COMMENTARY

Is Subrata Roy Merely a Scapegoat?

Ankit Kawade

Subrata Roy exemplifies the states

deficient regulation of finance
capital in our neo-liberal economy.
His recent imprisonment works to
avoid some fundamental
questions about the culpability
of the state, and its failure to
control capitalism through
liberal-democracy. In the fallout of
this case, Roy may well be a mere
scapegoat of the larger ailment of
financial speculation itself.

I would like to thank the anonymous referee of

this article for comments on an earlier draft.
Ankit Kawade (ankitkawade@hotmail.com) is
a student of Fergusson College, Pune.
Economic & Political Weekly

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MARCH 7, 2015

n 26 March 2014, the Supreme

Court had ordered Subrata Roy
to submit Rs 10,000 crore as a
condition for securing bail from Tihar
Jail, where he has been lodged for almost a year now. The bail amount, the
largest in Indias history, was supposed
to be raised by a US-based entity called
Mirach Capital, with Bank of America
(BoA) being the banker to this transaction. The BoA, however, has issued a
public statement refuting any claims of
it being associated with the said transaction. Both Mirach Capital and Sahara
Group have warned each other of legal
action following this suit.
In spite of all the drama that continues
to unfold before us, with the imprisoned
Subrata Roy being the main lead, a modest
debate over how the state tries to regulate the functioning of finance capital
should have been forthcoming. Subrata
Roys incarceration is a textbook case of
how the state can term an enterprise

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illegal on its own terms, and put the

entire affairs of the enterprise, and all
those who depend on it for livelihood, in
jeopardy. The story of how Sahara moved,
or rather gambled ahead in its business life
is evidence enough of the states own inconsistencies or lack of a clear agenda as
to how capital is to be managed, or regulated. The way Roy is being targeted in the
media makes him appear as if he is just
one rotten apple in an otherwise clean
bunch. However, this sort of targeting is
manifestly evasive as his conduct is not a
problem in itself; it is rather its symptom.
Portrait of a Capitalist
Sahara India Parivars website describes
Subrata Roy as Our Chief Guardian,
Managing Worker, A Real Visionary,
True Son of Bharat Maa, and Chairman, among other things. The philosophy of the Parivar is explicated as
Bharatiyata and Collective Materialism, where the former is described as a
religion higher than religion itself it is
the Indian Nationality (emphasis in
the original) that transcends all castes,
creed and sects and the latter is
described, in unambiguously vague terms,
as perfect blending of materialism with
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COMMENTARY

emotionalism (which) results in continuous collective growth for collective

sharing and caring.
The Sahara Groups business interests
range from finance, infrastructure and
housing, consumer merchandise and retail
shops, luxury real estate and lifestyle services, dairy and hospitality, media and entertainment, manufacturing, information
technology, international hotels and a sugar factory, distillery and a power generation plant. Its housing projects go by the
names of Aamby Valley City (touted as
being independent Indias first planned
hill city), Sahara City Homes (gated
community townships being developed
in many tier-I, tier-II and tier-III cities),
Sahara Swapna City (which aims for
affordable housing for the 1% of India
population), and other Residential
and Commercial Building Projects. Its
website shows total land bank of the
company as being 33,633 acres.
It owns five-star hotels in London and
New York, Grosvenor House and Plaza
Hotel respectively. It owns television
channels called Firangi, Filmy, Sahara
One, a national Hindi news channel
(Samay), an Urdu news channel (Aalami
Samay), and four more Hindi news
channels specific to the states of Uttar
Pradesh, Bihar, Madhya Pradesh and
Rajasthan respectively. It runs two dailies, each in Hindi and Urdu and an Urdu
weekly. Sahara was also the lead sponsor
of the Indian Cricket Team for more than
a decade but discontinued after a bitter
row with the Board of Control for Cricket
in India (BCCI). Roy also owned an Indian
Premier League (IPL) team which was
disenfranchised in 2013 and jointly owns
a Formula-One racing team called Force
India with Vijay Mallya. A cricket stadium in Pune is also named after him.
The profit-sharing model of the group
works thus 25% of the profits towards
social development activities, 35% for
the companys net owned funds and 40%
towards the welfare of Kartavyayogi
(dutiful) workers. It supposedly employs
11 lakh salaried and field workers. The
total number of establishments under the
tutelage of Sahara group is around 4,799.
Its net worth is Rs 68,174 crore.
Saharas social initiatives include
rehabilitation of people affected by
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earthquakes, disaster management, financial assistance to the families of the martyrs

