An Era of Economic Scam in India !!!

This is the story of India, but the question is that, when this story started?

In 1947, when India became Independent or in 1991, when India became bankrupt? And who is behind this story of India? Our today’s Prime Minister Mr. Narendra Modi or then Prime Minister Mr. P. V. Narsimha Rao? And if anyone who is responsible for this much development of India, then who he is?

First we will talk about Narsimha Rao who is known for three reasons:

Ayodhya Issue

Economic Reform

Political Corruption

Among these three, first two things has happened in first two years Rao’s tenure as PM and rest of the tenure was surrounded by corruption and scams and the biggest among that was Harshad Mehta Scam and the flame of this scam has touched the doorsteps of PM Rao’s office also.

“When this type of crowd and this kind of heat, yes the money was paid to the hon’ble Prime Minister of India, Mr. PVN Rao. People don’t give human name to scams but if a human name is to be given to this scam, it is not a Harshad Mehta Scam but it is P V Narsimha Rao Scam. (a person (lawyer) during the press conference by Harshad Mehta in 1993 at Mumbai, openly told that   crore rupee was given to the PM in cash).

The country was shocked after hearing this news and came to know about Harshad Mehta, who was at that time became the master mind of country’s biggest monetary scam.

After economic liberalization, Harshad Mehta was playing with the country’s stock market. The rate of the share start touching to sky in Harshad Mehta invests money. It was the beginning days of economic liberalization in India and the market was open for all but still security check points had not been installed in the market.

      There is only 2 years gap between 1991 & 1993, just 2 years gap, but what happened in these 2 years because in 1991, neither the market nor the government had money in 1993, the country witnessed the biggest economic scam of the Independent Indian History.

January 1991, New Delhi, This month was full of challenges for India, the economic condition of country was worsened and India was not in the condition to repay the loan to money-lenders.

If no immediate action had been taken, the India stood in the line of those countries that are not capable of repaying their loans.  Even in those days like today India was dependent on Arab countries special on Kuwait for crude Petroleum oils and in India there was not enough money to buy the oil for more than 7 days. It means after 7 days India will suffer from huge scarcity of oils and LPG which would be considered as biggest problem for common citizens. It was worst and most challenging period for independent India. In this critical situation a very important meeting was held in the office of finance ministry of India between the then Governor of RBI MR S. Venkatramnan and Dr. Manmohan Singh, then consultant of Indian Prime Minister Mr. Chandrashekhar.

“Sir, RBI is having hundreds of tones of gold reserve, if we mortgage it, country will get great relief, if the country is in problem, then RBI is having the authority to do this.” -  These were the words of Mr. S Venkatramnan to Dr Manmohan Singh.

               The situation of the country was that much of out of control that RBI had to come forward and put a proposal like this. Manmohan Singh was shocked at the proposal but seeing no other option he forwarded the proposal to PM Mr. Chandrashekhar. Considering the worst condition of India Pm had allowed the RBI governor to proceed, but asked also to inform these things to Rajiv Gandhi who was giving political support to the Chandrasekhar’s Government from outside. Rajiv Gandhi also gave his approval for the same and the file reached to Yashwant Singh office for signature the then Finance minister of interim government as at that time Chandrasekhar’s government has lost the power. Yashwant Sinha had signed the documents and paved the way for keeping the gold on mortgage to get foreign currency.

This was that gold only which the custom department had sealed from smugglers in years. And was store in SBI. The 2000 kg gold had been sent to United bank of Switzerland but the amount we received was not enough to meet the requirement so again we had to send another 47000 kg of Gold to Bank of England and Bank of Japan. They planned to keep these thing secret so the public will not come to know about these but they didn’t managed to keep it secret and soon the journalist Shankar Ayyer had published a report in Indian Express about these.

November 1990, country’s economy was in the hands of PM Chandrashekhar and Finance Minister Yashwant Sinha. The question here arises that the situation to mortgage the gold had not came in one day. So how these circumstances occurred and is there only option left to mortgage country’s gold or were there any other option?

One of the major causes for this was the License Permit System. During those days, one needs to have license for everything. The government had its interfere in all types of business. For everything one need to have permit.  To open a factory, how much to be produces, how many staff should be, at what price the things should be sold and many more. All these things were decided by the government. Apart from this Government was involved in manufacturing industry like TV. Scooter etc which was withdrawn later after economic reforms.  Once much before this period IMF at that time had warned the Rajiv Gandhi government that the policies should be redefined otherwise India will suffer huge economic crisis in future but the then government had overlooked the suggestions. After Rajiv Gandhi, V P Singh became the prime minister but he throw the country into a different and seemingly never ending problem of reservation based on 60 years old report of Mandal Commission and didn’t care for any economic development of India.. Then in 1990, Chandrashekhar came into power and found the treasury empty.

