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China
crosses the line options |
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foreign
policy west
bengal The
economics behind the finance game
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options
Even
as India and China understand their boundaries are a flexible cartographic expression of the British ‘forward policy’ of the 19th century, aimed at stalling the then Czarist Russia in its advance, the best option for the nuclear-armed Asian neighbours is to settle the Line of Actual Control (LAC) issue. The British boundaries — five separate ones proposed in 1846, 1865, 1873, 1899 and 1914, which China never accepted — have no bearing on the present day situation. The LAC partially adheres to one of the British-era boundaries, no more. In the early 1950s, the Chinese started expanding and occupying Aksai Chin. India now says the LAC lies along the alignment where its troops were in 1962 before the war commenced. China asserts the LAC is the alignment where the Chinese troops were after pushing back the Indian Army at the time of the ceasefire on November 23, 1962. The difference in perception is between 2 and 20 km at various points, hence the dispute. Rather, a ‘dispute within a dispute’. For both sides, especially for India, it would be prudent to delineate the LAC on the ground, while maintaining its claim over Aksai Chin, which is at present in Chinese control. A similar policy has been used with success on the western front with Pakistan, where a Line of Control (LoC) in Jammu and Kashmir exists since 1949. Then it was called the Ceasefire Line, brokered by the British. The LoC is marked on maps and ground, and signed by both India and Pakistan. Violations of the LoC are internationally decried and declared unacceptable, as it happened at the time of the Kargil incursion by Pakistan in 1999. India shows the areas of Pakistan-occupied Kashmir (PoK) and Gilgit-Baltistan in its maps, but acknowledges that an LoC exists on the maps. Also, New Delhi maintains that the dispute is pending over reclaiming areas of PoK and Gilgit-Baltistan, and even passed a resolution in Parliament in February 1994. The 1873 line In contrast, on the eastern flank of Jammu and Kashmir — in Ladakh — the boundary issue is much more knotted and tangled. One of the views pursued by New Delhi is the Chinese did not resolve the dispute with the British, but that does not mean they will not resolve it with India. One of the options for India is to agree to demarcate the LAC. Possibly along the Macartney-MacDonald line proposed by the British in 1899 or the 1873 line proposed by the British Foreign Office. The latter is more realistic. It runs along the top of the Karokaram and is on the internationally accepted principle that the water shed will decide the boundary. On ground, the rivers running west of Karokaram flow into the Indus river, those following east flow into China, making it a natural watershed. On the other hand, India can keep showing on the map the entire Aksai Chin and maintain it wants to claim it as per the November 14, 1962, resolution passed in Parliament, which read: “The House resolves to drive out the aggressor (China) from the sacred soil of India, however long and hard the struggle may be.” Fears abound China fears India’s intentions at interdicting the Aksai Chin highway — the only road access from Muslim-dominated Xinjiang province to Tibet. Conversely, Indian army commanders believe the creation of infrastructure in Tibet can lead to changed intentions on the part of the Chinese. Once the LAC is demarcated, both sides can be more at peace. Counter-move Militarily, one option for India will be to occupy a few dominating features along the LAC at other places, and wait for the Chinese to react. Also, India is now looking at an all-weather road alignment. New Delhi has okayed creation of roads and airfields — at Nyoma — besides setting up top-of-the-line surveillance equipment like radars, unmanned aerial vehicles (UAVs) and long-range observation and reconnaissance systems (LORROS). — Ajay Banerjee
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foreign policy
Just
around the time when military commanders of India and China were holding flag meetings to discuss the latest Chinese incursion in Ladakh earlier this week, Japan summoned the Chinese Ambassador to the foreign office in Tokyo to protest the entry of Chinese surveillance vessels near a disputed island in the East China Sea. A month back, Vietnam had accused China of chasing and firing at a Vietnamese fishing boat in disputed waters in the strategically important South China Sea. China is at loggerheads with almost all its neighbours, particularly those with whom it has historically had an uneasy relationship. Ever since the new leadership took charge in Beijing in early March, China has become more aggressive in its behaviour and is belligerently displaying hegemonistic designs. Hawk at the helm In fact, months before he took the reins in Beijing, the new Chinese President, Xi Jinping, had given ample indications of the situation likely to unfold after the change in the leadership in the Communist nation. He called upon the 2.3 million-strong People’s Liberation Army (PLA) to “push forward preparations for a military struggle”, which made major world powers sit up and realise that China was flexing its muscles to extract concessions from its neighbours in its territorial and maritime disputes. The latest border flare-up between India and China only goes to prove that it has become a habit with Beijing to pinprick India to keep New Delhi on tenterhooks. With differences between the two sides on the definition of the Line of Actual Control (LAC) all too well known, there have been nearly 600 ‘transgressions’ by Chinese troops inside the Indian territory in different sectors in recent years. However, India’s response has been far from satisfactory. Except for making soft diplomatic noises, New Delhi has done little to confront China, apparently fearing that such a move might cloud the overall relationship with the ‘Red Dragon’. Strategic analysts point out that while Prime Minister Manmohan Singh was quick to assert that “it can’t be business as usual” with Pakistan after Pakistani troops beheaded an Indian soldier in January to send out a firm warning to Islamabad, he has responded mildly to the Chinese action, terming it a “localised problem”. Mutual distrust Let’s face the facts. The scars of the 1962 conflict have still not healed. Deep suspicion and mutual distrust continue to be the hallmark of Sino-Indian relations. These frequent incursions by the Chinese are not the only irritants in the relationship. While pretending to be a well-wisher of New Delhi, China has taken numerous such steps in recent years that obviously cannot be termed friendly. When most nations at the Nuclear Suppliers’ Group (NSG) favoured India joining the nuclear mainstream in September 2008, China did everything possible to deny India a clean waiver, though in vain. To keep its ‘all weather’ friend Pakistan in good humour, China resorted to the practice of issuing stapled visa to Indian residents of Jammu and Kashmir in 2009. This was clearly seen by New Delhi as a move by Beijing to question India’s sovereignty over the northern state. Last November, China started showing Arunachal Pradesh and the entire Aksai Chin as part of its territory in maps of the country on its new e-passports. Unhappy at this, the Indian Embassy in Beijing retaliated by issuing visas to Chinese nationals with a map of India showing Arunachal and Aksai Chin as its territories. Recently, China took control of the Gwadar Port in Pakistan and gifted another nuclear reactor to Islamabad in violation of the NSG guidelines, posing a serious threat to India’s geo-strategic interests. But the latest Chinese incursion in Ladakh has come as a rude shock to Indian policy makers and army commanders, now asking China to revert to the status quo position in the area. More hope than action How should India respond to the situation, particularly since Beijing claims there is no incursion? The Chinese have been repeatedly making attempts to push into Indian territory and this merits serious attention. It is no longer a secret that China has developed massive infrastructure in its Tibet and Xinjiang provinces, especially feeder roads to the border areas, railway projects and air fields. However, it has vehemently opposed similar infrastructure development being attempted by India along the border. India is hopeful that the latest row will be resolved before External Affairs Minister Salman Khurshid visits Beijing on May 9, and certainly before the new Chinese Premier comes to India on May 20. But the incident must be a lesson to India that it has to differentiate between opportunities for strengthening economic ties with China and the recurring tension on the boundary dispute. The efforts of India and China to resolve their long-running border dispute have made little progress despite 15 rounds of talks at the level of Special Representatives (SRs). The last round of talks in December 2012 also ended with excellent atmospherics but little achievement. China has refused to bargain territory it holds in Aksai Chin, while India will not make any concession on Arunachal Pradesh. China refuses to accept the LAC as a border, and thus has every interest in keeping it unsettled with low-grade incursions — or, from its point of view, demonstrations of presence in territory it claims to be its own. The Dalai Lama angle The presence in India of Tibetan spiritual leader Dalai Lama and the self-declared Tibetan government-in-exile also remain a source of tension between New Delhi and Beijing. China is also suspicious of New Delhi’s growing ties with the US. However, it would be wrong to only reflect the negatives in the relations between the two Asian giants. They have indeed taken some path-breaking confidence building measures (CBMs) which have withstood the vagaries of nature and time. Also, the economic relationship between the two has grown from strength to strength. Bilateral trade between India and China has soared to unprecedented heights with China becoming India’s biggest trading partner. The two-way trade jumped from $5 billion in 2002 to nearly $75 billion in 2011, though it remains heavily tilted in China’s favour, another source of worry for India. If the relationship between the two countries has to be put on a firm footing, the Indian Prime Minister will have to personally intervene. Manmohan Singh, who has invested hugely in normalising relations with both China and Pakistan, needs to establish with the new Chinese leadership the kind of rapport he had with former President Hu Jintao and Premier Wen Jiabao. It would not only help the two countries defuse border flare-ups but also avert any other untoward development. Manmohan Singh last month had a cordial meeting with Chinese President Xi in South Africa on the margins of the BRICS Summit. The meeting provided an opportunity to measure each other up. It is time the leaders took the matters in their hands, instead of allowing diplomats and generals to dictate terms on ties between the two countries. For both India and China, there are excellent reasons to avoid a crisis: a burgeoning trade relationship, far from normal relations with other neighbours, and, above all, the absence of any likely dividend from war. Yet, a territorial compromise between them is a distant dream, considering the heavy political cost involved.
