Mr Sarma, former secretary of the Government of India, in a letter said the finance ministry should coordinate with MCA, SEBI and RBI to find effective answers to money circulation schemes which do not evidently add any value to the economy but siphon off the incomes of the people
EAS Sarma, former secretary to the Government of India (GoI) said the government should perhaps set up an inter-disciplinary team to investigate the existing companies operating pyramid and multi-level marketing (MLM) schemes and their multifarious links to establish the patterns that have emerged.
“While there are committed officials in Andhra Pradesh (AP) and the other states and professional journalists who have meticulously investigated some of these cases single-handed and brought the culprits to the book, the task that is faced by us is far too formidable to be left to single individuals or a single agency,” Mr Sarma said in a letter sent to finance minister Pranab Mukherjee.
He said, “The team should comprise of Central Bureau of Investigation (CBI), Enforcement Directorate (ED), Revenue Intelligence, Department of Corporate Affairs, the Serious Fraud Investigation Office (SFIO), the Registrar of Companies (RoC), Intelligence Bureau (IB) and investigating agencies from various states. Fast-track courts should be set up for speedy trials. It is possible that the ongoing investigations into the mining scams, land deals, spectrum sales and so on with political links have their tentacles extending into these 'pyramid' schemes”.
In the recent times, one finds a proliferation of unsustainable money circulation schemes initiated by fly-by-night operators with the sole aim of swindling the people and decamping with huge amounts of funds, by offering the gullible public, unreasonably high returns for small initial subscriptions. These are variously known as ‘chit funds’, ‘pyramid’ or ‘matrix’ schemes and MLM schemes, which involve promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public. These schemes do not evidently add value to the economy but siphon off the incomes of the people to fill the pockets of a few, says Mr Sarma.
These schemes have permeated almost all sections of the society today. The operators of these schemes face no hurdles at all in launching their schemes at will and luring unsuspecting people into the trap set for them. It has become commonplace to find each of these schemes collapsing under its own weight, causing immense trauma to unsuspecting households participating in the scheme. Every other day, one finds promoters letting down the subscribers and getting away with thousands of crores of rupees. These schemes, if allowed to operate unchecked, will promote among the people, the urge to gamble and destroy the social fabric of the society.
According to the estimates made by those familiar with these schemes, in AP alone, there are more than 10,000 such schemes in operation today. At the national level, the number could run into lakhs involving hundreds of thousands of crores of rupees, far exceeding the amounts involved in the scams uncovered recently. While the government is spending huge amounts on its social security programmes, these pyramid schemes act counter to them and neutralise their effect.
While there are existing laws such as Indian Penal Code (IPC), the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (PCMCS Act) and others under which concerned agencies could prosecute the culprits, there is no effective mechanism in place to ensure a coordinated approach to identify the fraudulent operators in advance and book them well before they destroy the livelihoods of thousands of households and launder the ill-gotten funds to unknown destinations.
“Apart from the two laws referred above, the transactions involved in these schemes violate several other laws such as the Income tax Act, the VAT Act, the Sales Tax Act, the Drugs & Cosmetics Act, the Food Adulteration Act, Prevention of Money Laundering Act, Foreign Exchange Management Act and so on. Many private and public sector financial institutions are partners in these schemes. It is possible that the funds generated by these schemes are so large that they have links to drug peddling, arms purchases and terrorist activity within and outside the country. These schemes have far reaching implications from the point of view of the security of the country,” the former secretary said.
Realising the pernicious impact of these schemes, several countries (e.g. USA, UK, Canada, Australia, New Zealand, Germany, Sri Lanka and others) have enacted laws to ban them.
In India, AP was the first state to enact a law to ban money circulation schemes in 1965. Both the Supreme Court and several high courts have passed landmark judgements against the operation of these schemes as they violate the law of the land and are detrimental to the interests of the public. There are ongoing cases against Speak Asia and Amway, to cite two examples.
