How many more Nirav Modis will Indian Govt. go after?

Nirav Modi

NEW YORK – A popular ‘joke’ proliferating on WhatsApp mocks Lalit Modi, Vijay Mallya and Nirav Modi, say they are going to start an ashram in London called the ‘Art of Leaving’ – a riff on Sri Sri Ravi Shankar’s Art of Living Foundation.

Let’s not forget the likes of Jatin Mehta, the founder of Winsome Diamonds, a diamond merchant like Modi from Palanpur, Gujarat, who now lives in the St. Kitts and Nevis Island, in the Caribbean – a country with whom India doesn’t have an extradition treaty.

Mehta is an alleged defaulter of around Rs. 7,000 crores taken as loans from 15 Indian banks, over several years, till 2012, before he left the country. The shocking part is that till date the Indian government has yet to file a charge sheet against Mehta. He has used legal loopholes to get away scot free.

It remains to be seen what happens in Modi’s case.

Or Vikram Kothari, the owner of Rotomac Pens, who, along with his son, have been arrested this week, in an alleged Rs. 3,700 crore loan default case.

The Wire website detailed how diamantaires Modi and Mehta are linked, by marriage, to two of India’s wealthiest and most influential business families. Mehta’s son Suraj is married to Krupa, industrialist Gautam Adani’s niece. Modi’s brother, Neeshal, is married to the Isheta, niece of industrialist Mukesh Ambani.

Zee News reported this week that Adani Group owes Rs. 72,000 crore to Indian banks. A PTI report said Pawan Verma, member of JD (U), talking about debt to state-controlled banks, in the Rajya Sabha, alleged that corporate houses in India owe about Rs. 5 lakh crore to PSU banks, including the Adani Group.

Forget the technicalities of how these loans are disbursed in the first place, without matching collateral. The fact is all these debt numbers, which run into billions of dollars, beat the imagination of the middle class. It’s confounded the Indian media and public consciousness.

Most people cannot fathom – apart from the theory of political collusion – how these huge amounts, which could transform the lives of millions of poor Indians if put to use judiciously by the government, is allowed to be looted at will from banks run on tax payers’ hard earned money.

It’s a disgrace for India, a country swamped by systemic corruption and horrific exploitation of the poor and middle class. Scams like this make it hard to imagine how India can ever become a civilized country.

Irony and humor that run amok on social media targeting wealthy fugitives who continue to lead an extravagant, lavish lifestyle camouflage the sad, bitter truth of India’s massive divide between the rich and poor, destitute citizens.

TV anchor Barkha Dutt, writing in The Washington Post, pointed out: “In a country where nearly 270,000 farmers have been driven to suicide since 2000, and nearly 80 percent because of an inability to repay small loans (the average value of most of these outstanding loans is about $3,000), it is criminal that millionaires and billionaires live it up as their unpaid loans suck dry the banking sector, and then simply take the next flight to London or Antwerp or Dubai, never to return.”

Dutt added: “An Indiaspend report estimated that, in 2016 and 2017, more than 5,200 “willful defaulters” owed public-sector banks about $8.65 billion, much more than the government allocation for agriculture and farmer welfare. Yet, because these men make up India’s power elite and are embedded deep within the political system, their violations are handled with kid gloves — until it blows up in our faces.”

The Indian Express reported this month that Indian banks have reported willful defaults of over Rs. 111,738 crore, involving 9,339 borrowers, who have the capacity to pay up but refuse to repay loans. Astonishingly, there has been a 340 percent surge in less than five years as total willful defaults were just Rs. 25,410 crore in 2013.

The rot is set deep. The only way to cleanse it – if one can imagine that to happen at all – would be to like uproot all the trees in the forest, plant fresh saplings.

It’s also a double edged sword for the Indian government, fraught with political hazard. If they vigorously go after thousands of willful defaulters, they also risk shutting down many small and big companies, jeopardizing hundreds of thousands of jobs. At a time when the Narendra Modi government is trying hard to bolster and create jobs in India, it could amount to political hara-kiri in the general election, a little over a year away.

The Financial Express reported in October, 2017, that according to the RBI, just 12 companies, who were identified, are estimated to account for 25% of the gross Non Performing Assets in public sector banks in India. There are 488 others who were given six months’ time to restructure their debt or be dragged to National Company Law Tribunal.

Those 12 companies include, Bhushan Steel Ltd., the largest manufacturer of auto-grade steel in India, with a loan default of Rs. 44,478 crore; their sister company Bhushan Power & Steel Ltd. with another mind boggling loan default of Rs. 37,248 crore; Lanco Infratech Ltd., once listed among the fastest growing in the world, with a loan default of Rs. 44,364 crore; Essar Steel Ltd., one of the biggest steel manufacturers globally, with a loan default of Rs. 37,284 crore; the Mumbai-based textile manufacturing company Alok Industries, who has a loan default of Rs 22,075 crore; and Amtek Auto Ltd., one of the largest integrated component manufacturers in India, with a loan default of Rs. 14,074 crore.

Nirav Modi’s business has been dismantled by Indian law enforcement agencies, his assets confiscated. Question is: how many more Nirav Modis will the Indian government go after?

(Sujeet Rajan is Executive Editor, Parikh Worldwide Media. Email him: Follow him on Twitter @SujeetRajan1)