September Campaign: Pamphlet IV

Vajpayee Government

Corruption At Its Venal Worst


 Morality has sunk to one of its deepest fathoms under this Vajpayee government. Political morality is denoted by its lowest denominator. Vajpayee & Co. entices every party in the NDA to join them, invoking their lust for power and a share in the spoils of office. Political morality is both degraded and debased, opportunism has become unbounded.

In material terms, this has seen a worse degeneration. The series of scams and the magnitude of money misappropriated is unprecedented.

Vajpayee & Co. came to power projecting a Party With a Difference. The only difference one can see is in the speed and efficiency in mortgaging, looting and enslaving our economy and the country.

They had talked of a party with a better chehara, chaal, charitra and chintan (face, conduct, character and thought). What loud mouthing! The image of Bangaru Laxman stashing away wads of money in his desk drawer is imprinted in the memory of every Indian and exposes the BJP and the NDA for what they are.

Let us take a look at some of the more glaring of these scams.



The tehelka episode has clearly shown how under the patronage of the Vajpayee government, national security has been shamefully endangered. The ease with which fictitious "West End" operators could penetrate the defence procurement system with impunity through the number of officers, dealers and agents operating with everybody’s knowledge with the collusion of the ruling political establishment has exposed the degeneration of the system under this Vajpayee government.

The fact is that the BJP-RSS and the government led by them do not care for national institutions, administrative norms or moral values as long as they can advance their agenda, strengthen their various outfits and fill their coffers by extending governmental patronage. The chain of corruption and nepotism includes senior politicians of the ruling establishment, military officers, MOD bureaucrats, various types of officers and influence peddlers.

It was shown beyond doubt with the tehelka episode that national security has been gravely compromised by Vajpayee & Co. in return for personal aggrandisement.

The entire episode also throws light on many other deals and possible scams. These will be taken up later


UTI-US 64 Scheme: The collapse of the Unit Trust of India’s flagship scheme US64 has led to the ruination of millions of people to the tune of over Rs. 6000 crores. By now it is clear that the money of small investors and the savings of over 2 crore unit holders was being diverted into speculation in the stock market and to favour companies close to the political establishment of Vajpayee & Co. This is a clear case of outright loot, nepotism and favouritism. Public financial institutions set up expressly by an Act of parliament to mobilise domestic savings and give it a boost has been put not at the disposal of the economy and its development but at the disposal of mercenary speculators who have used the people’s life long savings for garnering their profits.

The scam can be understood by this simple fact. When it was clear that the US-64 scheme had collapsed due to bad investments made with complete collaboration of the Finance Ministry, corporate houses were alerted. They withdrew their money i.e. sold back units to the UTI at the prevailing price of Rs. 14.55. UTI repurchased more than Rs. 4000 crore from the corporate houses.

Only after the interests of some corporate houses were protected did the UTI announce a freeze on buying and selling of US64 units. Small investors — more than two crores of them — were told that the UTI will re-purchase not more than 3000 units at par i.e. Rs. 10 i.e. at a loss of over 40%.

There has not been a more glaring case of loot of the life long savings of the Indian middle classes. Two crore unit holders with their families means that atleast ten crores of people have been ruined.

Stock Market Scam: A major scam has occurred once again in the stock market in March 2001. One estimate of the loss of market manipulations for Infotech companies alone is a whopping Rs. 1,84,000 crores. Like in the 1992 scam of Harshad Mehta, the modus operandi was similar. Scamster Ketan Parikh borrowed as much as Rs. 12,000 crores from banks and financial institutions at one point of time in March to buy shares of select companies and hike their prices. At an appropriate time they would be sold at an inflated price and super profits would be raked in. Information and software companies shares skyrocketed, some from below Rs. 100 to over Rs. 250. The problem came when payments had to be made and that is when the scam unfolded. The thousands of crores of rupees used in these operations were the savings of common people who had put them in banks like the Madhavapura Mercantile Cooperative Bank and the Bank of India. Once again regulators like the SEBI meant to control market manipulation are themselves guilty. Some millions of small savers and investors have been ruined, some have even committed suicide.

