How is it that one of the largest-ever embezzlement scams in India, involving unimaginable crones of rupees, occurs in its poorest state?
In India, the judiciary struck once in New Delhi, when the Supreme Court asked the Central Bureau of Investigation to take on national-level politicians involved in taking bribes. While the rest of the country was talking about “Hawala”, it struck next in Bihar, when the state´s High Court directed an enquiry into an affair that goes under the rather unprepossessing title of the Animal Husbandry Department Scam.
Since 1978, it turns out, colluding bureaucrats and politicians of Bihar have siphoned off funds provided by the Central Government for developing livestock in the tribal belt of South Bihar. No one knows yet how much was embezzled, but it could extend anywhere up to 1NR 2000 crore. (For the sake of comparison, the annual budget estimate of the state government for the current year was INR 2400 crore, although no more than INR 650 crore is actually spent on average in any given year.)
No one seemed to have been keeping watch over the officials and politicians as the tribals were cheated of two decades´ worth of valuable support, and New Delhi seemed content to send in money without demanding accountability. The venality was all the more galling as Bihar is the second-most populous, and the most poverty-stricken, state in Indian Union, one that is continuously short of development funds.
As talk of the scandal percolated through Patna´s unkempt streets, it exposed to attack the flanks of Bihar´s flamboyantly rustic chief minister, Laloo Prasad Yadav. For a man who has crafted for himself a Robin Hood-like image as champion of the poor and the minorities, the sudden revelation could not have been more inopportune. As the newly anointed President of the Janata Dal, Mr Yadav was just developing prime ministerial ambitions when the livestock affair came up to gore him in mid-stride. Ironically, it was that other scam, Hawala, which catapulted Mr Yadav to the top post of his party after the resignation of S.R. Bommai, who was “tainted” through being mentioned as bribe-taker in the diary of the mercurial businessman, S.K.Jain.
In April, the general-election related excitement served to divert attention of the populace and the SHD scam seemed to recede into the background. However, the newly energised investigative agencies such as the CBI are unlikely to let the matter rest. Mr Yadav faces a no-win situation—he may not be charged with foul play, but his image cannot but take a beating, as a Chief Minister who knowingly or not allows fraud to proceed on such a grand scale. The tragedy, in a way, is all Bihar´s.
CBI Comes Calling
Prior to the livestock scam, news out of Bihar as presented by the Indian national press tended to be restricted to the whims of the Chief Minister, whether ordering a mass haircut session for scavenger urchins in a surprise visit to their hovels, allowing peasants to park their buffaloes in Patna thoroughfares, or milking his personal cow in front of paparazzi to prove his proximity to the masses.
The livestock affair had been brewing for months, and at first Mr Yadav tried to stonewall investigations. After a raid on the Animal Husbandry Department offices indicated the existence of a racket, he did set up a panel, which reported that INR 1127 crore had been overdrawn by the Department since 1980.
A writ petition was filed in the Patna High Court by Mr Yadav´s political opponents, seeking a probe by the CBI. The Chief Minister pleaded that it was his government´s prerogative to approach the agency, but a Division Bench of the Patna High Court turned him down. The harshly worded judgement of 11 March stated, “It is clear that the excess withdrawals were not isolated acts but they were manifestations and result of a well-knit conspiracy to commit loot and plunder of public money which could not be possible without the support of highups.” The investigations thus far appeared to be slipshod and perfunctory, said the court, and it could not be ruled out that the state government would attempt to influence its own investigators.
The CBI enquiry, as confirmed by the Supreme Court on appeal, is to cover the period from 1977 to 1996, but it has been established that the exchequer was swindled of large amounts during the last five years, coinciding with Mr Yadav´s term in office. In 1996 alone, a whopping sum of INR150 crore was withdrawn from the state treasury for the Animal Husbandry Department, against a budgetary provision of INR 71 crore.
