Left points finger at FIIs, PNs
Left points finger at FIIs, PNs The Left on Tuesday slammed the Manmohan Singh government for the turbulence in the stock market with the CPI blaming the government for the “hyper volatility”.
By TNN |
NEW DELHI: The Left on Tuesday slammed the Manmohan Singh government for the turbulence in the stock market with the CPI blaming the government for the “hyper volatility”. It reiterated the demand for a ban on participatory notes.
The CPM and CPI warned the government against giving concessions to FIIs saying that a surge in inflows can have an adverse impact.
“The finance minister should bear the moral responsibility for the situation,” CPI’s Gurudas Dasgupta said. He said the volatility in the stock market was entirely due to the “unusual encouragement” that government has extended to FIIs for “inflating its foreign exchange reserves”.
The CPI MP sought a Sebi probe saying the “extraordinary phenomenon reminds about Harshad Mehta’s gamble when Mr Manmohan Singh was the finance minister”. He said the government should refrain from asking the LIC and UTI to do a salvage operation. “It is a market phenomenon and should be left to market forces. Only malpractice must be identified for the benefit of small investors,” he said.
CPM polit bureau member M K Pandhe recalled that the finance minister had ignored the RBI’s advice to take steps to phase out participatory notes. He also blamed the situation on insiders trading. “We have been saying the government should ban Participatory Notes,” he said.
The CPM had said unregistered entities were pushing in huge funds through Participatory Notes into the capital markets and engaging in speculative activities. It had also said that the pull-out of funds following certain measures by the SEBI late last year reflected the defiance of the FIIs towards regulatory institutions in India.
The CPM and CPI warned the government against giving concessions to FIIs saying that a surge in inflows can have an adverse impact.
“The finance minister should bear the moral responsibility for the situation,” CPI’s Gurudas Dasgupta said. He said the volatility in the stock market was entirely due to the “unusual encouragement” that government has extended to FIIs for “inflating its foreign exchange reserves”.
The CPI MP sought a Sebi probe saying the “extraordinary phenomenon reminds about Harshad Mehta’s gamble when Mr Manmohan Singh was the finance minister”. He said the government should refrain from asking the LIC and UTI to do a salvage operation. “It is a market phenomenon and should be left to market forces. Only malpractice must be identified for the benefit of small investors,” he said.
CPM polit bureau member M K Pandhe recalled that the finance minister had ignored the RBI’s advice to take steps to phase out participatory notes. He also blamed the situation on insiders trading. “We have been saying the government should ban Participatory Notes,” he said.
The CPM had said unregistered entities were pushing in huge funds through Participatory Notes into the capital markets and engaging in speculative activities. It had also said that the pull-out of funds following certain measures by the SEBI late last year reflected the defiance of the FIIs towards regulatory institutions in India.
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The Left has been seeking a policy that moves towards insulating the financial system from speculative finance capital. The CPM has been asking the government to reverse the capital account liberalisation measures initiated by the erstwhile NDA Government and take concrete steps to reduce the vulnerability of the financial system to the flow of speculative capital.Download
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