|For whom the polls toll|
|Tuesday, 08 March 2011 00:00|
Once it became clear the Supreme Court-monitored CBI wouldn’t have any option but to question DMK chief Karunanidhi’s daughter Kanimozhi over the R214 crore given indirectly by DB Realty, one of the companies that benefited from A Raja’s largesse, it was abundantly clear the Congress-DMK relationship was on rocky grounds. Never mind the pious statements made by various government functionaries saying the DMK was fully on board as far as the arrest of Raja and the subsequent investigations are concerned—the immediate crisis appears to have receded with the DMK ministers putting off their resignations. More trouble could occur if the CBI follows through on the new angle that has now presented itself, that Malaysia’s Maxis, which owns 74% of Indian telco Aircel, picked up a 20% stake in the then telecom minister Dayanidhi Maran’s brother’s firm. It is possible, indeed likely, all concerned will have explanations for the investments. The point, however, is that the markets are skittish already and any news of investigations is certain to get them more morose—if that is possible, given how they reacted to FIIs pulling out a small fraction of their investments and the panic over what the developments on Arab Street are doing to global oil prices.
The government is in no danger of collapsing. Not only are efforts on to placate the DMK, but enough others—Mulayam Singh Yadav, J Jayalalithaa—had made it clear they’re not averse to supporting the government. What’s worrying is that things aren’t fully in anyone’s control anymore—the DMK, reports suggest, wants to postpone Kanimozhi’s questioning till the time the elections are over, but the timing is something the Supreme Court will decide in case the CBI decides to go slow. Until the investigations are over, the markets and investor sentiment are likely to remain skittish. Too many large Indian corporates are involved in the 2G investigations for the markets to be able to easily ignore developments. Coupled with a poor FII outlook, especially now that the US economy is beginning to act like a magnet once again, that suggests weak investment outlook. All of which means the government needs to pull several confidence-building reforms out of its hat. A David Cameron having to write to Prime Minister Manmohan Singh on the delays in the Vedanta-Cairn deal can’t be very good news.