45 he is still young), has a thing or two to say on most issues. Let’s take the latest decision of the Narendra Modi government to cut the interest rates on the public provident fund(PPF) and the small savings schemes like Kisan Vikas Patra(KVP) and National Savings Certificate(NSC). Interest rate cuts ranging from 40 basis points to 130 basis points have been carried out. One basis point is one hundredth of a percentage.

Earlier the interest rates ranged from 8.4% to 9.3%. Now they are in the range of 7.1% to 8.6%. These interest rates come into effect from April 1, 2016.

Rahul Gandhi’s office tweeted to say that “slashing interest rates on small savings – on PPF and KVPs, is yet another assault by the Modi Govt on hard working middle class people.” He further said that “this Govt has failed farmers, failed the poor & now it’s failing the middle class. Modiji ppl are seeing through your event management politics.”

While the Modi government has taken the middle class for granted on other issues, like not passing on the benefits of the fall in oil prices in the form of lower petrol and diesel prices, or trying to tax the Employees’ Provident Fund corpus of private sector employees, the same cannot be said in this case. Before I get into explaining this, we first need to understand the meaning of inflation and how it impacts investment returns.

What is inflation? Inflation is essentially the rate of price increase. If the price of a product in March 2015 is Rs 100 per unit and it jumps to Rs 110 per unit by March 2016, the rate of inflation is said to be 10%. So far so good.

What does it mean when people say inflation is falling? It doesn’t mean that the prices are falling. It means that the rate of increase in price rise is falling. Allow me to explain. Let’s extend the example considered earlier.

The price of a product in March 2016 is at Rs 110 per unit. Let’s say by March 2017, the price of the product has increased to Rs 115.5 per unit. This means that the price of the product has risen by Rs 5.5 or 5%. The inflation is 5%. Hence, the rate of price rise has fallen and the price of the product has gone up.

A fall in the price of the product would mean the price of the product going below Rs 110 per unit, by March 2017, which is a totally different thing.

This is a very important point which many people don’t understand and hence, it is worth repeating. A fall in the rate of inflation does not mean lower prices, it just means that the rate of price rise is falling or has slowed down.

Now let’s get back to Rahul Gandhi and the Modi government’s decision to cut interest rates on PPF and other small savings schemes.

The rate of interest on offer from April 1 onwards, ranges from 7.1% (on the one-year post office deposit) to 8.6% (on the Senior Citizens Savings Scheme and the Sukanya Samriddhi Account Scheme). What is the prevailing rate of inflation? Inflation as measured by the consumer price index in February 2016 had stood at 5.18%.

What does this tell us? It tells us that the rate of interest on offer on PPF as well as other small savings scheme is higher than the prevailing rate of inflation. This means that the money invested will “actually” grow and not lose its purchasing power. The real rate of return on these schemes is in positive territory. The same cannot be said for the period when Rahul Gandhi’s Congress Party was in power.

Inflation as measured by the consumer price index was 10% or higher between 2008 and 2013. In fact, the inflation during the period stood at an average of 10.1% per year. What was the interest that the Congress led UPA government was paying on PPF and other small savings schemes?

The rate of interest varied from anywhere between 8-9%. This, when the prevailing rate of inflation was greater than 10%. Hence, the money invested in these schemes was actually losing purchasing power.

This is not the case now. Investors are actually earning a “real” return on their investment. Some people told me on the social media that even with lower inflation, prices are not really falling. As I explained earlier, lower inflation does not mean falling prices. It just means that the rate of price increase has slowed down.

Also, it needs to be mentioned here that investments made into PPF and other schemes like Senior Citizens Savings Scheme, National Savings Certificate and Sukanya Samriddhi Account Scheme, enjoy a tax deduction under Section 80C. Hence, the effective rate of return on these schemes is higher than the interest that they pay.

I guess these are points that Rahul Gandhi needs to understand. Editors of media houses who have run headlines saying how the middle class will be hurt because of the cut in interest rates, also need to understand this. While “middle class hurt” makes for a sexy headline, that is really not the case.

Also, it is worth mentioning here that the Modi government is trying to introduce a certain method in the calculation of the interest to be paid on these schemes. The interest will now be linked to the rate of return on government securities and will be calculated every three months.

Indeed, this is a good move and brings a certain transparency to the entire issue. Further, people up until now have been used to interest rates on PPF and small savings schemes remaining unchanged for long periods of time. But now with a quarterly reset in these interest rates coming in, they need to get used to the idea of these interest rates changing on a regular basis.

This is something that needs a change in mental makeup and will happen if the government persists with this. Also, it is important in the days to come the government ensures that the rate of interest being paid on PPF and small savings schemes is higher than the rate of inflation. That to me is the most important thing than the current rate cut.

