New Delhi, May 17: The bottom fell out of the stock market on Manic Monday — but the politicians weren’t bothered that the retail investor was losing his shirt and had no hope of rescuing his investment by selling stocks that no one wanted to buy.
Instead, the politicians chose to bicker: the Left parties said a couple of market players, who were in cahoots with the outgoing BJP government, were clobbering stocks to spark a scare.
A.B. Bardhan, the CPI general secretary, sparked the war of words early this morning when he said that the market mayhem was “a deliberate attempt by the rightist forces to create a scare over the forthcoming change of government.”
Bardhan blamed some sections of the BJP and the Rashtriya Swayamsevak Sangh (RSS) for the stock market crash. He said the outgoing government had created a speculative bubble in share prices “to create the impression that India is shining”.
The BJP riposted that the Left had no real mandate to set the economic agenda for the nation — and in any case they weren’t joining the Congress-led government.
“Left leaders are making outlandish statements aimed at hijacking the mandate. This is indirect political pressure with an element of economic adventurism to disturb the sentiments of the market,” said BJP leader Arun Jaitley.
He hoped those drafting the agenda for the new government would keep this in mind and not allow themselves to be subjected to pressure from those, particularly the Left parties, who want to enjoy power without sharing responsibility.
“Those who understand the management of the economy should look at the outlandish statements made by the Left leaders that are undermining the confidence of the investors,” Jaitley said. “It is sad that such people should be in management of the economy.”
The markets have wobbled all of last week ever since the Left aggressively set about trying to scupper the selloff of public sector units (PSUs) by raising the demand for the closure of the disinvestment ministry.
Manmohan Singh, the original architect of economic reforms in India and widely tipped to take over the mantle as finance minister in the new government, tried to once again reassure the frazzled markets by promising to put together a common minimum programme that would be “pro-growth, pro-savings and pro-investment”.
Bardhan also attempted to assure the markets that his party would play a “responsible” role in the government.
“There should be no apprehension about the Left’s role. We will form a government that will be stable,” he said. “Therefore, there is no reason for any section to be scared.”
But the market was in no mood to hear mere promises; it wanted clearly enunciated precepts. And that was something that no one was able to provide — at least not yet.
The nervousness in the market has been exacerbated by the dissonant voices that it has been hearing about the new government’s economic agenda. While the Left has spoken about an end to the selloffs, the Congress has been quibbling on the issue. It has said there would be no disinvestment, but selective privatisation would continue.
The politicians said they were mystified by the market’s visceral reaction to the developments in Delhi. “I cannot understand the panic in the market,” said Congress leader Pranab Mukherjee. “It’s just an overeaction.”
Nilotpal Basu of the CPM said: “What’s new' The market has fallen even during the NDA government’s regime. In any case, I am told the Asian markets are falling and that this is part of a secular trend.”
Bardhan said the foreign institutional investors were to blame. “The foreign investors have been selling heavily.” He said there had been an irrational exuberance in the market that speculators had whipped up ahead of the elections and that was why the market was now falling. “It’s okay; there’s nothing to worry about.”
Mukherjee said the Congress government was shooting for 8-10 per cent growth in gross domestic product and its thrust would be on boosting industrial and agricultural growth. When asked for specifics, Mukherjee said: “Wait for common minimum programme.”
There is no clear idea when the common minimum programme will be ready. Singh said it would take three to four days. Mukherjee, who has the responsibility of preparing the draft along with Singh, said it would take four to five days.
The market — which collapsed in two brief trading sessions of just 17 minutes before the state-owned financial institutions started buying stocks under instructions from the finance ministry to prop up the faltering bourses — could founder again unless the twaddle ends and some clarity emerges.