Tuesday, 23 January 2018

Rahul mantra to become rich

The NDTV (January 23, 2018, on internet ) has summarised how and what Prime Minister Modi addressed the World Economic Forum in Davos:  Prime Minister Narendra Modi acknowledged with a namaste the loud applause as he was introduced as the keynote speaker at this year's World Economic Forum's plenary session at the Swiss mountain resort of Davos. Speaking in Hindi, PM Modi showcased ease of doing business in India to world leaders and global CEOs, also calling for countries to unite to tackle what he called the three big challenges that the world faces - "climate change, terrorism and a threat to globalisation with powers of protectionism rising."

As expected, Rahul Gandhi, the Congress President and the Prime Minister aspirant in 2019, got one more opportunity to attack his arch-rival. He is perennially sad that Modi is occupying the position that is his birthright. He tweeted, “Dear PM, please tell DAVOS why 1% of India’s population gets 73% of its wealth? I’m attaching a report for your ready reference.”

By the way, the tweet proves that Rahul reads newspapers. The report he attached has been released by the Oxfam and published in the newspapers today (January 23, 2018). I would also like to add that being a “great leader” (at least in the opinion of his supporters in his party) and the latest President of one of the oldest parties in the world, he should ask the leaders of other countries attending the Davos meet to answer similar question about their countries. According to the Oxfam report “globally, 82% of the wealth generated last year went to the top 1%, while the 3.7 billion people who account for the lower half of the population saw no increase in wealth.” About scenario in India, the report says, “the richest 1% in India got 73% of the wealth generated in the country last year. Additionally, the 670 million Indians who comprise the poorer half of the population saw their wealth rise by just 1%.” In other words, the record of India is better than the record of the rest of the world. I wonder, if Rahul remembers the answer given by his party colleague Jairam Ramesh on July 29, 2016 during a panel discussion and interaction on “25th Year of Reforms: A Retrospective of What Happened in June-July 1991” . Ramesh had said, “Poverty has declined significantly since 1991 while inequality has gone up during the same period. Inequality has become sharper; it has become worse. Inequality in health, inequality in access to education, the inequality in access to public services has certainly gone up after 1991. This is the paradox of reforms.”

The debate on growing disparity, not just in India but worldwide has been subject matter of debate and research since time immemorial and most probably will continue indefinitely.

More relevant for the poor is that Rahul should also tell them how to solve this perennial problem. At least, in the larger interest of the poor of the country, he can tell us how the ‘Sonia-Rahul-Motilal-Oscar Mantra’, in fact Rahul Mantra (RM) was conceived that made his mom and him multi-millionaires in only one deal and that too without any investment. The Mantra could benefit large number of poor people who want to do do business but have no resources. His Mantra would be much more beneficial than the Pradhan Mantri Mudra Loan Bank Yojana (PMMY) conceived by Modi and under active implementation. I say “much more” because the loan taken under the PMMY has to be returned whereas the RM casts no such responsibility. Of course, there is risk that people like Subramaniam Swamy do not take liking for such a Mantra.

Well, Rahul will never admit that there is or was any such Mantra, here is a brief account of the RM.

First the background. On November 19, 1937, the 18th birthday of Jawaharlal Nehru’s darling daughter Indira Priyadarshini Nehru set up a company known as Associated Journal Limited (AJL) for the publications of newspapers started in 1938. After independence, the central and state governments, controlled by the ruling family, allotted prime lands at throwaway rates in New Delhi, Lucknow and other towns. Despite patronage of the Nehru-Gandhi family, AJL incurred losses for decades. Though the people voted for the Congress for decades, they had little interest in the party’s newspaper, the National Herald. By 2010-11, the AJL had accumulated losses of Rs. 90.21 crore.

The chanting of the RM, perhaps jointly composed by Sonia Gandhi, Rahul Gandhi, Motilal Vora and Oscar Fernandes, began in 2008 when the family decided to close down the publication and bring the ‘goldmines’ (the real estate now worth several thousand crores) under the family ownership. An ingenuous method (I call it Mantra) was devised. Sometime in 2010, the Congress party gave loan of ₹ 89.71 cr, to the AJL to tide over the financial crisis. (At least this is what people were told.)

In November 2010 Sonia, Rahul (owning 38% share each), Motilal Vora and Oscar Fernandes (owning 12% share each) formed a new company,  Young Indian Ltd (YIL). On December 21, the Board of Directors of the AJL transferred loans of Rs. 89.71 cr to the YIL. The shareholders ratified the decision a month later. In addition, the YIL gave loan of Rs. 50 Lacs (difference between Rs. 90.21 crore and Rs. 89.71 crore) to the AJL to meet the remaining obligations. The AJL now owed Rs. 90.21 crore to the YIL. To liquidate the loan owed to the YIL, the AJL allotted 9, 02, 16, 898 equity shares of Rs. 10 each to the YIL. The AJL became a subsidiary of YIL  76% of which is owned by Sonia and Rahul. On October 11, 2012, Rahul had clarified  that YIL being a not-for-profit company, it had no intention of starting any newspaper. 

Whatever was done was an in-house drama. As Congress treasurer, Motilal Vora, gave loans to AJL and then wrote all the loans off. As Chairman of AJL, he presided over the meeting of Board of Directors that requested YIL to take over the company’s debt to the Congress and as a shareholder of YIL, he was party to the decision to accept that request.

Following the investigations carried out by the Enforcement Directorate, the Income Tax (IT) Department served notices on Congress, AJL and YIL to explain, inter alia, unsecured loan by a political party and carried out further investigations. The 105 page IT assessment order passed by an Asstt Commissioner of Income Tax, Delhi, on December 27, 2017, throws more light on what had happened. According to the IT order, actually the Congress had not given any loan to the AJL. It was just a book entry. Nor did the Congress actually give any loan of ₹ 50 lakh to the YIL. The latter took accommodation entries of Rs 1 crore from M/s Dotex Merchandise Pvt Ltd, a hawala entry operator in Kolkata, for which commission of Rs 1 lakh was paid.  The IT order has estimated that the fair market value of the assets acquired by the YIL is Rs 413.40 crore. Holding that though the company had  been registered as a charitable company, it did not carry out any charitable activity, the Asstt Commissioner of income tax assessed its income at ₹ 413.40 cr. for the assessment year 2011-12, cancelled the tax exemption certificate of YIL, raised demand and initiated penalty proceedings f under section 271 (1) or concealment of income. The penalty could be in the range of 100% to 300%. The order says that YIL is now worth more than ₹ 2000 crore.

Mercifully, the IT department has not initiated proceedings under section 276 C (1) for wilful attempt to evade tax under which the tax evader is liable to imprisonment which may be six months to seven years and with fine.

Devendra Narain

January 23, 2018