The column originally appeared in the Vivek Kaul Diary on March 21, 2016

27 May, 2015

Why Jairam Ramesh’s new book on land acquisition is a must read for Rahul Gandhi

Jairam Ramesh was the minister of rural development between July 2011 and May 2014. He was instrumental in getting the new land acquisition law drafted and passed in 2013. And now he has written a book documenting this experience.
The book is titled Legislating for Justice—The Making of the 2013 Land Acquisition Law. Ramesh has co-authored this book along with Muhammad Ali Khan, who worked with Ramesh as an officer on special duty in the rural development ministry.
The book goes into great detail on why India needed a new land acquisition law. And given this, it is a must read for Rahul Gandhi, the vice-president of the Congress party, who has recently been ranting against the changes that the Narendra Modi government is trying to bring to the land acquisition law passed in 2013.
Before the 2013 land acquisition law was passed, land acquisition in India was governed by the Land Acquisition Act 1894—a law from the time when the British ruled India. And rather surprisingly it survived for close to 66 years after India achieved independence from the British in 1947.
The 1894 Act was loaded totally in favour of the government and made it very easy for the government to acquire land as and when it wanted to. This wasn’t surprising given that it was drafted in 1894, when the British ruled India and the rights of Indians were not really top of the British agenda. As Ramesh and Khan write: “The 1894 Act was a comparatively short legislation that left much to the discretion of the acquiring authorities.”
Take the case of the phrase “public purpose,” which is the basic reason why any government acquires (or at least should acquire) land from its citizens. It is very important to define the term properly. Nevertheless, as Ramesh and Khan write: “’Public Purpose’ which was the raison d’etre for any acquisition initiated was drafted in such wide terms that essentially any activity could be constituted as public purpose, as long as the Collector [of the district where the land was being acquired] felt it did…’Public Purpose’ became what ever the Government or acquiring authority defined it to include.”
In fact, in a 1984 amendment expanded the government’s ability to “acquire lands for a public purpose ‘or for a private company’”. Yes, you read that right. And which party was in power in 1984? The Congress party. This amendment allowed the government to acquire land from farmers at cheap rates and then sell it on to private companies at a significantly higher price.
The ‘Yamuna Expressway’ is a very good example of this, where the land was acquired by the Uttar Pradesh from farmers and then sold on to private parties at multiple times the price the farmers had been paid for it.
The 1894 Act also had an ‘urgency’ clause. As Ramesh and Khan write: “Section 17 of the Land Acquisition Act, 1894 was used to forcibly disposes people of their land in a frequent and brutal fashion by suspending the requirement for due process…Section 5A…allowed for a hearing of objections to be made but put no responsibility on the Collector to take those claims into consideration.”
So people could complain, but it was up to the Collector whether he wanted to listen to them or not. Further, like was the case with the definition of public purpose, the definition of urgency was also left “to the authority carrying out the acquisition.”
This clause allowed the collector to “take possession of the land within fifteen days of giving notice”. He could take possession of a building within 48 hours of giving notice. “The Outer Ring Road Project of Hyderabad and the Expressway in Uttar Pradesh are both striking(and recent) examples of acquisitions where large tracts fell pray to the urgency clause,” write Ramesh and Khan.
Further, land acquisition displaced many people over the decades and most of them were not resettled and left to fend for themselves. “While there is no comprehensive record of how many individuals have actually been displaced by land acquisition post-independence, estimates put forth by credible studies find that close to 60 million individuals have been displaced since independence. Worse still, only about a third of these have actually seen some measure of resettlement and rehabilitation,” write Ramesh and Khan. Further, the studies that Ramesh and Khan refer to are more than a decade old. Hence, the number of displaced is likely to be higher than 60 million.
The question is who is to be blamed for this? The Congress party, which ruled the country in every decade after independence. Why did it take them more than 60 years to wake up to this and do something about it. The only possible explanation is that the Congress politicians ‘privately’ gained from the law as it was.
And given this, Rahul Gandhi’s recent holier than thou attitude on “land acquisition,” doesn’t cut any ice. The Congress party is responsible for the land acquisition mess that prevails in this country as of today.
Getting back to the land acquisition law of 2013, it is only fair to say that India needed a proper land acquisition law which wasn’t loaded totally in favour of the government. The trouble is now we have a law which makes land acquisition extremely complicated and next to impossible. A reading of Ramesh and Khan’s book makes that extremely clear.
In fact, the authors even write: “The law was drafted with the intention to discourage land acquisition. It was drafted so that land acquisition would become a route of last resort.”
For a country which has nearly 13 million people entering the workforce every year and which has aspirations of “making things,” a law which discourages acquisition of land really cannot hold. No country has gone from being developing to being developed without the expansion and success of its manufacturing sector.
As Cambridge University economist Ha-Joon Chang writes in Bad Samaritans—The Guilty Secrets of Rich Nations & the Threat to Global Prosperity: “History has repeatedly shown that the single most important thing that distinguishes rich countries from poor ones is basically their higher capabilities in manufacturing, where productivity is generally higher, and more importantly, where productivity tends to grow faster than agriculture and services.”
And in the long run the ease of land acquisition remains an important input for the manufacturing sector to take off. It also remains a very important area if the physical infrastructure in this country needs to improve. Having said that, it does not mean that land should be taken over on a platter.
In fact, as the Economic Survey points out “land acquisition” was a top reason for 161 stalled government projects. The Survey also pointed out: “India’s recent PPP[public-private partnership] experience has demonstrated that given weak institutions, the private sector taking on project implementation risks involves costs (delays in land acquisition, environmental clearances, and variability of input supplies, etc.).”
Hence, we need to take a middle path on land acquisition.

