CHIDAMBARAM WOOS INVESTORS

India’s finance Minister, Mr. P. Chidamabaram, did the impossible though unavoidable. He went down to Mumbai on October 29 specifically to woo investors in the financial capital and specifically to talk of its people’s proven ability and expertise as well the mega polis’s ever increasing interests in attracting investment to take all of the country forward.

Come to think of it there was a shade of manner in ways he went about it in post-election Congress-led Central Government to carve Mumbai out as say Shanghai in China as a showpiece to the world to draw investors out in and to India.

For not only did he talk of “open gateway to foreign direct investment as well as for Indians to go (investing) global,” but also of targeting Mumbai’s interests and developing it as a global outsourcing hub for financial services and a trading hub for bullion and currency markets.

How splendid!

But he also did the unthinkable. He surely was to do it. Inasmuch as investors were required to be encouraged because of the severe shock they had suffered before. But the way he did it appeared to hurt investors rather than assuage them. He talked of the market crash of May 17 which was after the country had voted Congress and the party had enlisted Left members of parliament for support to form a government.

Bombay Stock Exchange’s Sensitive Share Index slumped that day 565 points as the crash wiped out Rs.1, 24,00,00 million of investors’ money. Recalling Chidambaram said the Securities and Exchange Board of India, the equivalent of the SEC, was now completing its inquiry into the crash which, he said, was “caused by irrational behavior and perceived fears and anxiety.” e then observedHe then observed that the “culprits are being brought e to book.”

“Culprits” in investors, Mr. Finance Minister? Or simply bewildered people?

SPITZER's SPOOKS

No man or woman is not law to himself or herself. Not in free and democratic society. This may be saying truth in a negative sense. But negative some times makes matters truly positive. Indeed, the one on the street can speak his mind above even the law maker and demand his contention be heard. Unquestionable then when an attorney general like New York’s Eliot Spitzer speaks up, he not only is in all rights and even earnest, but also paid all attention.

So when last week Spitzer discovered that insurance companies paid brokers contingent commissions to buy prospective cover, he sort of sent shockwaves through the insurers as well as companies, financial markets and investors.

Nothing untoward. It’s Spitzer’s business to tell the world how and where the people in authority may be putting them at risk and even serving their interest rather than of those they are to meet.

But in all fairness and much appreciation of AG’s enterprise which borders effervescence, so often Spitzer has looked churly in his outbursts whether at people, like New York Stock Exchange’s former Chairman and CEO, Mr. Richard Grasso, companies, federal fund managers, listed brokers and their security analysts, even informers and the SEC chairman, Mr. William Donaldson.

In the instant case of contingent commissions by insurance companies there are certain qualifying conditions particular to the nature of business. What is more, the companies observe them in their much honored and time tested ways and manners. Maybe, Spitzer knows. Insurance companies in any case do. So they know.

The conditions to briefly enumerate are that in first place the commissions are provided for contingencies as different from normal insurance, secondly, they are payable by the companies to the insurance brokers in case contingency arises and finally, the companies must provide, as must the clients, consent in a contract to cover a contingent situation.

Spitzer surely can pinpoint eventuality. But the parties to the situation can meet the situation as and when it arises. Above all, it is insurance, and not chicken, for insured or insurer to take a chance. The implications otherwise can be far more complex and far reaching.

Spitzer, nevertheless, has made out a case against insurance companies, subpoenaed several, allowed insurance stocks to rile the market and hit investors. On the one hand, some believe the AG has rendered insurance stocks that are at the center of it rather cheap and certain to rebound as the dust let loose by Spitzer settles.

The question then is does Eliot Spitzer remain the AG he is, or also be the market regulator he is, and as which he appears inspired as would believe he may welcome to be as well vis-à-vis his compatriots?

Is it then simply spooks and sensation for him? Or is it also serious purpose?

For regulator’s writ and realm run larger than the Attorney General’s.

SINGH's SILLY CAPERS

Something very farcical recently happened in India, which made Prime Minister Manmohan Singh attempt some silly capers. He did it to bail out his pal, Mr. Montek Singh Ahluwalia, and maybe he was happy as P.M. he had stood by his handpicked man. But the upshot of it was it had followed uncalled for pressure by Communist MPs supporting the Government from outside. The question then is how far is Singh going to bear with them?

Septuagenarian Communist MP who long served West Bengal as Chief Minister, Mr. Jyoti Basu, protested Ahluwalia chairing the Planning Commission as Deputy Chairman at the behest of the Prime Minister, who on assuming office had summoned him to take up the post.

Ahluwalia was Manmohan Singh’s sure bet to ensure his influence as the Prime Minister in the muddle of post-election politics in the country. But the Communists derided Ahluwalia, as he was a former finance secretary at the World Bank.

