Indian economy is a bizarre concoction. After being throttled for years by Soviet Russia-style constraints and growth rate ridiculed as ‘Hindu rate of growth’, it finally opened to the world in 1991, thanks to GATT. Yet, can we call India’s markets totally ‘free’? Charges of crony capitalism are levelled every day, where there is active collusion to maintain a monopoly in the market. Investigative journalist Shantanu Guha Ray sheds light on one such case, where market forces and politicians-bureaucrats allegedly actively colluded to finish off competition to a major Indian bourse.
Here, a little background information is necessary. The wikipedia entry on Jignesh Shah reads thus: The NSEL case, also called the NSEL scam or NSEL fraud, was a systematic and premeditated fraud perpetrated in the commodity market from 2007 to 2013 by National Spot Exchange Ltd.
A ‘commodity exchange’ as per Investopedia, is an entity determining and enforcing rules and procedures for the trading of commodities and related investments, such as commodity futures. Commodities exchange also refers to the physical center where trading takes place.
In the NSEL case, the bourse was asked by the Forward Markets Commission to stop all trades extending 11 days settlement. There were no fresh funds to pay off the old customers, and the company unravelled.
Ray claims, with documentary proof, that the action against NSEL was a conspiracy hatched by influential persons, including the then Finance Minister P Chidambaram and some other mandarins from the Finance Ministry, to keep the monopoly of the NSE, by crushing the competition, which was NSEL.
All other reports call the scheme a Ponzi one. People have lost money in the process. In other words, Shah had overreached and allegedly took too many shortcuts.
However, what is also true, as Suhel Seth notes in the book’s foreword, is that the Bombay High Court has observed that no money trail was established to NSEL.
The trail was established to 24 defaulting brokers of NSEL. The brokers, mind you, not the company. With all the wheeling-dealings as established by Ray in the book, Seth argues, a real ‘Make In India’ story was killed much before the initiative was even launched.
The scope of the conspiracy is mind-boggling. Ray’s claims do need to be properly investigated by the concerned authorities. Monopoly is, after all, poison for a competitive and free market.