From 1991, when liberalisation kicked off, to the present, 32 years later, when a deeply unequal neoliberal economy is well entrenched, India has seen at least 15 major scams involving either the country’s financial markets, banking systems, their offshoots, or a corporate entity. That makes for an average of roughly one scam every two years. Even granting that greed is the ruling emotion of financial transactions and fraud necessarily follows greed, there must be something else at work here, something that explains the systemic anarchy that allows such an abundance of rackets to flourish and contributes to the astronomical gap between the top 1 per cent and bottom 60 per cent of the economy.
While many worthies vie for honours, my personal favourite is the NSE co-location scam that came to light in 2015 and had all the ingredients of a Bollywood potboiler. There was a heroine (or moll, depending on your sympathies), a mysterious yogi (with an appropriately Sanatani email ID “rigyajursama”), a hint of romantic dalliance, obscene sums of money, any number of villains, and cops (aka regulators) who raced in at the closing moments after the horses were almost all stolen.
What strikes you is the ease with which it was possible to manipulate a leading stock exchange and defraud it of something like Rs.50,000 crore over five years. Insiders, apparently with the cooperation of the NSE top brass, seem to have worked with select traders and given them access to stock information before the markets opened. The loot is unlikely to be returned and the dramatis personae might soon go free.
This is the common denominator each time—owners, promoters, or top executives defraud the system and enrich themselves at the cost of the retail investor. Neither the financial regulatory system nor the judiciary nor the state is able to protect ordinary citizens. The late Sahara founder Subrata Roy was jailed, but his cheated investors never recovered their money. Strangely enough, the same defrauded middle class gulls itself into casting the scamster as “hero”.
Harshad Mehta is even today invoked in many drawing rooms with grudging admiration. Indeed, the law has failed Indians so thoroughly that beating the law has become almost aspirational. Popular culture riffs off this idea: recall the films Guru (2007) and Bunty Aur Babli (2005), the former about a crooked crorepati who is let off by both state and shareholders simply because he is the country’s biggest industrialist; and the second about two people who are serial swindlers but so lovable that the policeman frees them. Harshad Mehta got both a web series, Scam 1992, and a film, The Big Bull.
India’s soaring stock market is often held up as proof of the economy coming of age but that is misleading. Both markets and economy are plagued by what academic and author Ashoka Mody calls “lawless financial capitalism” in his cover story. Take the case of “unicorns”, as journalist and academic Sukumar Muralidharan cites. Few earn conventional profits, but are propped up by enormous global capital in a self-perpetuating valuation myth. The relationship between state and capital too has changed dramatically, as economist and academic C.P. Chandrasekhar points out.
Zoom out of the markets, and you see a clear example of this all-pervasive lawlessness in the Uttarakhand tunnel collapse, caused by the criminal collusion between politicians, contractors, regulatory bodies, and judicial authorities, a collusion that flagrantly allowed a greedy understanding of “development” to endanger the fragile hill State.
Each such incident confirms that so long as everyone feeds off its flesh, the culture of illegality will thrive. The scams will continue. As will films about scamsters.