of Kargil and Mumbai terror attacks, to
victims of Naxal attacks and National
Cadet Corps (NCC) students, special
programmes and distribution of aids for
the physically challenged, literacy and
health programmes, blood donation and
immunisation against polio, development
activities (providing basic amenities in
urban slums), programmes for beautification of public places, construction and
renovation of cremation grounds, construction of handpumps in villages, providing vocational training for skill development among youth, etc.1
This rather tiresome tale of Sahara
India Parivar and its chief guardian
Subrata Roy, perhaps, provides in the
most distilled form, is a portrait of the
21st century capitalist. The image of the
ideal capitalist today is not of a ruthless,
sleazy, frigid, heartless profit-hungry
machine, but of one who is humane,
with a warm heart beating inside him
like everybody else, who is willing to return a chunk of profits back to society as
a payback measure (owing to his humble
beginnings), one who seeks transcendental spiritual meaning in the pursuit of
material wealth, one who writes philosophical treatises and gives lectures on
self achievement,2 and one who portrays
fervent patriotism.3
Rather than painting a picture of an
over-exploitative capitalist magnate, he
indulges in all activities to combine the
fulfilment of social initiatives by way of
stock-market speculation. Here, amassing wealth is seen as a way of ones own
spiritual self-realisation, by fluxing a
share of it for social ends like fighting
poverty, provision of polio immunisations and mobile health units, basic
amenities to the poor and suchlike. All
of this basically serves to depoliticise the
whole situation; to say that poverty, lack
of basic healthcare and education, slums,
etc, exist not because of the persistence of
certain structural modes of inequality or
due to the states passivity in this regard,
but just because the industrialists are not
doing enough charity.
The assumption that the charity of
socially responsible rich capitalists can
effectively deal with social problems and

also replace the state itself in this endeavour has quite dangerous implications. It
projects poverty as purely an occasional
affair, and not a structural problem,
which can easily be solved by handing out
more money to the poor. One has only to
recall the agitation led by Baba Ramdev
with regards to bringing back kala dhan
(black money) at Ramlila Maidan, New
Delhi; as also the impossible promise of
Prime Minister Modi that every Indian
would get Rs 15 lakh once black money is
brought back from abroad.
In our so-called post-ideological society, to quote Deng Xiaoping, it doesnt
matter if a cat is black or white, so long
as it catches mice. Similarly, it doesnt
matter how the profits in millions are
generated in the first place, so long as
they can be used for charity.
Roys Imprisonment
Subrata Roy was imprisoned in connection
with a multibillion dollar investment
scheme that was later ruled to be illegal.
Two Sahara Group firms Sahara India
Real Estate Corp Ltd (SIRECL) and Sahara
India Housing Investment Corp Ltd (SHIC)
had raised around Rs 24,000 crore
through optionally fully convertible
debentures (OFCDs) in violation of publicissue norms. As such in August 2013, the
Supreme Court had directed the Sahara
Group to refund Rs 24,000 crore to
investors within three months, with 5%
interest per annum (Vaidyanathan 2013).
As happened in the Saradha chit fund
scam as well, the mainstream media did
not go beyond mere reporting of these
events as they unfolded. But even if one
assumes that there were to be some
debate on this in the mainstream media,
it is unlikely that it would have been
something grounded in the basics of
capitalism as such.
Roy, who is implicated for running an
investment scheme which was later
termed illegal, may well be likened
to Bernard Madoff, a highly successful
investment manager and philanthropist
from Wall Street. On 11 December 2008
Madoff was arrested and charged with
allegedly running a $50 billion Ponzi (or
pyramid) scheme (Zizek 2010: 35). What
these two cases reveal is the disillusionment of the state itself regarding which

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COMMENTARY

capitalist venture is legitimate and

which one is not. The attitude of the
state towards finance capital and this
regularly manifests when such ponzi
investment schemes surface is one of
dubious inconsistencies.
It may well be contested that Roy secretly knew these schemes were eventually
going to fail and that the people involved
in this were going to be duped. But the
common man (this includes the budding
investment managers as well), largely unaware of the legal Minotaur of regulations
pertaining to finance and such banking
operations, are bound to fall in a deadlock
(and in Roys case, a debt-lock) while chasing quick returns on investment.
In such an uncertain scenario, the state
with the hand of law could any day knock
on the doors of these Ponzi schemers,
who till then might be pursuing their
occupation in what they think is not
against the law in any way, charging them
with fraud or money laundering or whatever, under the pretext of some newly discovered legal provision which terms the
concerned occupation illegal. It cannot
perhaps be argued that Roy and such other
scamsters did not dupe the small investors at all, but it is largely owing to the
gaping loopholes within laws and inconsistencies of the state on these issues,
which provide a fertile ground for them to
subvert the same. Roys own confession in
this regard in an interview exposes the
dangerous tendencies of the state:
We started with prize chit schemes in 1978,
but that was banned in 1980. Then we went
for unincorporated body Sahara India.
When it was disallowed, we shifted to housing finance company. It did not have any
ceiling. When ceiling was imposed (on raising deposits), we went for mutual benefit
company. When that too was banned, we
went for the RNBC (Residuary Non-Banking
Company). We were doing very well we
were very happy. Right from the first year,
we were making profits. But the RNBC was
banned. Then we had to go for the OFCDs
(Optionally Fully Convertible Debentures).4