The Mauritius Route: In 1983 India had entered into a double-taxation avoidance treaty with Mauritius. The idea was that the same person or company need not pay the same taxes in both the countries. Strangely this was extended to those taxes which one of the countries does not levy. Mauritius does not have a capital gains tax while India does. When the income tax department served notice on some foreign institutional investors (FIIs) for avoiding paying capital gains tax in India, the finance minister personally intervened to invoke this treaty and state that no company registered in Mauritius need pay any capital gain tax in India. This is a clear case of protecting the guilty and officially patronising a route for avoiding legitimate taxes and siphoning funds. As a result India has been losing to the tune of nearly Rs. 3000 crores annually as capital gains tax which is not collected. In addition, the Mauritius route facilitates money laundering and suction of capital out of India. It has been shown that five overseas corporate bodies having invested Rs. 777 crores took back as profits of as much as Rs. 3677 crores in two years ending March 2001.

Looting Nationalised Banks: Huge scams are taking place when enormous sums of money are borrowed from the nationalised banks and public financial institutions like the IDBI, IFCI apart from UTI by the corrupt politician-bureaucrat-businessman nexus, never to be returned. Such bad loans of nationalised banks are over a staggering Rs. 80,000 crores. Similarly thousands of crores are owed to the public financial institutions. Once again in this case it is the life time savings of the small investor that is being looted.

CBEC Scam: The chairman of the Central Board of Excise and Customs (CBEC) was arrested by the CBI in April 2001. He was charged with corruption and amassing wealth beyond known sources of income. Interestingly in February 1999, the Central Vigilance Commissioner had warned the finance ministry and the Government of India about this gentleman’s reputation and activities. Yet he was chosen to be the Chairman as this was a crucial post which can give information to business houses on changes in the duty structures before the budget is presented. Once again the needle of suspicion points towards the PMO.

In a rare display of honesty, a senior journalist of the Saffron Brigade has described the PMO as being RH+. R stands for Reliance and H for Hindujas!


Modern Foods: The sale of Modern Foods to the multinational Hindustan Lever Ltd. smacks of a big scam. The unit valued at Rs. 2200 crore by the employees union has been sold to a single bidder for about Rs. 150 crores. Alongwith the company, the fixed assets like land, plant and machinery have been sold. These consist of 14 factories, 7 ancillary units and 20 franchise units — all situated in prime locations in big cities. The scam lies in the manner in which the evaluation has been done and sold to a single bidder.

BALCO: A highly profit making company Bharat Aluminum Co. (BALCO) commanding a share of more than 15% in the domestic market was sold off for a paltry sum once again to a single bidder, Sterlite, which has already been under a shadow for its dubious role in manipulating the stock markets in 1998. In 1999-2000 BALCO made a profit of Rs. 58.89 crores. It had a cash surplus of Rs. 460 crores. It had a captive power plant and other assets valued at more than Rs. 5000 crores. This company worth more than Rs. 5500 crores was sold for Rs. 551.50 crores.

The scam lies once again in the valuation of the assets of BALCO. The plant machinery was valued by a land valuer, one Mr. P.V. Rao. He was asked to give his value report within a span of ten days. No reputed consultant was ever engaged.

Air India and Other Forthcoming Disinvestments: Similar attempts to sell India’s flagship airlines to a single bidder is in the offing. While the government had invited international tenders for evaluating the assets of Air India abroad, these were not even considered and a small time Delhi-based firm has been asked to evaluate Air India’s properties abroad. Those companies appointed to value the other assets are again those who, at one time or the other, have been associated with stock market scams or directly connected with the only bidding firm.

The current budget estimates to raise in all Rs. 13,000 odd crores (Rs. 12,000 crores from this budget plus over Rs. 1500 deficit from the revised estimates of the last budget) from disinvestment of few profit making PSUs like MTNL, VSNL, GAIL etc. While they will be sold for a song, huge kickbacks are bound to take place in these deals.


The liberalisation policies being pursued by this Vajpayee government are opening up hitherto unknown routes for largescale corruption. These relate to changes in policy to favour certain sections and awarding contracts and placing orders with various multinational firms.

Telecom Scam: In July 1999, the government announced a sudden shift in policy from a fixed telecom licensing fee to a revenue sharing arrangement. Shifting from one regime to another meant a net loss of the government to the tune of a whopping Rs. 46,000 crore. This was done during a time when the Vajpayee government was in a caretaker capacity. The Attorney General who advised against such a move initially was prevailed upon to give another advice endorsing such a move. He shamelessly obliged. Clearly, this was done to favour certain players in the telecom sector. The PMO was the key player. The loss for the country was a personal gain.

