LETTERS

Issn 0012-9976
Ever since the rst issue in 1966, EPW has been Indias premier journal for comment on current affairs and research in the social sciences. It succeeded Economic Weekly (1949-1965), which was launched and shepherded by Sachin Chaudhuri, who was also the founder-editor of EPW. As editor for thirty-ve years (1969-2004) K rishna R aj gave EPW the reputation it now enjoys.

The Great Bengal Crash I

he sudden collapse of the Saradha group in West Bengal testies to the dark side of nance capital. With the group defaulting on payments and winding up its media business recently, and investors demanding their deposits, the collection agents of the group nd themselves in a precarious situation. The agents are putting pressure on the chief minister, Mamata Banerjee, for her intervention for the recovery of investments in various schemes they had marketed in the districts with attractive commissions. The common business strategy of chit fund owners is to invest in media business to gain legitimacy in the public mind. The ministers are often seen in public with the proprietors/managers of the chit fund/media business. The chit fund companies are found to distribute their magazines/newspapers free to the poor depositors in rural and semi-urban areas of Bengal to earn their trust. The Saradha group is no exception in this regard. In order to gain credibility in the market, the brochure of the Saradha group featured a picture of Kunal Ghosh, Trinamool Congress Member of Parliament, who used to manage the groups media business. It may be mentioned in this connection that the Bengali and English dailies of the group, Sakalbela and Bengal Post, died natural deaths very recently. It is easily understandable as to how the group tried to manufacture trust in the minds of the investors. The business career of the Saradha group chairman and managing director, Sudipta Sen, as reported in the media, is a fascinating one. He started as a real estate agent from a small ofce in south Calcutta in the early 1990s. It is reported that Sen maintained close contacts with the Communist Party of India (Marxist) leaders, used the political connections to mobilise deposits under various schemes, and invested them in his real estate business. Saradha group got its business license in 2008. Saradha Realty collected advances of more than Rs 89 crore from the public in 2009-10. Sudipta Sen started shifting his loyalty to Trinamool Congress when the winds
may 11, 2013

editor

C Rammanohar Reddy
EXECUTIVE Editor

of change started blowing across Bengal after the 2008 panchayat elections. The political link got strengthened in the next few years as the media business launched by the group tried its best to give legitimacy to the new regime. The Saradha case bears testimony to close ties between the media, politics and chit funds.
Arup Kumar Sen
Kolkata

aniket Alam
Deputy Editor

Bernard DMello
web Editor

II
ubhanil Chowdhurys article The Political Economy of Shadow Finance in West Bengal on the web exclusives section of the EPW website brings out the story of one of the greatest swindling episodes after Independence. The Saradha group had proximity with the ruling Trinamool Congress but the police investigations reveal that the group had interactions with the left as well. A news item (1 May) in Bartaman, a Bengali daily, reveals that many left leaders also attended functions sponsored by the Saradha group. In fact, in order to win the trust of the administration and also common people, this type of rm tries to showcase that it has close proximity to public gures. At this juncture the main concern should be to stop this type of Ponzi rms which cheat the common people of crores of rupees. Three decades ago many investors were duped by Sanchayita, another rm which used to collect money by promising people a higher interest rate. It is also the responsibility of the government to make people aware about the rate of return on investment and the need to put their hard-earned money only in those organisations where it would remain intact.
Saroj Upadhyay
Kolkata

subhash rai
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Economic and Political Weekly

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Myth and Reality

his is not to dishonour the memory of a person who has recently expired, but to put in perspective the true business achievements and ethical standards of a particular group the RPG group and give a balanced view.
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EPW Economic & Political Weekly

