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The Business of Politics

Updated: February 28, 2009, 5:38 PM IST
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This is a simple story of how rich are becoming richest in India. A 36-year young man wanted to start a new business. Several corporates came up with huge piles of cash to help him. Even before one business became fully operational, he decided to venture into another. Again nearly a dozen corporates operating in different domains arranged hundreds of crores of rupees in no time. With the right kind of financial back up, the young man became so successful that his worth has increased by over 200 times in less than five years.

You may be surprised as to how this story of unprecedented success was never reported by any of the business newspapers and channels in the last few years. Surprisingly, this young gentleman never wanted publicity for his success. Infact, he was never accessible to the media. He never spoke to the media about his business plans nor did he make his achievements public. People would have never learnt about his entrepreneurial skills even now, but thanks to Saytam scam, which led the media to write about this gentleman too, though he is in no way connected to the scam.

This young entrepreneur is no ordinary man. He is Y.S.Jagan Mohan Reddy, son of Andhra Pradesh Chief Minister Dr.Y.S.Rajasekhara Reddy or YSR. It seems that Jagan was happy with just the identity of being CM's son. Unlike other businessmen, it appears, that he never wanted media to report about his businesses, although his success story is very very impressive.

Jagan started a power plant in Karnataka in June 2001 with an investment of about Rs.30 crore. Jagan claimed that the plant became almost operational even before his father became chief minister in May 2004. But his career took an upward turn after YSR became the Chief Minister. Jagan floated several subsidiary companies like Caramel Asia, Raghuram Cements, Jagathi Publications and Indira Television. Whenever he needed money, he floated a subsidiary company; allocated shares of that company at a premium to big corporates and raised several hundred crores.

In a very short time, he achieved what others failed to achieve in over three decades. He started a Telugu newspaper and from the day one itself he had 24 editions and is now reportedly selling over one million copies daily. On Feb.24, he also launched a 24-hour Telugu news channel. In less than four years, he has set up businesses in many states in the country and operates in energy, infrastructure, real estate, cement, media and other sectors. Presently, all his businesses put together are worth nearly Rs.20, 000 crore.

What an impressive growth! You would certainly assume that he is part of the Great Indian Growth Story.

From a small power company to a news channel, Jagan ensured that funds do not come in the way to turn his dreams into reality. He floated as many companies as he could, generated shares and sold them to ready buyers. Many BSE-listed companies also invested in Jagan companies. Interestingly, one cement company whose shares never traded at Rs.1000 in the stock market in the last several years, itself bought shares in a start-up like Jagan's Raghuram Cements for Rs.1440.

What is wrong in that? This is what the chief minister and Jagan asked to the media to justify all these investments. Yes, there's nothing wrong in corporates investing in any potential business. But why they invested so open-heartedly in the companies belonging to the chief minister's son raises some doubts. Will they show similar enthusiasm in making investments in similar business ideas of other individuals? May be they wanted the 'son' to also rise.

In the last few weeks while debating on Satyam scam opposition parties have alleged that Jagan received investments also from Ramalinga Raju. Both the chief minister and Jagan out rightly denied those allegations. In turn, they alleged that Ramalinga Raju sponsored Chandrababu Naidu's son Lokesh's education in USA. Of course, Naidu too denied the allegation. Though the political parties are still busy leveling allegations against each other, which may or may not be true, the entire episode has exposed the clear nexus between the corporates and the politicians in Andhra Pradesh. Probably with elections round the corner, Jagan Mohan Reddy, for the first time, interacted with the national media to deny the charges leveled against him and his father.

Jagan says he is being penalised just for being chief minister's son. But opposition says that he is being rewarded for being YSR's son. Each day hundreds of young entrepreneurs approach state-owned finance corporations seeking loans to start a business. Most of them return empty handed as authorities reject their applications on various grounds. They ask for collaterals, guarantors, documents, experience and what not. Each aspiring entrepreneur go through all these painful procedures to get a small loan and most of the time official demand a 'cut' in the sanctioned amount. Private banks lay more stringent conditions and charge high interest rates. For such struggling entrepreneurs Jagan Mohan Reddy should be a huge source of inspiration.

Jagan further said his clout helped him mobilise such huge amounts. "I call Srinivasan my uncle, Puneet Dalmia is my friend, he is of my age, he is married to my classmate. What is wrong in having a clout?" Again, there is nothing wrong in having a clout. Every individual aspires to have a clout. A chief minister's son is bound to have a powerful clout. As they say it's all in the family.

Now all businesses that Jagan own are totally legal and as per the available records, all the investments in his companies were made through proper channels. But that's how the politicians set their own private rules of corporate governance.

Politicians in India are often wrongly accused by poor journalists like me of misusing their power. Then it becomes a 5-year-game of those-in-power and those-not-in-power. And in those years all we get to hear are allegations and counter allegations. Those reporting about Jagan's businesses are now being branded as anti-Congress or anti-establishment. Naidu did the same thing while he was in power and YSR is just emulating him. To avoid such a branding, if not all, some will stop writing about them to protect their own reputation.

Jagan's success is a perfect example of how political power pulls money towards it and how the money gets multiplied, legally. It will be immaterial whether the Congress retains or loses power in the next Assembly elections, as so far, no inquiry was able to reveal how politicians or their children became rich. This time Jagan himself is also likely to contest from the Cuddapah Lok Sabha seat and is most likely to win. Once that happens, then the media, even reporters like me, will write a new profile of another young MP, his ambitions and his vision for aam aadmi. Nobody will bother to track his journey from being rich to richer and then the richest. In India we have the tradition of never exposing the true worth of politicians and their families and this tradition may continue in future.
First Published: February 28, 2009, 5:38 PM IST

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