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President Kalam invites Sonia to form Govt

          New Delhi: President APJ Abdul Kalam on Monday invited Sonia Gandhi setting in motion the process of putting in office a Congress-led coalition government. On a day when the 36-member Samajwadi Party and three-member Rashtriya Lok Dal handed over to him their letters of support to the Gandhi-led coaltion, the President noted that the Congress with its pre-poll allies "is the largest political formation in the Lok Sabha. "The President having noted that Sonia Gandhi has been elected leader of the Congress parliamentary party sent a letter at 5 pm today requesting her to meet him this evening or tomorrow morning for discussions as per her convenience," a Rashtrapati Bhavan communique said. While the Congress and its prepoll allies secured 226 seats, it has already got letters of support from the Left parties combine who have 61 seats.

Markets nosedive on reform worries (Go To Top)

         New Delhi: Indian stocks were in virtual free-fall on Monday, wiping out 40 billion dollars in market value, amid frenzied selling on fears a new communist-supported Congress-led government will slow the pace of reform in Asia's fastest-growing economy. The Bombay Stock Exchange and National Stock Exchange suspended trading after their benchmark indices fell 15.5 percent and 17.5 percent, respectively. Both racked up their biggest point drop ever and sank to their lowest levels since late September. Market analysts and brokers said they expected the bear run to continue on the Indian stock exchanges. "I foresee Indian stock markets piercing its earlier bottom in a very short span of time. Because foreign money, which has come into India built on hopes of reform and stablility will flow out of India and 50 percent of it was hedge fund money, which would always go out, come what may, forcing our interest rates, our fiscal deficit to rise because the government at the centre is leftist leaning, it will increase subsidies, reforms will not take place. And I think coupled with rising petrol prices, commodity prices, India is in for a very very bad time," Vipin Aggarwal, director, Longview Research and Advisory Service said in New Delhi. India's communist parties decided on Monday not to join Sonia Gandhi's Congress-led coalition but only support it from outside, adding to investor fears over the stability of a new government. The new government is likely to be sworn in on Wednesday. Despite a central bank effort to brake its fall, the rupee lost 0.8 percent against the dollar as currency traders worried that foreign investment will slow if the new government is seen as less market-friendly. Bonds also lost ground.

          Sunil K.Sinha, Consultant, with a leading economic think-tank, said fears of reforms being cosiderably slowed down, if not stalled, were adding to the mayhem. "The market had a feeling that many of the reforms agenda, which were very much in the pipeline may not see the light of the day. Probably that is one reason why the markets are behaving so erraticaly. In a way its a perception of the investors that many of the policies of the earlier government may not get reversed but at least it may not be pushed further," Sinha who is with the National Council of Applied Economic Research said. Traders said the sharp slide was also due to margin calls - in which brokers have to deposit money with the exchanges to back up transactions - after heavy losses last week. Hundreds of people, including stock brokers and dealers, piled onto the streets outside the Bombay Stock Exchange in an impromptu protest against the incoming government, screaming "Sonia Gandhi Hai Hai (Down with Sonia Gandhi)." Monday's steep share price falls on what was Asia's best performing market after Thailand last year, were led by state-run firms and banks, both of which are likely to be hit if reforms stall. The Communist Party of India, said on Monday it would selectively back stake sales in government companies, but added it was for dissolving the privatisation ministry. Communist Party leader A.B. Bardhan said he favoured stable economic growth. India's markets have been heading down for two weeks since exit polls in the country's marathon elections first signalled that the pro-reform National Democratic Alliance (NDA) may not win a majority. Privatisation was one of the biggest reforms of the outgoing government, helping to attract more than 10 billion dollars in foreign equity investment into India since the start of 2003, driving the Bombay share index to 73 percent gains last year. But foreign funds have now sold 500 million dollars worth of Indian assets in eight trading sessions, equivalent to one-eighth of their total investment in India so far this year.

