Five years after the 2010 microfinance crisis, Andhra Pradesh - now a born-again state after the creation of Telangana - has been hit by another financing scam. Under the garb of call money, the poor were told to make a phone call and their money would reach home. The catch: an interest rate of up to 600 per cent.
The seedy side of the scam is the alleged sexual exploitation of poor women borrowers. The arrests made by the police suggest that the key players in the call money scam are politicians from various parties.
The scam dominated the five-day winter session of the state Assembly, with the lone Opposition party, the YSR Congress, targeting the ruling Telugu Desam Party (TDP) to the extent that it could not discuss any other issue. The verbal duel between the two parties led to the suspension of YSR Congress member Roja for one year for making derogatory remarks against Chief Minister N Chandrababu Naidu. The Speaker also temporarily removed 57 other YSR Congress members.
That the scam was busted in Vijayawada, the seat of power in the state post the carving out of Telangana, gave the Opposition more ammunition to attack the government. Names of political leaders tumbled out and arrests were made for allegedly sexually harassing a woman borrower.
"Call money rackets have been prevalent in the state for more than a decade. This is the first time though that sexual harassment has been linked with money lending," said Vijayawada Police Commissioner Gautam Sawang. With at least five cases of sexual exploitation coming to light, the scam has become a cause for worry for the state government.
Sources said the call money business, estimated at over Rs 2,000 crore, enjoys patronage across the political spectrum; socially and financially influential people are also involved.
When Sawang, who unearthed the scam, went on leave, the Opposition alleged the government was responsible for his absence and was trying to shield the guilty. The majority of the suspects belong to Naidu's Kamma community. Eventually, Sawang cancelled his leave.
Political observers said the chief minister's statement in the Assembly that his government would act tough failed to cut ice with the Opposition. Naidu accused the YSR Congress of "leading the scam": He alleged that of the 188 people arrested, 65 were from that party. He told the Assembly that 227 cases, including five of sexual harassment, had been registered in connection with the scam. While 20 TDP, 12 Congress, four Bharatiya Janata Party, six Communist Party of India (CPI), two Lok Satta and one Communist Party of India (Marxist) members had been arrested, 78 others with no political links had also been taken into custody. The government promised to invoke the Nirbhaya Act against sexual offenders.
The YSR Congress demanded that the names of the TDP leaders connected to the racket be made public. "How can you do justice when you yourself are trying to protect the guilty," YSR Congress chief Jagan Mohan Reddy asked Naidu. Reddy alleged that the call money racket had financed two TDP MLAs and an MLC. Reddy also met and petitioned President Pranab Mukherjee on the matter.
Even as the police got cracking and made arrests, the Opposition dismissed the move as an attempt to scuttle the issue.
"The real scam was in Vijayawada, where it thrived with the connivance of TDP leaders," Reddy said. "But the government tried to make it look like an issue where people from all parties were involved."
CPI state secretary K Ramakrishna said Naidu's statement was nothing but a defence of his government's misdeeds and accused him of "cheating the public".
News reports stated that the police had arrested 19 people and seized Rs 23 lakh from them in East Godavari district. The police also picked up two private finance company executives in Visakhapatnam. There were reports that the police were set to conduct a potency test on two people accused of sexually assaulting women borrowers.
Ahead of the Assembly session, the state government ordered a judicial probe headed by a retired high court judge.
Gauging the mood in the state, the Assembly passed the Andhra Pradesh Money Lenders Bill, 2015, that contains penal provisions, including a jail term of up to three years and a fine of Rs 1 lakh. Under the Act, offences would be made cognisable and a designated special court set up for cases related to sexual exploitation. Moneylenders would be given licence within 30 days, said N Chinna Rajappa, deputy chief minister and home minister.
Although the state government made its intention clear with the Act, the charging of exorbitant interest rates from the poor and their exploitation point to the need for making institutional finance easily accessible to them.
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