There are infirmities in the existing laws to tackle the problem of these schemes effectively. For example, the penalty for offences committed under PCMCS Act does not exceed a few years of imprisonment and a few thousands of crores of rupees of fine, whereas the schemes act as a “slow poison” in the society; the culprits would have violated several economic laws and have links to anti-national groups and swindled thousands of crores of public money. An urgent review of the relevant laws is called for.
According to Mr Sarma, the central government in conjunction with the states should promote public awareness of the futility of these schemes and their negative impact on the families’ ability to invest adequately on education, health and other essential facilities, he added.
In the letter to the finance minister, Mr Sarma said, “I request the government not to underestimate the need to tackle the operators of these money circulation schemes. In my view, this item should occupy a very high place on the agenda of the ministry of finance. I believe that your ministry should co-ordinate with the ministry of corporate affairs, SEBI and RBI to find effective answers to this problem.”
The consolidated operating revenues of the company for the December quarter stood at Rs457 crore, an 82% jump from its corresponding period last year when it stood at Rs251 crore
New Delhi: Anil Ambani Group company Reliance Power today reported 42% increase in consolidated net profit at Rs204 crore for the quarter ended 31 December 2011 compared to Rs 144 crore in the year-ago period, reports PTI.
“Our 600 MW Rosa plant continues to run at high operational efficiency and financial profitability. The third 300 MW unit at Rosa has been successfully commissioned three months ahead of PPA schedule,” Reliance Power chief executive officer JP Chalasani said.
The company in a statement said that the operating revenues from the 600 MW Rosa Phase I has almost doubled to Rs441 crore from Rs241 crore in the previous year and the net profit for the plant has also increased to Rs75 crore from Rs40 crore in the previous year.
The consolidated operating revenues of the company for the December quarter stood at Rs457 crore, an 82% jump from its corresponding period last year when it stood at Rs251 crore.
Reliance Power said the entire 1,200 MW Rosa project is set to be operational by March 2012, while, the construction activities at the 3,960 MW Sasan Ultra Mega Power Project (UMPP) in Madhya Pradesh progressing as per schedule and the first unit is expected to be commissioned ahead of schedule by December 2012.
“Gas turbines of the 2,400 MW Samalkot Project are ready for synchronisation and power generation and we are well on track to become a 5,000 MW operating company by end of 2012.” Mr Chalasani added.
Further, the pre-commissioning activities have commenced for the first 300 MW unit of the 600 MW Butibori project in Maharashtra and the unit is expected to be commissioned by March 2012.
The project is expected to be fully commissioned by the middle of the year, Reliance Power said.
Shares of the company were trading 0.19% up in post-noon trade at Rs 105.50 on the BSE. Earlier the stock jumped over 1.61% in morning trade to touch a high of Rs107 on the exchange.
There are problems in every city and everywhere the poor and elderly have their own problems, but looking around what is good for us can be replicated if it suits our culture and ethos without compromising on the safety and security of our people
Mumbai is the fourth populous city in the world with a population of over 12.47 million, as per the latest census. So it can never be compared with a small city-state called Singapore, which has a population of 5.18 million and is ranked 38th in the world in terms of population. It is preposterous to compare these two cities, as the former is the capital of the richest state in India; the latter is a single city-state Nevertheless, leveraging technology, Singapore has developed a few very useful systems, which can be duplicated in our cities as well, with a view to improve the lives of ordinary citizens of our country. A short visit to Singapore strikes you at what could be achieved through proper planning and executing the plan with such precision that makes life easier and smoother for the people of the city. In fact its president till recently was of Indian origin and the present deputy prime minister-cum-finance minister is also of Indian origin. Singapore has a population of Indian origin of more than 9% and Tamil is one of the official languages of the country, along with English, Chinese and Malay.