The vouchers that were unearthed by investigators showed cars, oil tankers and even scooters being used to take delivery of and to transport bulls, buffaloes and cattle feed. Payment receipts were faked, and vast amounts earmarked for specific schemes were wholly diverted. All along, the livestock authorities were misusing the mechanism of civil deposits and public ledger accounts, while the auditors in New Delhi were kept satisfied with supposed paper transfers.
The public ledger accounts are those that are placed at the disposal of the state government by the Accountant General for payments related to public sector undertakings, etc. Both civil deposits and public ledger accounts fall in the category of non-plan expenditure, providing (it turns out) enough scope for financial manipulation and swindling of funds. The same is true of central allocations for welfare and poverty alleviation schemes, including the Integrated Rural Development Programme (iRDP, now nicknamed “Integrated Robbery and Dacoity Programmes”).
In the High Court´s view, the facts as reported prima facie constituted “gross financial indiscipline verging on fraud on the Constitution and the people”. It was an irony, it stated, that all this was happening while state government employees were not getting their salary on time, and writ petitions had to be filed for payment of pensions and contractors´ bills.
In his defence, the normally boisterous Mr Yadav claimed that the “animal husbandry mafia” had been trying to do him in by keeping him out of the loop. He also blamed the state´s Accountant General and the Assembly´s Public Accounts Committee. For his part, the Accountant General observed in his report: “The controlling officers failed not only in containing the expenditure within the voted grant but also in making a reasonably accurate estimate of requirement of funds.”
Meanwhile, as many as 75 officers of the Indian Administrative Service of the rank of commissioner, deputy commissioner and district magistrate, are said to have over the years fed in the trough of the livestock boondoggle. The state´s administrative and police cadres are a highly pampered lot, with a large proportion of them is notoriously corrupt. It remains to be seen whether the CBI investigators will be able to nab the guilty in the bureaucracy as well as in the political arena.
How come a corruption scandal of such proportions gets acted out on a subject as dull and droopy as animal husbandry? “Because it is an area of absolute insignificance, an obscure hiding hole through which you can suck the exchequer dry,” says Damodar Thakur, an articulate Cambridge-educated retired professor, and former director of Bihar´s Education Department. He adds, “What the long-drawn affair indicates is collusion from top to bottom, a massive rot that exists in the state of Bihar.”
Why did the Central Government allow the scam to continue unchecked for so long? According to one view, Mr Yadav´s government received protection from P.V. Narasimha Rao because, as Prime Minister, he wanted to have the Janata Dal on stand-by in case he needed a coalition partner at the Centre. There are even those who think that the Congressmen in the Centre themselves consider Congress rule in Bihar (and Uttar Pradesh, for that matter) as inimical to their interests, and hence would rather that Mr Yadav continued unmolested.
For whatever reason the Central auditors turned a blind eye to happenings in Bihar, the animal husbandry scam, it turns out, is just the tip of the dungheap. The livestock loot is only the most outrageous example of all-pervasive corruption that has eaten into the superstructure of the state´s politico-administration. Many other instances of multi-crore venality are now coming to light.
The Questions Committee of the legislature has discovered that a Central allocation of INR 103 crore for the supply of free drugs to leprosy sufferers—the affliction is endemic among the tribal population—was misappropriated. There seems to have been a separate racket involving a whopping INR 10,000 crore meant to subsidise tubewells, irrigation pumps and piping, as well as fertilisers and pesticides. Patna is yet to respond to urgent letters from the Union Rural Development Ministry on the matter.
There are other examples of financial breakdown in a state where the once-prestigious Patna University has mortgaged its library to a commercial bank in order to raise money to pay provident funds and other dues to its faculty. Passenger buses of the state transport corporation were auctioned recently, but there are no accounts of the sales proceeds. There is, similarly, no accounting of INR 65 crores spent on the upkeep of the embankments of the Kosi River.
Meanwhile, allocations for numerous schemes all over the state and amounting to hundreds of crores are being shown as “unspent”, but the funds have not been surrendered to the Centre. They have been either diverted towards salary payments or embezzled, and as much is conceded by senior state government officials who do not wish to be identified.
