The Budget that could destroy India
by Bhaskar Menon on 04 Mar 2013 9 Comments

If parliament enacts Finance Minister Chidambaram’s proposals to liberalize the insurance sector, the 2013 Union budget will destroy India. Entirely ignored by mass media pundits, the proposals are that:

-        Insurance companies be allowed to open offices in all Indian cities without prior approval from government; and

-        Banks “be permitted to act as insurance brokers so that the entire network of bank branches will be utilized to increase penetration.”


What makes those innocuous proposals deadly to Indian nationhood is a bill tabled earlier that would:

-        Allow 49% foreign ownership in Indian insurance companies;

-        Let foreign reinsurers open branches in India; and

-        Specifically allow Lloyds of London to set up operations in India.


In combination, those provisions mean that foreign companies and individuals, including those at the heart of Britain’s enormously corrupt financial industry, will be able to collect and dispense money with no oversight or control anywhere in India. In effect, they will bring the global black market into every Indian town and village.


Insurance companies are unique in that they have access to the private details of every covered person and company. In the wrong hands, that information can be grossly misused, to extort, blackmail and manipulate.


Such manipulation was the key to British control of India during the colonial era; to enable them to do the same again is to negate the enormous sacrifices of the struggle for independence. It is a betrayal of blood and honour. The fear that the British will use increased access to the Indian economy to subvert it is firmly founded. As I detail at some length in 1001 Things Every Indian Should Know, Britain has used every opening offered by economic liberalization to do so.


I trace what happened after IMF pressure pushed India into the first market oriented reforms in the early 1980s. One of the new “investment bankers” who arrived in Mumbai at that time was Mark Bullough, a member of the elite Scots Guards unit of the British Army, the traditional foaling pasture for intelligence operatives.


Fresh from the 1982 war in the Falklands, he came to Mumbai as the representative of Hong Kong-based Jardine Fleming, an investment bank with roots in Jardine Matheson, one of the most prominent opium traders of the 19th Century and a company with a reputation for being neck-deep in spooks. (See here for a fascinating blog item by a BBC staffer.)


All kinds of hell broke loose in India during Bullough’s time in Mumbai (followed by stints in Hong Kong and Singapore). Much of what happened was linked to new flows of funds from abroad to violent groups in the country. A brief resume:


1)      In the cataclysmic year 1984 anonymous “rich Sikhs” in Britain, Canada and the United States reportedly funded the drive for an independent Khalistan that pushed Punjab into virtual civil war. In June, the Indian Army dislodged terrorists from the Golden Temple; in October, after a call for Indira Gandhi’s murder on a BBC show (officially protested by the Indian government), she was assassinated.


2)    A month later, an incredible set of multiple safety-system failures at Union Carbide’s chemical plant at Bhopal caused the “world’s worst industrial accident.” It was a clear case of sabotage, meant to implicate a Sikh staffer and set off another round of attacks on the community, but the Rajiv Gandhi government went with the accident-due-to-negligence scenario even though the repercussions killed its bid to attract foreign investment to India.


3)     A few months later, in June 1985, “Sikh terrorists” operating out of Canada were blamed for blowing up of Air India Flight 182 over British waters as it made its way from Montreal to Delhi, killing all 329 people on board. Canadian prosecutors are still trying to prove the heavily circumstantial case.


4)    In 1986 came the “Bofors scandal” manufactured from whole cloth after the Swedish arms manufacturer beat out Britain’s BAE Systems to supply field mortars to the Indian Army. The scandal was pure media hype but it destabilized and helped unseat Rajiv Gandhi; in 1991, weeks before his certain return to power, he was assassinated. (India got the Bofors mortars but only after that company was ruined and taken over by BAE Systems.)


5)     In 1992 came Harshad Mehta’s stock market manipulations using misappropriated funds from several Indian and four major foreign banks. He generated an enormous flow of funds just as “rich Hindus abroad” were supposedly sending their hard-earned money to Hindutva extremists, making possible the mobilization that led to the demolition of Babri Masjid and the rise of the BJP to power in Delhi. (Interestingly, National & Grindlays, now Standard Chartered, refused to take legal action to try and retrieve its reported loss of $130 million to Mehta.)


6)    Mehta’s stock frauds, the demolition of the mosque, communal riots in several cities and the 1993 terrorist bombing of the Bombay Stock Exchange, all projected a deeply negative image of India, again blunting the Narasimha Rao government’s push to open up the economy to foreign investment. 


7)     In 1994, a British national, Peter Bleach, was arrested from an aircraft that dropped crates of AK-47s, rocket launchers and ammunition for use by the Ananda Marg, a violent Hindu cult in West Bengal. During his trial in Calcutta on a charge of waging war against the Indian State, his lawyers argued that MI-6 had organized the flight and that Bleach was only a contract employee; they produced a tape recording of a phone conversation to support that claim. Bleach was convicted and sentenced to life in prison in 2000, but was released in 2004 after persistent representations by the British government culminating in a private chat between Tony Blair and Deputy Prime Minister Advani on the eve of the 2004 Indian general election.


All this underlines that the British cannot be trusted to behave like the normal run of foreign investors in India, especially at a time when a global economic crisis is looming.


Surely, Mr. Chidambaram is aware of all this, so we must interpret his action in one of three ways.

-        He could be driven by ambition -- The Economist mentioned him approvingly as a viable Prime Ministerial candidate; 

-        He (and the Congress leadership) might be fearful of another spate of subversion that could include a nuclear attack by British proxies in Pakistan; or

-        He/they are unable to face down London’s demands because they are compromised in some way.


In those equations the ordinary people of India are viewed as helpless pawns, as indeed, they are. Only a quantum jump in political awareness can change that. Unless we do something to bring about that change India will have to win its independence all over again.



PS: Mark Bullough surfaced in Iraq in 2003 as a partner of Aegis Defense Services, a London based company founded by fellow Scots Guards operative Tim Spicer. It got a $293 million contract to create what was then the largest private army in the world. In August 2010, the Basler Zeitung reported that Aegis Defence Services had moved its base to Basle, Switzerland, and that its partners were Spicer, Bullough, the former British Chief of Army Staff Peter Inge, and two former members of the Foreign Office.

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