How Jagan Mohan Reddy is compensating hundreds of thousands of victims of AgriGold deposit scheme scam

Andhra Pradesh chief minister Y.S. Jagan Mohan Reddy, on August 24, clicked symbolically to credit nearly Rs 667 crore into the bank accounts of over 700,000 people towards compensation for their lost deposits—ranging from a few hundreds to Rs 20,000—in the defunct AgriGold Group. The business entity had launched collective investment schemes without regulatory approvals and collected crores of rupees. With the release of this large sum to the gullible investors, the total compensation paid to around 1.04 million depositors has crossed Rs 905 crore.

In the first tranche, the state government had released Rs 238.7 crore in November 2019 to 340,000 AgriGold victims, who had deposited less than Rs 10,000 each. About 386,000 depositors in this category are among those who were compensated on August 24. Another Rs 459 crore was paid to 314,000 others who had invested Rs 10,000-20,000 each.

Jagan assured that his government, which had identified the victims of the multi-state scandal through ward and village secretariats, was committed to compensating all those duped. Further, the government would ensure that properties of AgriGold were monetised and the money recovered given to the depositors to the extent of losses incurred by them.

The AgriGold scandal is pegged at Rs 7,000 crore, affecting nearly 3.2 million poor depositors across Andhra Pradesh, Tamil Nadu, Telangana and Karnataka. The Enforcement Directorate (ED) had filed a money laundering case under provisions of the Prevention of Money Laundering Act. The directors of AgriGold Group, Avva Venkata Rama Rao, A.V. Seshu Narayana Rao and Hemasundar Prasad, were granted bail by the Telangana High Court in March 2021.

The opposition Telugu Desam Party (TDP) had promised to ensure justice for AgriGold depositors soon after coming to power in 2014. But it was hamstrung as investigations pointed to an alleged collusion of TDP activists in several districts. In spite of that embarrassing discovery, the TDP government issued an order to compensate 879,000 victims with a payout of Rs 785 crore just two months before the 2019 assembly election, and then put it on hold.

“While travelling through districts in the run-up to the last assembly election, I had directly heard from the victims of AgriGold cheating. They shared their agony about losing their hard-earned money and requested me to help recover it. The victims ranged from daily-wage labourers to middle-class families, who had trusted the AgriGold management and deposited their earnings,” recalled Jagan Reddy, referring to his Praja Sankalpa Yatra. With that he transformed the recovery and release of depositors’ money into political mileage for himself.

Jagan pointed out while the TDP had done little to recover the money, his Yuvajana Sramika Rythu Congress Party (YSRCP), on assuming power in 2019, had kept its pre-poll promise of doing everything possible to compensate the duped investors. He alleged that leaders calling the shots in the TDP government had tried to acquire the assets of AgriGold through dubious means by taking advantage of the situation.

“AgriGold was established during the TDP government in 1995 and the scandal also came to light during Chandrababu Naidu’s rule,” says L. Appi Reddy, MLC and convenor, YSRCP AgriGold Victims’ Relief Committee. Though the AgriGold Group was mobilising funds and promising lucrative returns without clearance from the Reserve Bank of India, it eventually became a huge scandal that involved 3.2 million investors, including close to 2 million from Andhra alone. Low investments (deposits of less than Rs 20,000) alone totalled to about Rs 1,150 crore, leaving a larger trail of victims than most deposit-based scandals.