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west bengal
In the aftermath of the chit fund scam in West Bengal, there has been a formal denial from the Trinamool Congress (TMC) that Chief Minister Mamata Banerjee was connected in any way with Sudipta Sen, the chit fund operator who is under arrest, and his Saradha group. But preliminary inquiries and circumstantial evidence suggest Sudipta Sen and his group was not entirely unknown to her, though it is likely that the Chief Minister herself was not aware of his detailed biodata and other particulars regarding the fund and its operation. Two of her trustworthy journalist-friends, Kunal Ghosh and Srinjoy Bose, allegedly had professional as well as business relations with Sudipta Sen and his group. While Srinjoy is the son of Satyasadhan Bose (Tutu Bose), owner of the Bengali newspaper, Pratidin, Kunal’s presence in the media circuit has been quite recent. He is not known to many senior and veteran journalists in Kolkata and has not worked with any big newspaper. Kunal’s colleagues claim that he had been a frequent visitor to Mamata Banerjee’s house. During the Left Front rule, he was also reportedly close to many CPM leaders, particularly Gautam Deb, the then state Housing Minister and trustworthy lieutenant of Chief Minister Buddhadeb Bhattacharjee. Past catches up How Kunal forged a connection with Sudipta is not really known. Sudipta was formally known as Sankar in the Behala area, where he had his ancestral house. No one knew about Sudipta’s whereabouts after he fled Behala following his alleged involvement in a case pertaining to the trafficking of women in the late 70s. But after the lid blew off the Saradha chit fund scam, many of his old associates identified him as their “Sankar”. It is alleged that Sudipta was the nephew of another chit fund operator, Bhudeb Sen of Sanchayani, who had been arrested and his property attached at the intervention of the former Finance Minister, Dr Ashok Mitra, during Jyoti Basu’s tenure as Chief Minister. The Saradha group was in operation during the Left Front regime also, but it was not doing well. It is said Sudipta approached several political leaders belonging to various parties for help. He was once reportedly taken to Gautam Deb by Kunal, but the meeting yielded nothing. Kunal, however, found Mamata Banerjee as the right person to help Sudipta, who was then in extreme trouble because of his company. The TMC chief thought Kunal could help publish her achievements as minister and the pro-people works of her party. Give and take Later when Mamata Banerjee became the Chief Minister, she chose Kunal as her main mediaperson for building a network in the print and electronic media for contradicting the alleged propaganda against her by the CPM, the Congress and other vested interests. She would often complain publicly that the CPM owned and controlled several television channels and newspapers that were engaged in spreading canard about her and the state government. But soon with Kunal’s help, Mamata allegedly found several fledgling newspapers and television channels at her service for countering the propaganda against her and her government. Seven daily newspapers, including two English, one Hindi and another Urdu, had been brought out with chit funds provided by Sudipta. Kunal controlled these until these were closed down by Sudipta for want of funds. The Saradha group also owned three television channels, which were also under Kunal. Tables turn Sudipta alleged that he had funded all these newspapers and channels following assurances that he would be bailed out from his business problems by the Chief Minister and the TMC, which was then a part of the UPA-II government. Sudipta alleged in an 18-page letter to the CBI that he was “cheated and blackmailed” by Kunal and Srinjoy. The judicial commission set up by the Chief Minister will be looking into Sudipta’s charges. The police has also launched a separate inquiry into the allegations. Earlier Mamata had been satisfied with the services rendered by Kunal and Srinjoy and had suitably rewarded them with TMC’s Rayya Sabha membership from West Bengal. They are suspected to have helped the TMC monetarily as well. The financial assistance was coming from Sudipta and his chit fund business which was booming with large-scale deposits from people all over the state who had rightly or wrongly identified Saradha chit fund with the TMC. Sudipta had also given an impression that he had the blessings and support of “Didi” (Mamata). Mamata’s paintings The Chief Minister as well her party ministers and leaders have, however, denied any association with Sudipta and his group. They said they had not asked anyone to deposit money with his chit fund. At the same time, Mamata has not denied that Sudipta had been a frequent buyer of paintings she would casually draw. She also did not contradict the report that he bought one of her paintings for Rs 1.80 crore. The Chief Minister often claimed publicly that she did not need the assistance of any businessman to run her party as she was competent enough to mobilise large funds by selling her paintings. It has now been proved that Sudipta cheated millions of poor depositors and agents. At the same time, he, too, has allegedly been cheated and blackmailed by TMC leaders who used him as a “milch cow” to meet their financial needs. Mamata Banerjee now realises that her clean image and popularity have been tarnished because of the party’s associations with Sudipta and his chit fund, though publicly, the party is denying any involvement in his chit fund operation. As damage control, the TMC is trying to make both Kunal and Srinjoy scapegoat since their close links with Sudipta have been well established. The Chief Minister has ordered a judicial probe and a SIT inquiry into the scam. She has also announced the formation of a Rs 500-crore relief fund for meeting the needs of genuine depositors who are poor. But the small relief fund will be a futile attempt to please thousands of depositors and agents who have been defrauded. Chit operation The chit fund operation is not new in Bengal. It is also not an illegal financial operation if sanctioned by the RBI and SEBI. Such legal chit funds have been in operation and quite popular in Kerala, Chennai, Navi Mumbai, Lucknow, Chandigarh and Agartala. In West Bengal, barring the Balussery Chit Fund, no other chit fund is legal. But still they have been in operation for several years. Chit fund operation witnessed a boom in the state in the 90s during the former Left Front regime and now during Mamata Banerjee’s rule. The Left Front government did not pay much attention to the illegal chit fund operations and several such funds now exist in the state.