In the same period, a big tragedy happened when Iraq had capture Kuwait under the leadership of Saddam Hussain. America was planning to attack Iraq. As a result the price of the oil has had started touching the skies and indirectly India  got suffered as now we have to pay more than double for the crude oil.

This situation had forced India to change not only its economic policy but also foreign policy. Initially India was always in the support of Arab Countries.  Butt due to high oil price now again India had to manage some more foreign currency to cop up with the situation, so the PM of India had himself appealed IMF for loan but the world know that IMF can’t give loan to anyone without approval of USA as it has 80% share in IMF.  To approve the loan USA had put forward a condition that if Indian Government will allow US fighter plane to land in India for refueling during the war then only IMF can sanctioned the loan. Left with no choice India given its permission but also asked to sanctioned loan with no other hidden conditions.  With this approval from Indian government   had indirectly signaled that now it is not standing on the side of Arab countries.

While these things was happening in world, India was also under political change and PV Narsimha Rao became the prime minister of India. In front him the biggest challenge was who will be the next finance minister of India and to bring economic reforms. So the first person contacted was Mr. I Patel The ex-governor of RBI and great economist of that time but seeing the country’s condition he denied and then it was Manmohan Singh, the then Chair Person of UGC was asked to became the finance minister of India and then PV Narsimha Rao has announced that he is going to take strict decisions for the welfare of the country and kept Industrial Department in his hand.

  

                  After one month, Manmohan Singh had presented his first budget, starting with Victor’s line “no power on earth can stop an idea, whose time has come”.  This ‘Idea’ was all about economic liberalization. Unlike olden days when government interfered in each and every aspect of industries, now the government had lifted all restrictions and opens the door for international market to invest in India.  Though these decisions was highly criticized by all but Mr. Rao didn’t cared for all these and kept on taking important decisions one by one. Later these decisions were proved beneficial and media has given the credit to Manmohan Singh but the real hero behind the curtain was Prime Minister Mr. PV Narsimha Rao. But during the period when the economic condition of India was started improving again a big stroke hit the India in the form of biggest economic scam.

23^rd April, 1992 , one news had surprised everyone, and it was about Harshad Shantilal Mehta. Mr. Mehta was the well known personality of that time. People use to call him the “Amitabh Bachchan” of stock market. He had a big apartment in Varli near sea and had dozens of luxurious vehicles including Toyota Lexus, one of the most expensive cars of that time. By profession he was just a stock broker, but he was merchant of dreams for Indian Middle class .

This scam was reported by journalist Suchitra Dalal, & according to her SBI had given around INR 1700 crore to Mehta for buying government bond but when in yearly audit it was found that bonds of only INR 1170 crore had been bought, they found a scam of around 500 crore and called Mehta in their office and asked to repay the amount and were not ready to hear any excuse.

  Soon Mehta had started giving cheques to SBI management. RBI surprised at this and asked that how can a broker can manage that much big amount in the short period of time... So RBI started investigating and later found that more or less all other big & small banks are involved in this scam. It was deshi chain scam. It was just the beginning of 5000 crore scam .later on to investigate the scam, JPC ( Joint Parliamentary   Commission ) was formed second time India History after the boforce scam (scam of 64 crore during Rajiv Gandhi Government). Harshad Mehta arrested and soon released on bail and after coming out of jail he announced in a press conference that he given crore rupee to Indian Prime Minister Mr. P V Narsimha Rao as the name of election fund. Though Home ministry has rejected the allegation by saying that at time Harshad Mehta went to PM house, Rao was not there.

 Even Rao denied all these allegation but opposition tried to take the advantage of this high profile scam and passed the ‘No-Confidence Motion’ against Rao government but Rao’s supports managed to save the government. Later it was found that the use of money was done to buy the votes as per CBI report but CBI had not taken strict action against the culprits.

 To distract the public attention from these issues, Mr. Rao had played a master-stroke of Hawala Scam but was in vain in which most of the opposition leaders including LK Advaani was alligated but later got NOC form court. In 1996, Rao government lost the election and soon Harshad Mehta was also arrested and died in jail in 2001.

On conclusion, yes it is true that the script of current scenario of developing India was written by P V Narsimha Rao but it is also true that political corruption is also an outcome of Rao’s Government.