Mumbai: Five members of parliament (MPs) grew over 1000% richer--among them the Congress’ Jyotiraditya Scindia--and 95 grew over 100% richer between the Lok Sabha elections of 2014 to 2019. The assets of the Congress’ Konda Vishweshwar Reddy of Telangana increased by Rs 336 crore over the five years, more than any of his Lok Sabha colleagues.
These were among the details revealed in a new analysis, which reported that the average assets of 335 MPs re-contesting elections in 2019 increased by Rs 6.9 crore over 2014, a rise of 41%. The best returns on investments over this period, a financial expert told IndiaSpend, came from equities: about 16%.
The five MPs whose wealth rose over 10 times were Sumedhanand Saraswati (Bharatiya Janata Party, 80 times), Abu Hasim Khan Chaudhary (Indian National Congress, 22 times), Sankar Prasad Datta (Communist Party of India-Marxist, 20 times), Shrikant Shinde (Shiv Sena, 18 times) and Jyotiraditya Scindia (Indian National Congress, 10 times), according to data from the Association for Democratic Reforms (ADR) and National Election Watch, both advocacies.
Source: Association for Democratic Reforms
Among the top 10 MPs with the highest increase in assets, four are from the Congress (of which three top the list), three from the ruling BJP and one each from the Nationalist Congress Party, the Shiromani Akali Dal (SAD) and the Telangana Rashtra Samithi (TRS).
The average assets of BJP MPs--170 of 335 MPs who contested again in 2019--grew 31% over the five years, from Rs 13 crore in 2014 to Rs 17 crore in 2019. The SAD’s two MPs grew richer by an average of Rs 115 crore, the Nationalist Congress Party’s four MPs grew richer, on average, by Rs 102 crore and 38 Congress MPs, on average, by Rs 60 crore, according to ADR data.
The ADR analysed self-sworn affidavits of 335 out of 338 MPs, three of whom were not analysed “due to unclear/incomplete affidavits from 2014”, said the report, which found increase in the assets of these 335 to be Rs 23.9 crore in 2019, from Rs 16.8 crore in 2014.
The implication of these data is payoffs or corruption, but Subhendu Harichandan, director at Anand Rathi Wealth Management, a wealth consultancy, cautioned against “painting everybody with the same brush”.
“The inflow may or may not be legitimate,” said Harichandan. “The inflow through legitimate means would be income from salary or business. One has to analyse individual balance sheets to understand their (MPs) asset growth.”
These financial details emerged because the election commission (EC) on February 26, 2019--after a Supreme Court judgement that month--made it mandatory for Lok Sabha candidates to report income-tax returns of the previous five years, offshore assets and permanent account number (PAN) details of self, spouse, dependents and Hindu Undivided Family (HUF).
Under the HUF, a family is treated as an individual and taxed at the same rates as an individual. This provision is usually used by business families and families with ancestral properties. Jain and Sikh families are also governed under this Act.
To contest a Lok Sabha election requires, according to unofficial estimates, between Rs 10 crore and Rs 30 crore, said Rahul Verma, fellow at the Centre for Policy Research, a think tank.
“The average politician in India is richer than the average person,” said Verma. Political parties tend to believe candidates with “dynastic or criminal pasts” win elections, and that belief is easily expressed.
“Most parties in India are centralised (around single families or single leaders), so there is no intra-party democracy,” said Verma.
The MP who grew Rs 366-crore richer
Konda Vishweshwar Reddy of the Congress--India’s main opposition party--from Chevella, Telangana, grew richer by Rs 366 crore since the 2014 general elections, the highest rise among 335 MPs who contested elections again in 2019.
Reddy’s assets increased 69% over the five years, from Rs 528 crore in 2014 to Rs 895 crore in 2019. His assets in 2014 included that of his spouse and three sons (Anindith, Vishwajit and Viraj) filed returns, while in 2019 included his spouse and his youngest son Viraj Madhav Reddy.
In 2014--when he represented the TRS, switching to the Congress in November 2018--Reddy reported movable assets, such as deposits, bonds and jewellery, valued at Rs 482 crore, rising 78% to Rs 858 crore in 2019.
Most of Reddy’s wealth (95% or Rs 820 crore in 2019) came from bonds, debentures and shares in companies. Reddy, his wife and son hold shares of Apollo Hospitals, valued at Rs 466 crore, accounting for 57% of his income from bonds, debentures and shares. Reddy’s wife, Sangita Reddy, is the joint managing director of Apollo Hospitals.
Reddy’s immovable assets--such as agricultural/non-agricultural land, commercial/residential buildings--decreased 18% over five years, from Rs 49 crore in 2014 to Rs 40 crore in 2019.
Konda Vishweshwar Reddy reported liabilities--including that of his wife--worth Rs 35 crore in 2019, up from Rs 7 crore in 2014.
“Most candidates come from a rich background, so they have investments in rent-seeking activities,” said Verma. “Many have assets like industries, factories and petrol pumps. You cannot do politics without economic resources.” And being in politics, as the table below indicates, tends to increase the value of those assets.
Source: Association for Democratic Reforms
After Reddy, the next two MPs who reported the greatest rise in assets were Jyotiraditya Scindia and D.K Suresh, both from the Congress.