Here I am talking of only three areas of surface transportation of the city which can considerably improve the living conditions in any city and can be implemented with the initiatives on the part of government officials and also the co-operation of the people of that city. I have taken the liberty to suggest these projects for Mumbai, as Mumbai is a city that has an excellent transportation network, a very good civic infrastructure, praiseworthy civic sense among the people of this city, a large number of philanthropists live here and the citizens are responsive to the changes, if it can save the environment for the benefit of the society at large.
The following facts and figures of both the cities would be useful to understand the need for a change in Mumbai which is one of the fastest growing cities in the world.
Electronic Road Pricing (ERP)
The most transparent, flexible and practical solution working successfully in Singapore to control congestion in roads is the electronic road pricing (ERP), which has been systematically implemented for over the last 10 years in this small city-state. The concept simply requires any car passing into the downtown to pay a toll, which is collected through an electronic mechanism without human intervention and without obstructing traffic in any way. And because it is controlled through technology, it is so flexible that the toll can be increased, reduced or even shut off any time of the day,
The scheme consists of ERP gantries located at all roads linking into Singapore’s central business district to discourage usage during peak hours. The gantry system is actually a system of sensors on two gantries, one in front of the other. Cameras are also attached to the gantries to capture the rear license plate numbers of vehicles. At present, there are currently 76 gantries in operation in Singapore and new gantries are fixed where congestion is severe, like expressways, etc.
An electronic instrument known as In-Vehicle Unit (IU) is fixed on the lower right corner of the car windscreen within the sight of the driver, in which a stored a value card or a cash card is inserted for payment of the road usage charges. It is mandatory for all Singapore-registered vehicles to be fitted with an IU if they wish to use the priced roads. They have made the system so efficient that the IU now accepts what is called EZ-Link cards, which are used by all individuals while travelling on bus, train (MRT) and ERP, and this card can be loaded with cash at any metro station where there are plenty of machines located conveniently for the purpose.
The present cost of IU is said to be Singapore dollars 150 which is equivalent to around Rs6,000 as per the present exchange rate. This could be produced much cheaper in India, what with the bright minds we have in the field of technology and innovation.
When a vehicle equipped with an IU passes under an ERP gantry, a road usage charge is automatically deducted from the cash card in the IU. Sensors installed on the gantries communicate with the IU via a dedicated short-range communication system, and the deducted amount is displayed to the driver on an LCD screen of the IU.
The charge levied through a gantry depends on the location and time, peak hour being the most expensive. The ERP is shut off during Saturdays, Sundays and public holidays, so that people can use these very roads on these days without any payment. Foreigners driving foreign-registered cars on priced roads, during the ERP operating hours, could choose to either rent an IU or pay a daily flat fee when leaving Singapore.
If a vehicle owner does not have sufficient value in his/her cash card (or EZ-Link card) when passing through an ERP, the owner receives a notice of a fine by post within two weeks and the violator must pay the ERP charges plus a $10 administration fee within two weeks of the notice. Online payment is allowed; listing just the vehicle registration number is required. Otherwise, a penalty of S$70 is levied by sending a notice through registered post to the vehicle owner, which rises to S$1,000, or one month in jail, if not settled within 30 days. (One Sing $ = approx Rs40 at present)
Whether Mumbai is ripe to introduce such an ERP is a big question mark, as it hinges on what the state government and the municipal authorities feel about the need to control congestion on roads. If not today, in a couple of years when the number of cars may multiply many folds, the government may be left with no option but to start this system in some way or other, as this system prevails in many international cities of the world. So it would be worth the while to experiment now in a limited way, as any project of this type may take a minimum of two to three years to commence and stabilize, subject of course to the support of the citizens. Besides, as most of the traffic in the island part of Mumbai moves from north to south and vice versa, it is much easier to implement this project in Mumbai with minimum gantries compared to any other city in India. To begin with, this system can be introduced only on that part of the city, which allows only cars to operate and no three-wheelers are permitted to ply, like from Mahim Creek to Colaba and Sion Circle to southern tip of Mumbai.