Police findings thus far
Rs 35,000 cr collected from chit fund 160
companies under
Saradha group Rs 115 cr withdrawn by Sudipta from his first wife’s account in Feb Rs
300 cr withdrawn from second
wife’s account in Feb
Sudipta’s story
Links revealed
(Most of them were drawing
Rs 10 lakh to Rs 1 crore a month)
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The economics behind the finance game Chit funds are basically larger forms of a “committee” which one can find in every neighbourhood, market or small business clusters. A group of people pool in their money in instalments on a designated date and the committee is opened. This is on the basis of a bid or “boli” in which the highest bidder can take the lump sum. If 20 persons are giving Rs 5,000 a month, the total is Rs 1 lakh. The highest bidder can go as high as Rs 65,000, which means he takes Rs 1-lakh committee for that amount depending on his needs. The highest bidder wins and the remaining amount is distributed among the other members. The last bidder gets the highest profit when the cycle is completed among all the members. Stocktaking Following the Saradha scam and public outcry, the Central Government has jumped into the investigation mode. The Ministry of Corporate Affairs has taken note of the misuse by certain chit fund companies that have raised huge sums of money from the public at large. According to a statement issued by the ministry, in view of the larger public interest involved in these cases and concerns regarding the misuse or laundering by such companies of the ill-gotten wealth, and the possibility that the promoters of these companies may strip these companies, it has been decided by the Ministry of Corporate Affairs to set up a Special Task Force in the Serious Fraud Investigations Office (SFIO) to investigate the affairs of such companies. The task force will also coordinate with other law-enforcement agencies and regulators wherever required. The danger now with chit funds across the board is the apprehension of a resultant panic among depositors following the sordid developments in Kolkata. Any money-lending operation where one is dealing with public deposits runs on a semblance of stability. Once that is shattered, the subsequent run-on deposits are impossible to handle. Not even the largest banks in the world can survive a run. There have been reports of some panic in other states like Maharashtra among others. Unorganised finance Chit funds are only one among the unorganised and poorly regulated financing activities that have grown manifold in the country. Collective investment schemes, multi-level marketing, plantation schemes, para-banking and other such activities outside the organised and regulated financial sector like banking, mutual funds, post office and many others, attract a huge chunk of the country’s savings. It may be confounding why depositors flock to such schemes given the high risk attached to them. The answers are somewhat obvious and sometimes dark. Most of the depositors, big and small, are dealing only in cash which makes these operations attractive. No questions are asked and there are no tax implications. The failure to meet the stringent “know your customer” (KYC) norms of organised finance, where many poor people do not have adequate identity or residential proof is another important factor. Those who have KYC also sometimes prefer to deal in cash for fear of inviting income tax queries. The most important lure is that of very high returns. Bank savings account offers 4 per cent while these schemes can offer around 20 per cent or more. In addition, in a chit fund, a member can get a lump sum amount whereas he or she may not get a loan from a bank for a wedding or some other big event. The agents employed by these schemes also work on big commissions and are able to create a strong network. An additional factor could be that the banking system is not so accessible physically and also some people find it intimidating. Frauds in chit funds are not uncommon, but only when there is a big blowout like Saradha that people and governments take note.
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A committee is completely informal while a chit fund is registered with the Registrar of Chit Funds. Chit funds are regulated by the states under the Chit Funds Act, 1982. A chit fund runs a committee on a larger format where several groups are created. The company takes a fee for managing the chit fund. Unlike committees, the bid cannot exceed 35 per cent.