Scindia contested from Guna, Madhya Pradesh, and his assets grew 1032% over the five years, rising from Rs 33 crore in 2014 to Rs 374 crore in 2019. Scindia’s wealth in 2014 was inclusive of his spouse and two dependents, while in 2019 it included his spouse, two dependents and the HUF.
Scindia is the descendant of a former Madhya Pradesh royal family, the grandson of the late Jivajirao Scindia, the last maharaja (king) of Gwalior and son of the late Madhavrao Scindia, a former Congress union minister.
Scinida reported movable assets valued at Rs 2 crore in 2014, which increased 2150% to Rs 45 crore in 2019. His immovable assets rose 933%, from Rs 30 crore in 2014 to Rs 328 crore in 2019.
Immovable assets accounted for 88% (Rs 328 crore of Rs 374 crore) of Scindia’s wealth in 2019. Agricultural land under HUF accounted for 55% of his immovable assets, followed by residential buildings (45%), including his own and HUF.
Scindia reported liabilities--including that of his wife--worth Rs 35 lakh in 2019, while in 2014 he reported liabilities (only self) worth Rs 14 lakh.
Shiromani Akali Dal MPs got rich
The SAD, a BJP ally, reported the highest average assets among MPs (Rs 115 crore) in 2019, followed by the NCP (Rs 102 crore), the Jannayak Janta Party (Rs 76 crore), the Congress (Rs 61 core and the BJD (Rs 55 crore).
The impact of the EC order to report finances is evident here as well, since SAD was not among the top 10 richest parties in 2014.
Source: Association for Democratic Reforms
The SAD has two members re-contesting in 2019, Harsimrat Kaur Badal with assets valued at Rs 217 crore, and Prem Singh with assets valued at Rs 12 crore.
Badal was elected from Punjab’s Bathinda constituency in 2014 and was made union minister for food processing industries under the National Democratic Alliance government. She is the wife of Sukhbir Singh Badal, former deputy chief minister of Punjab and president of SAD.
Badal’s declared assets in 2019 were her own, her husband’s, HUF and one dependent. In 2014, her assets were her own and her husband’s.
Immovable assets accounted for 54% (Rs 117 crore) of Badal’s declared assets in 2019. Agricultural land comprised 42% (Rs 49 crore) of immovable assets, of which Rs 45 crore was declared under HUF. Badal declared movable assets valued at Rs 100 crore, of which bonds, debentures and shares in companies accounted for Rs 60 crore.
In terms of percentage increase of assets over five years, Sumedhanand Saraswati of the BJP from Rajasthan Sikar, as we said, reported highest asset growth (8141%), from Rs 34,311 in 2014 to Rs 28.27 lakh in 2019.
Saraswati’s 2019 affidavit reveals declaration of a motor vehicle worth Rs 16 lakh, a major reason for the growth in his assets. He reported liabilities--loans from banks/financial institutions--worth Rs 27 lakh in 2019, while no liabilities were reported in 2014.
Saraswati was followed by Abu Hasem Khan Chowdhury (2244%) of the Congress, Sankar Prasad Datta (2016%) of the Communist Party of India (Marxist), Shrikant Eknath Shinde (1866%) of the Shiv Sena and, as we said, Jyotiraditya Scindia (1032%).
The assets of Chowdhury, an MP from Malda Dakshin constituency in West Bengal, increased from Rs 1 crore in 2014 to Rs 27 crore in 2019. The increase was mainly due to declaration of his wife’s offshore bank accounts, valued at Rs 9 crore of Rs 10 crore listed as movable assets. The 2019 affidavit also revealed a plot of land in Switzerland--under (residential buildings) immovable assets--worth Rs 15 crore in his wife’s name. Both these declarations were not available in the 2014 affidavit.
Chowdhury reported liabilities worth Rs 7 lakh in 2019, compared to Rs 6 lakh in 2014. Shinde reported liabilities worth Rs 12 lakh in 2019, while Datta reported no liabilities.
There are, however, caveats to analysing the growth evident in these declarations.
Why asset growth is hard to analyse
Any analysis of the asset growth of MPs over five years must consider two types of income, said Harichandan of Anand Rathi Wealth Management: from house property (rental income), salary, profits or gains from business or profession, capital gains and income from other sources (such as interest income, dividends and lotteries); and the “market impact of asset classes” and the years MPs have held them.
Although it is hard to predict “inflows”, over the last five years, equities, invested monthly, have delivered the best returns--about 16% return on Rs 50,000 invested per month over this period, said Harichandan. This means, for example, a Rs 30 lakh investment would become Rs 46 lakh.
Real-estate returns depend on the type of property and how many years it was held before being sold, said Harichandan, who spoke of a “multiplier effect” but not more than 18-19%, if the land was purchased between 15 and 20 years ago.
Returns on residential property over five years to 2019 have ranged from 4-5% to 13-14% and commercial property from 7-8% to 15-16%, said Harichand, depressed in general and worsening after demonetisation in November 2016, when Prime Minister Narendra Modi invalidated 86% of India’s currency, by value.
Opaque campaign-finance laws hinder optimal use of asset information.
“We do not know how campaign finance is generated and spent,” said the CPR’s Verma, explaining that while the EC asks candidates to reveal asset information, it is not known if this is analysed.
“I do not think just creating public awareness is going to solve the problem,” said Verma.
(Mallapur is a senior analyst and Salve is a programme manager with IndiaSpend.)
Courtesy: India Spend