(The column appeared originally on Firstpost on May 26, 2015)

13 May, 2015

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

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

4 May, 2015

Five questions for Rahul Gandhi on his sudden love for distressed home buyers

Vivek Kaul

Rahul Gandhi is on a learning spree these days. Yesterday he learnt that Indian middle class also has a problem. A report in The Indian Express points out Rahul as saying: “Mujhe aaj kuch seekhne ko mila. Meri soch thi ki zameen ke mamle pe kisan ko, mazdoor ko, adivasiyon ko dabaya jaata hain. Magar aaj mujhe seekhne ko mila, zameen ke mamle pe middle class logon ko bhi dabaya jaata hai. (I learnt something today. So far, I used to think that only farmers, labourers and tribals are suppressed in land matters. But today I learnt that the middle class is also suppressed).”
The Gandhi family scion said this after meeting distressed home buyers in the National Capital Region. That he did not know that the issue of “land” also impacts the country’s middle class, after having been an MP for more than a decade, is a clear indicator of how well connected he has been with issues that concern the people of this country. But yes he is trying and it’s never too late.
Rahul also said: “They are told that you will get the flat on a particular day but for years they don’t get the flat. They are told the super duper area of the flat would be so much but what is delivered is different.”
There are multiple questions that crop up here. The situation that these home buyers are in currently, did not crop up over the last one year of the Narendra Modi government. It has been work in progress since 2008. So why has Rahul woken up to it now? The answer is fairly straightforward. This sudden concern for the middle class home buyer is a part of the Rahul relaunch.
The second question is how have all these builders managed to get away with taking money from the buyers and not delivering homes even many years later. Rahul met distressed home buyers from the National Capital Region. The Congress party was in power in Haryana (parts of which come under the National Capital Region) for an extended period of time. What did this government do for distressed home buyers in the city of Gurgaon, which is a part of the National Capital Region?
The third question is how have real estate builders in this country managed to have a free run for all these years. When almost every form of investment in this country is regulated, be it mutual funds, stocks, insurance, derivatives and so on, how has real estate managed to be given a free run for so long? The Congress party has been in power at the centre in every decade since independence. Why did it do nothing on this front all these years? Why was the Real Estate (Regulation and Development) Bill introduced only as late as 2013? This after the Congress led UPA government had been in power in Delhi for nine years. Maybe, Rahul can explain all this to the people of this country as well, the next time he decided to speak to the media.
The fourth question is that when opening something as simple as a savings bank account requires multiple documents, why can real estate be almost be bought over the counter, as long as the buyer is willing to pay in cash? How did the system evolve in the way it has? Guess, Rahul can speak to his seniors in the Congress party and maybe they can give him an answer.
The fifth question is what has Rahul’s Congress party done to control the amount of black money being generated in the country, in all the years that it has been in power. As per the Global Financial Integrity report titled Illicit Financial Flows from Developing Countries: 2003-2012, around $439.6 billion of black money left the Indian shores, between 2003 and 2012. If this was the amount of black money that left the Indian shores, imagine the kind of black money that must have been generated during the period.
The Congress led UPA government was in power for much of this period. A substantial portion of the black money that is generated finds its way into real estate, driving up prices and making things very difficult for genuine home buyers who want to buy homes to live in them.
This has led to a situation where the real estate market has totally become investor driven. What did the Congress led UPA government do about this in the ten years that it has been in power?
To conclude, since Rahul Gandhi is in a learning phase, it’s time he saw Yash Chopra’s 1965 classic Waqt. And in it he should concentrate on a dialogue written by Akhtar-Ul-Iman and spoken by Raj Kumar in the movie, which goes like this: “Chinoi Seth…jinke apne ghar sheeshe ke hon, wo dusron par pathar nahi feka karte(Chinoi Seth…those who live in glass houses don’t throw stones at others).”

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

The column originally appeared on DailyO on May 4, 2015