Apart from the Ahluwalia issue, the Communist MPs were also protesting the Planning Commission’s appointment of World Bank and IMF representatives on various committees to consult on economic progress. However, Basu zeroed in on Ahluwalia himself.

Singh did the ultimate to let his pal stay. He ordered disbanding all consultative committees of the Planning Commission, including Members of Parliament, among them Communist MPs as well.

Singh may say he had his way as P.M.
Did he?

CHIDAMBARAM's ASSURANCES

Indian Finance Minister, Mr. P. Chidambaram, in New York on October 7, told the international business community that the Indian Government was “serious” about raising the limit on foreign direct investment in aviation, telecommunications and insurance, from 40 to 49 per cent, from 47 per cent to 74 per cent, and from 26 per cent to 40 per cent, respectively.

It so happens Chidambaram has already proposed to make the increases in the Union budget he presented in July. Why repeat them? He had a reason maybe. For he declared the increase in aviation would happen in one month, in telecommunications in the “near future” and in insurance on “approval” by parliament.

Distant, yet nevertheless, on the horizon. So is Chidambaram preparing investors in the meantime? Could they care less? Investment seeks opportunity. Welcome when available. Lost if not around there. No squabbles. No regret.

Why continue to have assurances then without any implementation? And that, too, from the finance minister of a country?

The real reason for Chidamabaram to come to New York and speak up was to tell the 61 communist members of parliament supporting the Congress-led government from the outside that it was implementing the budget proposals.

Even as the budget is passed by parliament, the proposals are still on paper, as they are opposed by the communist MPs. Chidambaram from NY was telling New Delhi MPs what the Government was going to do. He even set some limit in time.

It's a game of wait and see. Not for the international investing community but rather the Government itself actually.

NO DESPERADO

President Pervez Musharraf of Pakistan is caught between stools. Staging a coup and seizing power by banishing the civilian government five years ago, he pledged to step down in favor of elected representatives.

This was when the whole world frowned at him on another military dictator coming to power in Pakistan. Leaders demanded he set the timetable. Pervez was obliged. He called the National Assembly elections under a new constitution. Its 17^th amendment expressly said he would remain leader as President but would step down as the army chief by the end of this year.

Pervez now is told to honor the commitment. But he is not willing now.

Last month he told 96 per cent of his people want him to be the Army Chief-cum-President. He did not say if that is indefinite. But certainly it is to be that past the set deadline of December 31, 2004.

Islamic Alliance of fundamentalists, which is dominant in the National Assembly, is vehemently opposed to it. What’s more, although President, Pervez cannot enforce the change. Even the military dictator must honor the national assembly, after having elected it to government.

So the national assembly having passed the Constitutional amendment to have him out as Army Chief on December 31 is meeting now to pass another Constitutional amendment annulling the earlier one and continuing with Pervez as Army Chief along with President after the end of this year.

But from dictator Pervez has turned demagogue claiming 96 per cent support of his people. Why not be a leader then and be with them a commoner instead of military general?

Good question the man-on-the-street may say. But the commoner also knows the answer perhaps. So does Pervez certainly.

Even as demagogue Musharraf does not want to be a desperado.

For all one knows the day he hands over military command he may be kicked out as President.

MANMOHAN SINGH’s POLITICS

Prime Minister Manmohan Singh develops an urge for politics. To show perhaps he is not apolitical. Or perhaps to illustrate he is the Prime Minister in his own right, not a nominee, filling in for Congress Party president, Mrs. Sonia Gandhi, who picked him in her place to the post. His own party bigwigs do not believe he is the P.M. But now he wants to show he is.

What better chance to do it than when he was asked to visit Mumbai prior to the state assembly elections in Maharashtra due October 13. He is to be out in the state campaigning for his ruling party . On October 6 he opened the front with India Inc. addressing a news conference in Mumbai. After all, who must address India Inc. but Manmohan Singh?

A Press Trust of India report quoted him saying that in face of the corporate sector’s opposition to job reservation, P.M. Manmohan Singh advised them to initiate steps in this regard voluntarily. If big business did not “volunteer” on its own, he warned it would be difficult for it to oppose a “national policy”.

“Nobody can oppose an idea, whose time has come,” he declared at the conference, saying “those opposing the move will not be able to do so once a national policy is put in place.”

Holding India Inc. down thus, he however ruled out immediate policy in this regard.

The politics speak clearly. But before Manmohan Singh takes to politics, the reformist guru may consider the following.

• Are jobs to be created? Or is it that they can be reserved?

• What about growth? Growth can create jobs. Job reservation can stifle growth itself.

• Whose idea is it of a “national policy” of job reservation?