Sugar Scam: In September 1999, the Vajpayee government decided to import 5.54 lakh tonnes of sugar from Pakistan when there was no shortage in the country. This was at a time when domestic consumption was estimated at 146 lakh tonnes. The production was estimated at 154 lakh tonnes. The government already had a carry over stock of 55 lakh tonnes. Yet such unnecessary imports were undertaken while the Kargil conflict was on. An estimated Rs. 900 crores went into the pockets of traders. Interestingly the then food minister had sought a rise in the import duty of sugar but the PMO rejected this and went ahead with the imports.



Defence Jet Trainer: The need for such trainers has been long felt by the fact that during the last decade the airforce has lost 172 MIG series aircraft in accidents compared to 115 total aircraft lost during the 1965, 1971 and Kargil wars put together. Such trainers are necessary to prevent such a loss.

India is expected to enter into a deal with the BAe (British Aeronautics) for the outright purchase of 22 aircraft and licence for manufacturing 44 by HAL. India may end up paying $21 million (Rs. 100 crores) for each of its Hawk 100 aircraft, or Rs. 1600 crore more for the entire deal. The same aircraft was bought by South Africa for $ 17.64 million while the Australians paid only $ 16 million for a later Hawk version 127.

The deal is in the stage of being finalised despite the fact that 15 years have elapsed and apart from aircraft, more than 100 young pilots have lost their lives. Serious doubts about possible kickbacks and deliberately inflated prices have been raised.

Israeli Barak Missiles: India’s purchase of Barak anti-missile and anti-aircraft system from Israel’s Rafael corporation has been mired in controversy. The deal is worth $ 270 million (Rs. 1300 crores)

It is unclear why there has been such a strong preference for the Israeli Barak as compared to the cheaper alternatives such as Russian Klab missiles. References in the tehelka tapes suggest that other factors have been at work.

Russian T90 Tanks: The T90 tanks at a cost of $2.2 million (about 10 crores) is a single vendor transaction i.e. no other company or player was invited to give estimates. The tehelka tapes show claims being made of a 15% commission in the entire deal. The Indian press reports in December show that agents and officers were at work in pushing this deal referring to "well known business family in London" and "a powerful arms dealer living in an exclusive South Delhi colony". While the former clearly refers to the Hindujas, the latter is a possible reference to Rtd. Admiral Nanda.

Mirage 200 Aircraft: The deal was finalised for the purchase of 10 of these aircraft in September 2000 at a cost of Rs. 1500 crores. Reports strongly suggest that these were originally sold to Jordan in 1989 and are being rerouted to India. The same aircraft sold for a price of 1200 million French francs is now costing India 2146 million French francs. India may have lost about Rs. 630 crores in this deal due to a higher price for a second hand aircraft. Who gained and how much?

Sukhoi SU 30: The largest of defence acquisitions ever entered into by India and one of the largest military deals ever is the $ 1.4 billion (Rs. 6500 crore) Indo-Russian deal for the advanced Sukhoi SU30 aircraft. This deal has been shrouded in controversy and the sacked Admiral Bhagwat in his book details the acrimony of charges and counter-charges of pecuniary considerations in finalising the deal. Tehelka tapes show the references of kickbacks paid all the way upto the till recently defence minister.

Other Deals: India is to acquire a Russian aircraft carrier which was to be given free as ratified during President Putin’s Visit. India, however, will have to pay about $ 600 million (Rs. 2800 crores) for getting the vessel in ship shape to meet the requirements of the Indian Navy. Several stories have appeared in the Indian press that the Crown Corporation run by Retd. Admiral Nanda and his son had acted to push the figure upwards while the Navy’s relevant committees had estimated that the cost would be around $400 million (Rs. 1900 crore). A loss of Rs. 900 crores.

The notorious case of the woolen socks by the army was exposed in September 2000. Socks were being purchased at Rs. 97 per pair while in Ludhiana SSI units were offering them for Rs. 27 per pair. A loss of Rs. 1200 crores annually.


There are many instances when contracts were given to MNCs when the bids by the Indian public sector were lower. These continue to happen on a large scale since the kickbacks offered by the MNCs are not available if orders are placed with the PSUs. One such instances is that of NTPC’s Talcher plant. The 2000 MW stage II power plant of the NTPC was to be contracted. BHEL emerged as the lowest bidder. Yet the power minister bending all rules is seeking to give the contract to the multinational ABB.

This in short is the sordid deal of the manner in which Vajpayee & Co. are looting our country and the people. And such loot continues. No amount of exposures is enough to shame this government. The only way to save India from such unscrupulous loot is to ensure that these set of people do not continue in office.


For the sake of India i.e. Bharat Quit!

August 28, 2001