LETTERS

Most of the native empires of Kolkata were built upon three pillars collaboration with foreign imperialists, questionable levels of tax compliance and ethics, and ability to sense and prot from scarcity and oligopolistic opportunities. But, without doubt, one has to acknowledge the enterprise and risk-taking ability of these groups. The big break came after the rst world war, when the British Empire was losing its imperious power and British entrepreneurs were not any more effective or interested in India. In the post-Independence era, the Goenka groups achievements are nothing great, especially of the current nonR P Goenka streams. Yes, the RPG group made several big and savvy acquisitions at bargain prices. But it failed to build these businesses to leadership positions. Dunlop and Gramophone Company (HMV) are nowhere near being market leaders in their business segments. There were issues about transferring valuable trademarks and real estate to privately-owned companies of the group. Calcutta Electric Supply Corporation (CESC) during the 24-year-period of Goenka ownership, just added 200 MW to its power-generating capacity. CESC has to buy 500-600 MW from the West Bengal State Electricity Board (WBSEB) to meet the power demand of its licensed area in Kolkata and Howrah. CESC has a small service area with more powerintensive urban customers, and hence lower transmission and distribution losses and no drag from subsidised rural users. CESCs cash of about Rs 2,000 crore and nancial strength have been used to invest in non-related businesses like retailing, or building power plants in other states meaning its licensed area customers had to bear higher tariff than the WBSEBs. The diversications have not given any return to CESC, and are once again, not as big as Tatas or Pantaloons ventures. The failure to build upon acquired companies strengths is more in the Sanjiv Goenka segment of the old RPG group. The groups record in top class product development or customer service, or attracting fresh talents from the leading engineering and management schools reveals that its mode of business growth
Economic & Political Weekly EPW

is totally out of tune with what the present set of customers, potential employees and investors want.
P S Datta
Kolkata

Sanjay Biswas
he Coalition for Nuclear Disaarmament and Peace (CNDP) is deeply saddened to learn of the death of Sanjay K Biswas (68), the former Dean of Engineering at the Indian Institute of Science at Bangalore. He passed away on 28 April following a heart attack. Sanjay Biswas was one of the foundermembers of CNDP and consistently opposed both nuclear weapons and nuclear power. As a scientist-engineer, Biswas worked on a range of subjects, including mechanical engineering, bioengineering, study of friction, and more recently, healthcare. Biswas took radical positions on a number of scientic, social and political issues, and for many years edited a magazine on the science-society interface. He also raised his voice against nuclear energy projects and signed numerous citizens appeals initiated by CNDP on Jaitapur, Koodankulam and other sites. The All Indian Progressive Forum under his leadership was a strong contingent of democractic voices demanding accountability on various issues including commercialisation of life-saving medicine and hazards of nuclear energy.
Praful Bidwai, Achin Vanaik, Anil Chaudhary, Lalita Ramdas, Kumar Sundaram

On the Demise of Sarabjit Singh

e the citizens of India and Pakistan are pained by the sad demise of Sarabjit Singh as a result of an attack on him in the Kot Lakhpat jail in Lahore, Pakistan by some inmates on 26 April 2013. We express our deep and heartfelt condolences to the family of the deceased. Given the statements by most Indian prisoners in Pakistan jails of good and humane treatment, this inexplicable attack on Sarabjit Singh and the allegations of torture in the recent death of Chamel Singh in Pakistan jail indicate some conspiracy by vested interests to destabilise relations between India and Pakistan that were showing some improvement in recent times. Hence we demand a thorough and complete investigation under the supervision of the United Nations or any independent international body. Prisoners anywhere are the responsibility of the governments and the Government of Pakistan should immediately take strict action against all those responsible for the attack as well as the planners and conspirators. Pakistan and India should especially ensure that all steps are taken for complete protection and safeguarding all human rights of the prisoners of the other country in their jails.

Corrigendum
A Vaidyanathan, the author of the article Future of Cooperatives in India (4 May 2013) was wrongly described as being on the board of the Reserve Bank of India. His tenure on the board ended in 2011. The error is regretted.

Mahesh Bhatt, Mazher Hussain, Ram Punyani, Jatin Desai, Feroz Mithiborewala, Hasan Mansoor, Vijayan M J, Ramesh Jadav and others (India) Mohammad Tahseen , Abbas Ali Siddiqui, A H Nayyar, Tipu Sultan, Qazi Javed, Zulqar Halepoto, Zeeenia Shoukat, B M Kutty, Farhat Perveen and others (Pakistan)

Web Exclusives
The following articles have been uploaded in the past week in the Web Exclusives section of the EPW website. They have not been published in the print edition. Read them at http://epw.in (1) The Political Economy of Shadow Finance in West Bengal Subhanil Chowdhury (2) What Is Behind The Chinese Incursion At Daulet Beg Oldi? Neville Maxwell Articles posted before 4 May 2013 remain available in the Web Exclusives section.

may 11, 2013

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LETTERS

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may 11, 2013

Economic & Political Weekly

320-321, A to Z Industrial Estate Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013, India Email: edit@epw.in, epw.mumbai@gmail.com
vol xlviII no 19
EPW Economic & Political Weekly