Days after Vijay Mallya’s extradition notice was approved by the UK government, Union minister Nitin Gadkari asked if the embattled liquor baron could still be called a “willful defaulter” if he repaid his loans for 40 years.
Mallya is wanted in India on several counts of alleged fraud and money laundering, to the tune of about Rs 9,000 crore. The former transport minister thought that it was unfair to tag a one-time loan defaulter as a thief.
Here’s what he said about Mallya
At an economic summit organised by the Times group in Mumbai, Gadkari reminded those gathered of a loan Mallya had taken through the Maharashtra government-owned entity Sicom which he diligently paid back with interest for 40 years. If a person who was repaying the debt for 40 years, and due to some issues he is not able to meet his debt obligations later, can you declare him a willful defaulter? Gadkari, who now holds several key infrastructure ministries, asked.
Praising his clean track record with duly paid installments, Gadkari further added that it was only after entering aviation that the defunct Kingfisher Airlines’ founder started facing problems and could not repay loans.
Claiming that in view of the risks involved in business ventures, Gadakari argued that if the mistakes are bona fide, entrepreneurs facing difficulties must be lent adequate support.
If Nirav Modi or Vijay Mallya have committed fraud, then send them to jail, but if we label everyone who is in financial trouble as fraudsters, then the economy will not progress, he opined, blaming the banking system for the NPA crisis and for not supporting debt-driven companies.
Opinion on RBI
Instead of helping sick companies, Gadkari proclaimed that Indian banks make sure they die. According to him, the RBI should continue to be an independent body but it should also support the economic vision of the central government.
Even if we accept RBIs autonomy, it is the responsibility of the central bank to support the vision of the government. We havent destroyed it (RBI as an institution) in any way, he said, asking, if the finance minister gives an economic vision for the country then isnt it binding on the RBI to support that vision?
Calling for a transparent and corruption-free system to fast-track decision-making, Gadkari also wanted key government decisions to be made binding on every institution. Further asserting his opposition to RBI’s complete autonomy, he claimed that if the central bank wants to be autonomous, it has to also accept all the blame for failed economic policies, and be answerable to the masses, instead of the government or the finance ministry.
How Gadkari responded to criticism
Criticised for his soft stance on Mallya, who is likely to face considerable prison time after his extradition to India within the next 28 days, Gadkari later clarified, “I had said that if Vijay Mallya has done any wrong and an investigation is underway on him, then the investigation is right and suitable.”
ANI further reported that he said that his statements had been taken out of context and that he had no business dealing with Mallya, though he stood by his view that banks should support businesses facing ups and downs for the economy to progress.
The Mallya trial
During his extradition trial in The Westminster Magistrates’ court in London, Mallya’s counsel had also claimed that the huge loans he took from banks (and later defrauded on) went into keeping his now-defunct airlines functional. Just weeks before the final hearing, Mallya had tweeted, With respect where have I defrauded Banks ? I did not borrow a single rupee. The borrower was Kingfisher Airlines. Money was lost due to a genuine and sad business failure. Being held as guarantor is not fraud.
In June 2017, the ED had filed a chargesheet under the Prevention of Money Laundering Act (PMLA) alleging that Mallya owed 13 banks some Rs 9,000 crore, and had fled to the UK on March 2, 2016, after the consortium led by SBI closed in on him. The Ministry of External Affairs submitted an extradition request to the UK in February 2017, which was cleared by the UK government the following month. Mallya had approached to stave off his deportation and extradition, but last week, the court rejected his plea and directed his return to Indian within a month.
Prarthana Mitra is a staff writer at Qrius