The Yadav Also Rises
Laloo Prasad Yadav´s rise from penury to chief executive of Bihar is the stuff of myth. One of six sons bom to landless, cowherding parents in a village in Gopalganj District, Mr Yadav moved in his early 20s to Patna city, where his brother served as an orderly at a veterinary college. He became active in student politics, and before long, was elected President of the Patna University Students´ Union, on the strength of voting by Muslim and backward caste students.
Mr Yadav capitalised on this same electoral bank when he ran for state office—the Muslims, Dalits and his own community of Yadavs (traditional cowherds, or gwalas), who together provided him with an unshakeable 40 percent base among voters. When he was first elected Chief Minister in 1990, Mr Yadav turned the clock on the Congress Party, which had ruled the state for much of the period since Independence. The 1995 Bihar Assembly elections saw the Janata Dal increase its lead from 120 to 160 in the House, while the Congress saw a rout, down from 72 to a mere 29.
Having swept into office for a second time with an even firmer grip on the state, Mr Yadav, the Patna intelligentsia had hoped, would outgrow his weakness for gimmickry and get down to the business of providing good governance. While Mr Yadav did start a campaign to attract NRI and other investments to the state, he did not have much time before livestock scam splattered him and everyone in sight.
Mr Yadav pleads that the scam had its origins before his time, when Jagannath Mishra of the Congress Party (at the time of writing a Union Minister in Delhi) was Chief Minister. There are those who believe Mr Yadav. However, there are others, like Prof Thakur, who are convinced that Mr Yadav is personally corrupt: “You have only to go through the list of benami properties he, his family and close relatives have acquired—a house in Calcutta, properties in Patna and Chapra, and all that ostentatious expenditures at political rallies.”
Mr Yadav´s political opponent, Sushil Kumar Modi, who is leader of the Bharatiya Janata Party in the state legislature, predictably, has no doubts either. He says, “The needle of suspicion points to Mr Laloo Prasad because of his open patronage of the kingpins of the scam, including officials of the Animal Husbandry Department who looted public money in collusion with proprietors of fake firms.” Besides the Chief Minister, Mr Modi also accuses former Chief Minister Jagannath Mishra and Jagadish Sharma, a Congress MLA, for stalling on the scam inquiry.
The point to be noted, say Mr Laloo´s critics, is that there has been a sharp increase in the swindled amounts between 1990-1996, which coincides with his term in office. According to tables available, the “excess withdrawals” were INR 29.3 crore in 1990-91, 70.7 crore in 1992-93, 199.2 crore in 1993-94, 245 crore in 1994-95, and 150 crore thus far in 1996. In comparison, the excess withdrawals in the three consecutive fiscal years previous to 1990-91 were INR 6.9 crore, 6.1 crore and 8.7 crore.
Ruling by Hubris
All said and done, Mr Yadav´s sullied image has dealt a great blow to the Janata Dal in Bihar and for the party´s national calculations. Mr Yadav, basically, makes up the party in his state, independent-minded dissidents having walked out to form the Samata Party a couple of years ago.
The Patna elite regards Mr Yadav´s provincialism with exaggerated disdain, and the national English-speaking press rarely misses an opportunity to taunt him. However, the poor and lower castes continue to look up to the Chief Minister, if only as a symbol, thumbing his nose at the national elites on their behalf. Indeed, the far Left forces and the Samata Party looked askance during the 1995 Assembly polls as Mr Yadav raked in the votes of the downtrodden, on the basis of sheer hubris. As one analyst wrote in The Telegraph of Calcutta, “Laloo Yadav was able to successfully woo the oppressed constituencies, speaking a language easily identifiable by the common masses.”
Unfortunately, Mr Yadav does not seem to know what to do with power once he has it in his hands. He has been unable to use the mandate from the populace to bring about some energy and direction in Bihar´s governance. Says a Patna University economist, “Laloo has not been able to replace the old elite with something better. He is not able to deliver because his administrative capability is nil. Besides, he is arrogant and he never takes advice.”