This shows that Roys various business

ventures did operate for a few years before they were termed illegal by the
state. In other words, he was presiding
over ventures which were legal when
they were established. As such he failed
to anticipate that the state would, in the
near future, change its mind and term
Economic & Political Weekly

EPW

MARCH 7, 2015

these occupations illegal. It was only after a few years from the founding of his
businesses that he was confronted by the
law, after he had gained sufficient traction to roll out another set of businesses.
That Roy could still amass crores of
rupees through these schemes only goes
to show that such fine people nonetheless pass through the complex sieve of
laws formulated by the state. The states
crackdown on these schemes and businesses did not begin when these were in
their nascent stages, but only after they
had thrived for several years. The tendency shown by the state in this regard
is like you are allowed to start any
business in a legal manner, however we
do not guarantee this very legal legitimacy of the business in future.
Hence scamsters like Roy, Harshad
Mehta, or Abdul Karim Telgi are merely
treated as aberrant excesses, as the
unclean bathwater of the clean baby of
stock market or financial speculation.
Roys imprisonment should not be seen
as the greed of one individual ruining
the investments of many thousands of
small investors; instead it should be seen
as the very embodiment of what goes in
the economy in the name of regulation.
Some Myths
As already pointed out, the institutional
mechanisms of our liberal democracy
seem hopelessly inefficient to curb these
so-called excesses of capitalism. The
whole illusion of the democratic mechanisms to overcome these excesses
nonetheless forms a part of the very state
apparatus which guarantees the reproduction of capitalism. Hence, these institutionalised liberaldemocratic mechanisms of multiparty elections, rule of
law, media scrutiny, investigations by
authorities like the Comptroller and
Auditor General of India (CAG), Securities
and Exchange Board of India (SEBI) or
the judiciary are simply not enough to
curtail this ogre of capital, more so when
domestic capital is so closely interlinked
to the global economy. Hence such
democratic mechanisms to overcome
these excesses, which are normally peculiar to every nation state, seem grossly
inadequate in the face of the globally integrated economy. Here too, Thomas

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Pikettys recent intervention that, We

want capitalism to be the slave of democracy and not the other way round
and his advocacy of a global wealth tax
surpassing the unique legal frameworks
of nation states seem utopian at best
(which he himself has conceded).5
Certain systemic flaws of capitalism
have thus been personified in the personal psychological attributes (say,
greed) of one Subrata Roy. To view such
symptoms of the larger problem of
capitalism, not as its systemic flaws, but
just as idiosyncrasies of some bad
greedy guys, who can easily be rectified
through stronger legislations and democratic institutions, leaves untouched the
sanctum sanctorum of the capitalist system as also of the regulatory mechanisms of the state. As such, his imprisonment and conviction would only amount
to the killing of a messenger.
Notes
1 These details are drawn from the following
two websites http://www.saharaindiapariwar.org/ and http://www.saharaindiapariwar.org/saharasri/index.html
2 Subrata Roy has addressed several mass gatherings as some sort of lectures on his lifes philosophy, videos of which are available online.
He has also written a couple of books expounding the same, titled Shanti, Sukh: Santushti
(Peace, Happiness: Satisfaction) and MaanSamman, Atmasamman (Respect towards
Others, Respect towards Self). See the abovementioned websites.
3 Every year, on the eve of the Independence and
the Republic Day, Sahara Group organises an
event called Bharat Parva (Festival of India). In
its many websites and also on its full page advertorials in newpapers, an image of Bharat
Maa riding on a vehicle carried forward by four
roaring lions is almost always visible. See
http://saharabharatparva.in/home.htm.
4 From an interview of Subrata Roy by Tamal Bandyopadhyay for a book titled Sahara: The Untold
Story, Mumbai: Jaico Publishing House, excerpts
of which are available at http://www.livemint.
com/Companies/r4KiscyXXx4bxBPnVyqMVI/
Sahara-hasnt-done-anything-against-the-lawSubrata-Roy.html, last viewed on 24 May 2014.
5 From an interview of Thomas Piketty by Vivek
Kaul, available at http://economictimes.indiatimes.com/features/corporate-dossier/whydoes-thomas-piketty-proclaim-we-want-capitalism-to-be-the-slave-of-democracy/articleshow/35504599.cms, last viewed on 24 May
2014.

References
Vaidyanathan, A (2013): Sahara Asked to Submit
Property Title Deeds Worth Rs 20,000 Crore to
Sebi by Supreme Court, NDTV, http://profit.
ndtv.com/news/corporates/article-saharaasked-to-submit-property-title-deeds-worth-rs20-000-crore-to-sebi-by-supreme-court-370641
Zizek, Slavoj (2010): First as Tragedy, Then as Farce,
New Delhi: Navayana.

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