By Abdul Kalam Azad,
TMC MP Kunal Gosh’s arrest perhaps has refreshed your memory of the horrific Saradha scam. If not, let me remind you. Saradha group of companies looted thousands of crores of rupees from the poor people of the states of West Bengal and Assam. It is alleged that West Bengal Chief Minister Mamata Banerjee was fully aware of the detailed functioning of the company and her party was getting maximum benefits from the satellite television channels and newspaper owned by the company. Kunal Gosh claimed that those media houses were working under the direct instructions of TMC. In fact Mr. Gosh claimed that he was compelled to sack one of his editors to satisfy Didi! Same things happened in Assam. Saradha CMD Sudipta Sen himself alleged that a powerful minister of Gogoi cabinet, top cop of the police administration, journalists and even so called artists were benefitted out of his fraudulent company.
Saradha was not the only company to loot the hard earn money of the poor investors of the state. There were many other ponzi companies like ABYSS, Ramel etc etc. We also noticed the operation of the fraudulent pyramid companies like Unipay2You, Royal Forex, Sambav etc in Assam. Those companies also looted thousands of crores. Some of the perpetrators were booked and many got spared.
Another such possible threat of pyramid scheme is going to be exposed through this article. It may be shocking for you to know that this time government welfare scheme National Pension System (NPS) is going to be used as a tool to fool the poor people of the state by some pyramid fraudsters.
National Pension Scheme is a social security scheme by government of India. It is meant to provide a secure retirement life to the citizen of the country keeping in mind the inflation, rising cost of living as well as increased life expectancy. Swavalamban Yojana is designed for the workers of unorganized sector under NPS. It is expected that the scheme will benefit the poor workers to great extend. Under this scheme if the subscriber pays a minimum yearly contribution of Rs. 1000 and maximum Rs. 12000; government will contribution another one thousand to their pension account i.e. Permanent Retirement Account Number (PRAN). This scheme will continue to till FY 2016-17 and may be extended also. No doubt it’s a very good scheme for the poor unorganized workers.
Now let’s see how the pyramid fraudsters are planning to the fool those poor unorganised workers. In the first week of this month (Nov’2013), an NGO is registered under the Societies Registration Act 1860. The organization has designed such a plan that you even can’t raise question to their noble (?) initiative! They will organize awareness camps to promote Swavalamban Pension Scheme (PRAN CARD). To get involved with the campaign you need to donate only Rs. 500/-. Yes! This is not a big deal. In fact they will be helping the poor to get their legitimate entitlements! But they have different plan to benefit you as well. What is the actual plan?
The subscriber needs to pay Rs. 500/- and the organization will liaison with the Point of Presence (PoP) to open his/her NPS account. Pension Fund Regulatory and Development Authority (PFRDA) have identified 58 PoPs all over the country. PoPs are basically banks (both PSU and private), private financial institutions and Department of Posts. The next move is very interesting. The subscriber will be qualified for an income as soon as he adds three subscribers (A, B and C) in his immediate downline and A and C again add three subscribers each as their immediate downline. The first subscriber (Top of the pyramid ToP) will get a bonus of Rs. 200/-.
Now calculate the total amount received by the organization. The organization had added 13 NPS subscribers so far and had collected Rs. 6500/- from the bottom of the pyramid (BoP). The organization will be incurring the expenses Rs. 1300/- for their PRAN card and Rs. 200/- as bonus to the ToP. Thus their net profit is going to be approx Rs. 5000/- from the one single ToP!
Remember if the ToP somehow fails to add a single subscriber he/she will not be eligible to get the bonus amount of Rs. 200/-.
The organization has also a very lucrative award and reward plan. If there is a 100 pairs of countable (A and C only constitutes countable pair, B is not countable!) subscribers, the ToP subscriber will get a tab and if there is 25000 such pairs under the ToP, he will get a Skoda car!
Let us make it easy to guess the total benefit of the pyramid organization from such single ToP subscriber 25000x3x400=30000000. Yes, you are not mistaken; the fraudster can earn a hefty amount of approx Rs. 3 crores! So, giving a skoda car as incentive is not a big deal! We shouldn’t forget that the huge income of the fraudster is nothing other than the great loss to the poor people of the state.
Now let’s examine why such scheme is viable to operate in Assam only. The reason behind the rise of ponzi schemes like Saradha, Jeevan Suraksha, Ramel etc is same with the case of this pyramid schemes. Lack of financial literacy, financial inclusion and the anti-poor attitude of the formal financial system are the major reason behind this menace. Financial literacy is a must to protect the financial vulnerability of the poor of the state. Moreover, the status of financial inclusion is worse in Assam. Business Correspondent model ‘Swabhiman’ has become a liability for the banks. At the same time the 58 PoPs identified by Pension Fund Regulatory and Development Authority (PFRDA) are not poor friendly. The fraudsters can read the weakness of the financial system in Assam and they are making cash on it.
This fraud scheme is reaching the interior parts of the state like wildfire. Districts like Barpeta, Nagaon, Dhubri etc are more prone. In fact a huge network has already been built within a couple of days. Some of the subscribers are even thinking that this is the only way to get the PRAN card!
The fear is not only to lose the Rs. 500 alone, but to lose the entire life savings of the poor unorganized workers. Our fear is based on some crucial documents. We have accessed some documents which clearly indicate that even some of the government machinery is also involved in this fraud campaign. We are not disclosing those documents here to help the administration to nab the fraudsters.
We hope, government will wake up and take action against those pious frauds.
(Abdul Kalam Azad is a Post Graduate student at Tata Institute of Social Sciences.)