Manmohan Singh reassures markets, urges Jaswant to act (Go To Top)

          New Delhi: The Sonia Gandhi-led coalition and government-in-waiting today reacted promptly to the collapse of the country's bourses, reassuring investors to not to worry about existing trends, and saying that the situation would stabilise later in the day. Television reports quoted senior Congress leader and potential Finance Minister Manmohan Singh as warning that the government- in-waiting would be carrying out its own probe into what was causing the bourses to fluctuate, and would take remedial action against those manipulators responsible. He also confirmed that he had spoken on the issue with outgoing Finance Minister Jaswant Singh. Indian bourses pressed the panic button again on Monday even as the Sonia-Gandhi/Congress-led coalition inched closer towards forming a government at the Centre. Trading on the SENSEX and the NIFTY was stopped for some time today as the bourses registered their biggest-ever fall in early trading on a bout of frantic panic selling. The SENSEX had shed over 750 points in early trading, its biggest-ever intra-day fall, prompting the market regulator SEBI to step in and temporarily suspend trading. The NIFTY too lost over 180 points.

           Even as traders registered shock at the move, there seemed to be no clear indications about when the trading would be allowed to resume. Suspension of trading is an extremely rare measure, and was last seen during the time of the Harshad Mehta share scam. Market watchers said there was a very high level of selling by foreign investor institutions and other investors in the morning deals, which had lead to the historical fall. The negative sentiment, fuelled by the political uncertainty, came as no surprise, even though its magnitude has sent shock waves through the country. On Sunday, market regulator SEBI had sounded a high alert, and asked stock markets to remain extraordinarily watchful of any unusual movements. "The stock exchanges have to report any unusual movements immediately to SEBI, in addition to taking action themselves", the market watchdog said in a release.

SP, RLD flash letters of support to President (Go To Top)

          New Delhi: The Samajwadi Party (SP) and the Rashtriya Lok Dal (RLD) gave their letter of support to the Congress-led government at the Center directly to President APJ Abdul Kalam. Amar Singh (SP) and Ajit Singh (RLD) handed over the letter here Monday. The development gave immediately after the reports surfaced saying that the CPI-M decided not to join the government. While the SP has 36, the RLD has four members in the 14th Lok Sabha. "We have made easier the Congress' job of forming the government by directly giving the letter of support to the President," Amar Singh said after handing over the letter. He was replying to a question that why they didn't follow the precedent and gave the letter to the Congress president Sonia Gandhi. Flanked by RLD's Ajit Singh, Amar Singh said his party had proved that they want to keep the communal forces at bay. "We have shut everyone's mouth, including the political parties and the media, from saying in future that SP scuttled the formation of a secular government at the Centre." It may be recalled that in the aftermath of Prime Minister Atal Bihari Vajpayee's statement that the SP had come closer the BJP, Amar Singh and his mentor Mulayam Singh Yadav had been vehemently denying of any such development had taken place. They repeatedly maintained that it was a BJP's ploy to create confusion in the minds of the minority community, including the Muslims.

Sonia's tenure as PM likely to be short: Frank Wisner (Go To Top)

          Washington: Even as the stage seems to be set in New Delhi for the Congress president Sonia Gandhi to take over as the country's next prime minister, a former US diplomat to India feels that she might not remain in power for long. According to the Daily Times, former US ambassador to India Frank Wisner on Sunday said that the Sonia-led government might not remain in power for long. The former envoy reportedly said: "It will be a hard-to-manage coalition and you may be back in a general election, then you will have a period of uncertainty, which will affect all the accounts: the Pakistan peace account, the reform account, all the governance issues in India." He said there would be further surprises in store that would show the increasing strength of regional parties. He said the victory margin was so "hair thin" that a reversal in the future was not inconceivable. "I would argue that, given the structure of the coalition put together at the moment, the thinness of the election could very well result in another general election in a year's time. As the mid-1990s show, you could go through a series of general elections, and I am not yet satisfied that we see a formula for a stable government coalition such as we've enjoyed for the past years of BJP rule," he elaborated. About the effect the change-in-guard would have on Indo-US ties, he said: "The Indians will not, be it a Congress - or a BJP-led government, go into a visible, open embrace with us. But they want a strategic relationship." The Congress had a strong record and it would want to stand by on issues like normalisation with China, relations with Pakistan and economic reform.