Travels through the Hindi belt: Chhattisgarh govt struggles to assuage investors, agents duped in chit funds during BJP's tenure
Over 400 cases of irregularities have been registered against chit fund companies in Chhattisgarh. The Congress government is struggling to assuage those who lost their money.
Over 400 cases of irregularities have been registered in chit funds in Chhattisgarh.
The Congress government is figuring out a policy to return money to more than 2.70 lakh people.
Several agents convinced others to invest in these funds, and now find themselves burdened with guilt
The Raman Singh government, instead of going after the directors of the companies, had cracked down on agents.
The Congress government has now decided to withdraw cases against the agents.
Editor's Note: This is part of a multi-article series on the jobs crisis in the three states crucial to the 2019 Lok Sabha elections — Chhattisgarh, Bihar and Uttar Pradesh.
He got a job through a state-organised employment fair. He didn’t have it six years later. In between, he lost 10 lakh rupees, and a lot of face among his family and friends.
Based in the Parsada village in the outskirts of Raipur, the capital of Chhattisgarh, Lakshminarayan Chandrakar, 57, and his family depended on their 4.5-acre farmland for livelihood. “But when the state decided to build Naya Raipur, our farmland was acquired,” he says, clad in a white shirt and trousers.
Naya Raipur, or New Raipur, is an upcoming city in Chhattisgarh, 17 kilometers south east of Raipur. It is currently serving as an administrative capital of the state, and is supposed to be a hub for trade and industries. “In 2006-07, we were offered a rate of Rs 5.9 lakh per acre and a job in return,” says Chandrakar. “We agreed. But we haven’t got anything yet.”
A year after he had lost his land, and thereby his livelihood, unemployed Chandrakar stumbled upon an advertisement of a job fair in a local newspaper. A chit fund company had been looking to recruit agents. “I thought the state has issued a notification of an employment fair, it is a good opportunity,” he says. “I went there, and got the job. There were thousands that had come. Many of them got employed that day.”
As an agent, Chandrakar’s objective was straightforward: get people to invest in the company. In return, he would get a commission of 5 percent on the amount his customers would invest. He also had to recruit more agents, which is what is required in a normal pyramid scheme, which promises exponential growth of investment.
However, to convince others to invest in the chit fund company, Chandrakar had to gain people’s trust. “I invested my own 10 lakh rupees, which helped me sell the scheme to my relatives and friends,” he says. “I had saved it up after years of hard work. Every agent did the same thing. The chit fund companies had licenses. They had state sanctions. It seemed like a safe bet.”
As things stand today, over 400 cases of irregularities have been registered and the Congress government is figuring out a policy to return money to more than 2.70 lakh people who had invested over Rs 1,105 crore in close to 200 chit fund companies operating in the state, according to newspaper reports. It turned out to be a scam.
Chandrakar says, “I had managed to persuade 35-40 of my family and friends to invest. In total, they have invested close to Rs. 2 crores. They are devastated, and they blame me for it.”
The agents have been living with that guilt since. Anita Verma, 50, got into it because she separated from her husband, and has to look after herself. “There were several agents operating where I live in — Patan, which is 30 kilometers from Raipur,” she says. “I didn’t have a job. I got into it, and convinced several others to join in.”
Even today, Verma’s customers harass her through repeated phone calls. “It was their hard-earned money, so I don’t blame them,” she says. “But most women would have been broken by now. I started selling sarees for a while, but every village I wanted to sell sarees in had an investor who would ask for the money back. For the past 3-4 months, I have had no source of income.”
Virendra Pandey, all-India president of the Swabhiman Party, a lesser-known political outfit in Chhattisgarh, who has been raising this issue in the state, says thousands of those agents — who were also investors — in the chit fund setup were either unemployed youth looking for a job, or farmers or labourers wanting get out of farms to make their ends meet due to the agrarian crisis. “The chit fund scam has rendered all of them jobless,” he says. “They are either back in their farms or looking for odd jobs without any security.”
According to CMIE’s figures as of January 2019, Chhattisgarh’s unemployment stands at 7.7 percent, 0.4 per cent higher than India’s. When CMIE did a detailed research between May and August 2018, it found that 26 percent of Chhattisgarh’s youth aged 20-29 were unemployed. In Raipur, over 96,000 people have registered at the District Employment Centre as of January 2019.
But when the irregularities in the chit fund investments came to light initially, the BJP-led Raman Singh government, instead of going after the directors of the companies, cracked down on agents. As many as 286 of them were arrested between 2012 and 2018. Pandey says the state went after “soft targets”.
One of them was Bhupendra Hirvani, 51, who spent seven months in prison. “What was my fault?” he asks. “I did my job. Some of these chit fund companies were inaugurated by ministers, including Raman Singh. Why wouldn't they seem credible? I had invested Rs 10 lakh of my own from fixed deposits. I lost that, and I was jailed too. I am the only earning member of the family. I have two kids. For seven months, my family went through hell.”
Ahead of the Assembly elections, being the Opposition party, Congress blamed the Raman Singh government for allowing the scam to fester under their nose. The agents, in the meantime, formed their own union to demand justice, to which the Congress leaders extended unconditional support. The party even included their demands in its manifesto.
In December 2018, Congress swept the assembly elections with 68 out 90 seats, unseating the 15-year rule of Raman Singh. The government has decided to withdraw cases against the agents. But a policy is being devised to return money to the duped investors, when the promise was to do so immediately. The first budget in February 2019 was dedicated to the farm loan waivers. In an event organised by the teachers' groups, which are waiting for their own promises to be realised, Chief Minister Bhupesh Baghel said the next budget would focus on their demands. “The duped investors and agents are in a queue,” says Pandey. “They are looking for jobs in the meantime.”
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