To get the support of the people of Mumbai and to ensure that it does not support inflation by increasing the cost of transportation for common people, the ERP charges may be waived for all public transport—including buses and taxies— and two-wheelers, so that it is confined to only private cars at least initially. There will, no doubt, be objection from the car manufacturers and other business and industrial lobbies, but this project will ultimately provide respite to car owners by a smoother ride and lesser petrol consumption due to faster movement of cars.
The next question is whether it will result in a toll being charged for just coming out of your gate if you live within this central business district, where the system is to be implemented. These users can be exempted by a system of pre-registration of their cars with the authority concerned.
Bus Bays at Bus Stops
In Singapore more than 95% of the bus stops have bus bays attached to them, i.e. each bus stop provides a separate bay for the buses to alight and pick up passengers, so that the buses do not have to stop on the main thoroughfare. This will result not only in faster movement of traffic coming behind the buses without any obstruction when the buses stop at bus-stops, but also prevent people waiting at the bus-stop from spilling over to the roads whenever there is heavy rush during peak hours.
Lack of adequate space behind the bus-stops may have prevented the BEST (Bombay Electricity Supply and Transport Undertaking) to have such a facility in Mumbai, though I understand that there are already a few bus bays in some parts of Mumbai. In the absence of dedicated bus lanes in Mumbai, it is time now to seriously think about expanding this facility to as many bus stops as possible for the purpose of reducing congestion, faster movement of traffic and preventing accidents on the roads, besides, overall improvement in the surface transportation in the city.
The land available in all the roads in Mumbai being limited, this may cost a fortune for the local authorities to even attempt providing this facility. But certainly a beginning can be made at least at bus stops now located in front of government land, if it is available for this purpose. In case of bus stops in front of housing societies, these bus stops can have their names, if they cede any part of the land for this purpose to recognise their contribution to the cause. Many innovative ideas can be floated to get the co-operation of the people and land developers of Mumbai, as this will be one of the simple methods to ease traffic on congested roads and provide some respite to both bus travellers and car owners in this metropolis.
Footpaths for pedestrian movement
It is really a pleasure to walk on the footpaths of Singapore. These pavements are so wide that there is enough space not only for pedestrians to move comfortably, but also most convenient even for wheel-chair users, as these pavements are so evenly laid out that there are absolutely no ups and downs and no obstructions whatsoever. This results in more people preferring to walk for their daily shopping needs to the nearby markets.
It is not uncommon to find narrow footpaths in our country with full of obstructions like hawkers occupying a major part, dogs sleeping comfortably, junction boxes of telecom and transformers of electricity companies laid out in the middle of footpaths, lighting poles indiscriminately placed in the centre with wires hanging perilously and building material dumped not only on the footpaths but also spilling over to the roads, making it impossible for the pedestrians to move, not to speak of elderly and disabled people who have no place even to stand and stare. If the municipal authorities take a little extra care while laying footpaths by ensuring that they are evenly laid out with no potholes and obstructions, it will make life much smoother for the people of any city, more so for Mumbaikars because of the large number of floating population in this city.
Not that everything is hunky dory, as there are problems in every city and everywhere the poor and elderly have their own problems, but looking around what is good for us can be replicated if it suits our culture and ethos without compromising on the safety and security of our people. The whole purpose of the exercise is not only to reduce congestion on the roads, but also to reduce pollution, save precious oil, improve environment and more importantly improve the quality of life of ordinary citizens to the extent possible. If this suggestion receives the interest it deserves, the state government can make it mandatory to use the funds generated from ERP to be compulsorily used for developing road infrastructure in the city without frittering away the funds on any other project. This is, however, only a food for thought for all those interested in improving the plight of the citizens of Mumbai and even if some action is initiated towards this goal by the powers that be with the cooperation of the affected citizens, the purpose of this article will be served.
(The author is a banking and financial consultant. He writes for Moneylife under a pen-name ‘Gurpur’)