Laloo Prasad Yadav is said to be at his most efficient when he is on the attack, and easily disoriented when forced to react. The livestock scam has put him on the defensive as never before in his political life.
What the tragicomedy of the animal husbandry episode has done is, it has once again placed the spotlight on India´s laggard state. Bihar´s development figures scrape the bottom: the largest proportion of people below the poverty line; the lowest per capita income in all India; stagnant agricultural growth; the worst in public health and education; and a wholly inadequate infrastructure. The criminalised, caste-based politics is a Bihar invention and something that social scientists can only marvel at. “Bihar has landed in the trash heap of the national agenda,” wrote one editor.
It was not meant to be that way. North Bihar has fertile soil and perennial rivers, providing ample opportunity for the state to rival Punjab and Haryana as the country´s green basket, while the southern belt is the storehouse of India´s coal and iron. But historical neglect dating back to British times, when the colonial administrators allowed landlords to hold sway in north Bihar, left a state where the feudal legacy acts as a brake on social and economic advancement. And an “equalisation policy” put in place by Nehru and maintained to this day keeps Bihar from receiving market rates for its mineral wealth.
Bihar, the second-most densely populated region in the world after Java, sends out an army of landless migrants seasonally to affluent states like Punjab and Haryana to provide agricultural labour. Others travel as artisans and labourers to Nepal and the Indian Northeast. The rickshaw pullers of Calcutta are mostly Biharis, although most have now settled there. A tiny slice of Bihar´s upper crust is among the most affluent in the nation, while the overwhelming majority is the poorest in the country. The percentage of the state´s population that lives below the poverty line has gone up from 43 percent in 1987 to 54 percent in 1994.
The various politico-criminal leagues that call the shots in the state include the coal mafia, the cooperative mafia, the education mafia, the land mafia, the public works contracts mafia, the transport mafia and the floods (embankment) mafia. At least 80 to 100 members of the State Assembly, drawn from all parties, are “history-sheeters”. Kidnapping and gun-running are thriving cottage industries.
There are other Bihari woes: the departure of intelligentsia to Delhi and beyond; flight of Bihari capital to industrialised states like Gujarat and Maharashtra; restiveness among the Jharkhand tribals in the south who want to wrest mineral royalties away from Patna; perennial waterlogging and flooding problems to the north; and an education system that has evolved into a money-making racket of fictitious colleges and fake certificates.
“Given the pace of economic degeneration and the mal-governance, there has to be a great famine or an uprising in this state before long,” says a Patna University economist.
It is powerful irony that a Chief Minister who comes from a community of gwalas, and who flaunts his affinity to the masses by emphasising his links to all things bovine, should be enmeshed in a scam that deals with—livestock.
The matter of animal husbandry is but a reminder to the rest of South Asia as to how totally putrefied is the polity of Bihar, a state which has been left alone to set its own standards, at a level whole rungs lower than the rest of the Indian Union. This land of the Buddha´s enlightenment and the seat of imperial power under the Mauryas and Guptas, this producer of coal and steel for all India, and generator of some of the most brilliant bureaucrats and best of intelligentsia in the national scene (check the government offices and university departments in New Delhi for the Sinhas, Jhas and Mishras), is stuck with little else to show for its efforts than caste wars and poverty on a Subcontinental scale. A state that could vie for the topmost ranks, instead scrabbles around for crumbs from the Centre´s table.
In mid-March, Laloo Prasad Yadav called a “Garib Rally” on Patna´s great Gandhi Maidan, in a show of force to counter the court judgement, and to convince others, and himself, that the poor, were firmly in their place—behind the Chief Minister. The self-proclaimed votaries of social justice used official machinery to seize passenger buses, private cars and trucks to transport the public to the rally site. “We will go to the people´s court,” thundered Mr Yadav from the podium. There will be time enough for that.