Use Sahara’s unclaimed funds for financial sector, not pre-election freebies

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₹16,000 crore to markets watchdog Sebi to refund investors. Now with the death of its founder Subrata Roy, the Centre seems to be weighing the option of transferring the corpus to the Consolidated Fund of India. A report in The Economic Times on Monday said that the government was looking at the legality of transferring the funds to the consolidated fund with few investors coming forward to claim money even after a decade.

These funds, which have now swelled to over ₹25,000 crore, after accumulating interest could be used for pro-poor programmes or for public welfare, the report said quoting officials. Would that be a wise option? It would be tempting for any incumbent government to use such “windfall gains" to announce schemes, especially with elections around the corner. However, it is doubtful if any such scheme, unless it is well-targeted and executed, will provide medium and long-term benefits.

It may be easy to justify transferring these funds to the Consolidated Fund of India considering that only over 17,000 investors had applied for refunds with the outgo being just ₹138 crore. In March this year, the Supreme Court, which had originally approved in 2012 the appropriation of funds after all refunds and if the securities market regulator was unable to find out details or whereabouts of the bond investors, allowed the transfer of ₹5000 crore from the refund corpus to the Central Registrar of co-operatives. This was to refund depositors of the cooperatives promoted by the Sahara group.

The deadline for providing refunds through this window too will end soon. And besides the Rs.25,163 crore Sahara refund corpus the regulator and agencies are still trying to reclaim over ₹60,000 crore from the group. According to