|Vajpayee's real job begins now|
|Saturday, 31 March 2001 00:00|
The government, going by various events over the past week, appears to be finally getting over its post-Tehelka paralysis. No major economic decisions have been made, it is true, but the process has begun with the Cabinet meeting to decide on hiking support prices for wheat, announcing of the guidelines for Direct-to-Home telecast, and a group of ministers near-finalising a package for the revival of the vexed National Textiles Corporation. And to show that he’s sensitive to the public perception of high-handedness in the Prime Minister’s Office, Vajpayee has been threatening to wield the broom here for the past several days. And, finally, the statement by Home Minister Lal Krishna Advani that the government should have concentrated on the lacunae highlighted by the Tehelka Tapes instead of just looking for conspiracies also shows it’s growing up.
Of course, for poor Mr Vajpayee, the problems have only just begun. First, as the Tehelka Tapes highlighted inadvertently, the country’s top intelligence agency, the IB, didn’t have a clue as to what was being planned in the Capital. Not only was it unaware, it interrogated Tehelka’s Mathew Samuel as early as October when he was visiting various defence ministry personnel, but still never figured what Tehelka was plotting. The IB failure, of course, comes on top of the RAW failure in Kargil, when that agency never got even a hint of Pakistani intrusion a witch hunt is clearly not the solution, but India’s intelligence agencies have got to be fixed, and it’s up to the PM to figure out how this is to be done.
It goes without saying, the situation in the country’s stock markets is equally, if not more, grim. Whether you blame successive finance ministers for not giving the stock market regulator enough powers to deal with the matter, or whether you blame SEBI itself for not forcing the issue all these years, the fact is that India’s markets are almost completely rigged. Several cases of what looks like insider trading regularly surface with the press highlighting huge increases in scrip volumes just prior to mergers the latest being the Global Trust Bank one. But it was only after the huge public furore over rigging and the operations of the bull and bear cartel following the budget, that SEBI began investigating the matter. Ironically, within a few days of beginning its investigation, SEBI said that there was a prima facie case of rigging!
And after the Finance Ministry forced SEBI to begin its investigations, and weighed in by asking the CBI and the Income Tax authorities to raid the brokers as well, massive evidence has been unearthed about how select brokers were rigging shares, were taking massive short positions, and were allowed to freely ramp up prices of shares of their choice. Evidence exists, of how brokers were getting price-sensitive information from stock exchanges they controlled, and of how they ensured different stock exchanges had different settlement days since this helped them. Now SEBI can argue, with some justification, that not all of this such as the presence of slush funds in the markets is its job. And that with just 20 officers in the surveillance department to monitor the activities of 8,000 companies and 15,000 brokers and intermediaries, its job is impossible.
What’s even more frightening is the attitude of the country’s top bank regulator, the Reserve Bank of India. Forget sleeping on the job, the RBI has got away by claiming that a lot of banking supervision is simply not its job! In the case of the Bank of Rajasthan, to cite just one example, as this newspaper detailed some weeks ago, the RBI simply ignored evidence presented to it by the Central Economic Intelligence Bureau (CEIB) that the Tayal Group had a chequered past, and should not be handed control of the bank without a serious investigation of the matter the charges included an income tax notice on the group for producing fictitious bills worth Rs 145 core to avoid taxes, massive diversion of funds, and using the benami route to take control of the bank.
When quizzed on why the RBI slept on the job, top officials privately give the view that the RBI’s job is not to examine audit trails, it is to ensure that banks have enough funds and that their balance sheets are healthy in the Tayal case, therefore, his background didn’t matter. What did, instead, was his promise to bring in more funds into the bank. On the face of it, you can’t really quibble with the RBI’s view which, incidentally, is much like SEBI’s that its primary job is to ensure stock exchanges have enough funds to avoid a payments crisis.The point, however, is that if monitoring audit trails and financial irregularities is not the RBI or SEBI’s job, then whose is it? If it is that of the CBI and the Income Tax department, then whose job is it to ensure these agencies are brought in at the right time and appropriate place?
Passing the buck is an age-old tradition, particularly in India. But, as you know, Mr Prime Minister, it finally stops with you.