The Telegraph
Since 1st March, 1999
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Minister talks, market tanks

Mumbai, June 3: The talks went off well, but the talking up did not happen.

Finance minister P. Chidambaram flew into Mumbai to be greeted by a rising stock market yesterday but left with the sound of a crash ringing in his ears.

The Bombay Stock Exchange sensitive index fell over 105 points to close a shade below 4818, though industrialists and foreign institutional investors, the biggest players on the market, made satisfied noises after meeting the finance minister.

“We will do everything in our power to advance the cause of economic reforms,” Chidambaram said.

Mukesh Ambani, who sits at the top of the country’s largest corporate empire, said after the luncheon meeting with the minister: “Of course, the government is reform-friendly. My view is that Prime Minister Manmohan Singh and finance minister P. Chidambaram are like (Sunil) Gavaskar and (Sachin) Tendulkar in one cricket team. What better team can you get'”

Chidambaram himself and industrialists like Venugopal Dhoot and Harsh Goenka, with experience of working in Bengal under a Left regime, mounted a joint operation to dispel fears about the communist supporters of the UPA government.

“The finance minister reminded us that he had held the same portfolio in the United Front government (supported by the CPM) in 1996-98 and reforms were really deepened then. And, of course, Manmohan Singh is the architect of reforms. So, I think it was a meeting that reassured everybody that we are on the right path,” Ambani said.

Bengal chief minister Buddhadeb Bhattacharjee would be glad to know that for once, industrialists spoke well of conditions of doing business in his state.

Ambani said: “There is Harsh Goenka (of the RPG group) and Videocon chief Venugopal Dhoot who operate in Bengal. They shared their experience and said it has been very good.”

Practically everybody is satisfied that the common minimum programme will take the reform process forward
P. Chidambaram

We hope the investment climate will improve substantially

Dominic Price, MD of
JP Morgan Chase,
A Foreign Investor

The important thing is that after many years, infrastructure is
being created

Mukesh Ambani

The stock market is not impressed. Sensex ends the day down by over 105 points

The market fell apparently because it was looking for some positive announcement by Chidambaram. But, as the minister explained, with Parliament in session and the budget a month away, his lips were sealed. He confirmed the budget would be presented in the first week of July.

Arun Kejriwal, a market player, hazarded a guess about market behaviour. “Clearly, the finance minister has larger (investment in agriculture and infrastructure) commitments to meet and lesser resources. The balancing is the crux of the issue. That’s what the market is worried about.”

“I regard myself as the minister for investment. My job is to promote investment,” Chidambaram said. He revealed that from his meetings with bankers he had come away with the impression that the investment drought was over.

He said at his meetings, he tried to answer questions on the alliance’s common minimum programme that “may have appeared ambiguous to some”.

Industry, for instance, was clear that “it is goodbye to strategic sale” of profit-making public sector companies. Ambani put it that way while expressing the view that divestment of Hindustan Petroleum, a profit-making company, was unlikely to take place. With a growing presence in petroleum, his Reliance group might have been interested in the company.

Before lunch, Chidambaram met foreign institutional investors (FIIs). “Our interaction with the finance minister has allayed fears and FIIs are comfortable with the policies and reforms process of the new government,” DSP Merrill Lynch chairman Hemendra Kothari said.

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