Tuesday :: May 18, 2004

Cowboys In India

by pessimist

Things didn't quite go the way those who have been strongly pursuing American jobs for transplantation in Asian soil were hoping. The recent election was a surprising upset (listening John F. Kerry?), with the ruling BJP party toppled by the Congress Party.

It didn't take long for BJP supporters to show their displeasure over that result:

Stock markets crash

Fears over Left parties' influence over the new government today led to a historic crash in the stock markets, wiping out upto Rs 2,00,000 crore on a day, forcing halting of trading even as Congress stepped in to douse the fire and warned of action against manipulators.

3 crore about equal to $690,000 dollars, if I got the exchange rate correct. Another site says 45 lakh crore equals one trillion US dollars. If anyone has better figures, please supply them in the comments section so we can all gauge how big this crash was.

Opening after the weekend when the Congress tied up a coalition in which the 60 member Left front would have a major role, the BSE recorded a 16 per cent fall, 786 points on index, triggered by across the board sell off by foreign and domestic institutions.

The plunge, which started on Friday after the Left parties took a hard line stand against disinvestment, has cost investors about Rs three lakh crores, of which Rs two lakh crore today itself.

Following the unprecedented crash, authorities in BSE suspended trading twice for a total of three hours to bring a semblance of balance.

Not everyone sees market forces at work:

Market crash a deliberate attempt by rightist forces: CPI:

The Communist Party of India said the historic crash of the stock market today was a deliberate attempt on the part of the rightist forces to create a scare after the change of the government at the Centre. "Earlier, the sensex had been artificially boosted up. The BJP was trying to create an impression that India is shining. It has been shown in the elections that it was hard from the truth," A B Bardhan, CPI General Secretary, said here.

"We realise the importance and usefulness of the stock market in present day economy but we also understand that there are certain forces who are creating the speculation and hype," he said adding "we are not at all scared of this and appeal to all those who have any doubts that we are for stability and stable economic growth that helps the poor and not only a section of the rich."

Even on the question of disinvestment the sensex had reacted in a similar manner and "we want to tell that there is no reason for any scare and warn that such steps should not be resorted to, to influence the economic policies of the new government."

As if no good deed goes unpunished, the leader of the Congress Party, Sonia Gandhi, rejected taking the Prime Minister position despite leading her party to victory:

Gandhi 'Humbly Declines' India Leadership

Stunning her supporters, Sonia Gandhi announced Tuesday she would "humbly decline" to be the next prime minister of India, sidestepping Hindu nationalist outrage over the prospect of a foreign-born woman leading the nation.

"The post of prime minister has not been my aim," Gandhi told newly elected Congress party members in Parliament. "I was always certain that if ever I found myself in the position I am in today, I would follow my inner voice. I humbly decline the post."

As head of the party, Gandhi had been expected to become prime minister. But she would likely have led a coalition government dependent on the outside support of two communist parties, who oppose continuing economic reforms such as privatizing state-run companies.

That prospect spooked investors and caused financial markets to tumble Monday, when the Bombay Stock Exchange registered its biggest drop in its 129-year history.

The benchmark index rose again Tuesday on news that Singh could be the new Congress party candidate for prime minister, though it was unclear how his coalition would be any different from the one Gandhi might have led.

Jyoti Basu, a senior leader of the Communist Party of India-Marxist and a Congress party ally, said Gandhi's children did not want her to take the post. "Rahul and Priyanka said, `We have lost our father, we don't want to lose our mother as well,' " he said.

Gandhi's husband and mother-in-law were past prime ministers who were both assassinated. Rajiv Gandhi was killed by a suicide bomber in 1991, and Indira Gandhi was shot to death by her own bodyguards in 1984.

"This is a woman whose husband was killed by terrorists, a woman whose mother-in-law died of gunshot wounds. Of course, there are security concerns," said Jayanti Natarajan, senior Congress party leader.

This story isn't finished. Watch for more trouble and unrest in a nuclear-armed country, with some segments of the population looking to instigate war with their nuclear-armed neighbors China and Pakistan over long-term land and border issues.

This could get really ugly in a flash.

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pessimist :: 4:30 PM :: Comments (7) :: Digg It!