Financial Daily
from THE HINDU group of publications

Thursday, July 26, 2001



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Debating the latest flops

Menka Shivdasani

THIS is not a good week for the Vajpayee government. First, it gets lambasted from all sides for the failure of the Agra Summit, then the Finance Minister comes under fire thanks to the UTI scam. At times like this, you can be sure you will get to see so me great television.

STAR News must have wondered what hit it when it invited Messers Sitaram Yechury, Kirit Somaiya and Jairam Ramesh to discuss the UTI controversy on Tuesday. You knew it was going to be a lively session from the start because they kept butting in even whe n the STAR News presenters introduced them. Then, as the discussion proceeded, the three brandished papers about and yelled at each other, with Mr Yechury insisting that the Finance Ministry had to take responsibility for the ``gigantic fraud'' and ``uns crupulous corruption and nepotism'' that had taken place. Mr Yechury turned out to be the loudest of them all, and I thought his vehemence had to do with concerns about the small investor till I realised after reading the newspapers that his party, the C PM, had also invested in the US-64 and lost a lot of money. No wonder Communists hate the markets!

Mr Ramesh, appearing in an ``independent capacity'' and not as a Congressman, was far more restrained than the other two, though he was forthright about the ``collapse of corporate governance'', and of the fact that he refused to believe that the Finance Ministry ``with its antennae out'' did not know what was happening.

Through all that noise and rhetoric, there was one important point that emerged, and it was made by Mr Ramesh. ``The UTI episode demonstrates the need for the Government to get out of running financial institutions,'' he said. ``The only way out is to fi rst implement the Deepak Parekh report and then withdraw from running these institutions.'' If that is done, then perhaps some good will have come out of this sorry episode.

It was a point that economist, Mr Swaminathan Aiyar, made a little later on Mr Subhashis Gangopadhyay's Crossfire (DD Metro). Mr Aiyar's opponent on the show, Mr Jagdish Shettigar of the BJP Economic Cell, defended the UTI package that was announced this week, saying that the interests of the two crore investors had to be protected. (Noble sentiments, and he must have certainly believed them. He even managed to ignore the fly that was constantly hovering around his nose and lips.)

Mr Aiyar, on the other hand, felt that the move to buy back units at a pre-determined rate -- a move that essentially meant that the UTI had committed itself to administered prices over the next two years -- was not a good idea. ``The UTI has turned out to be an unsustainable social contract,'' he said, ``and there is a need to disband the US-64 and the way it is structured''. Mr Aiyar believed that this should have been done away with in 1998, when the first bail-out package was announced, making it cl ear that it was not sustainable. ``The UTI has taken a huge gamble that the stock market will revive in the next two years,'' he said.

Mr Shettigar spoke of the importance of this fresh package as being one way of ensuring the credibility of government-controlled institutions. However, the point that Mr Aiyar was making was that the Government should move away, since social contracts we re an anachronism in today's competitive markets. Mr Gangopadhyay, who clearly seemed to agree with him, posed an interesting question. When Mr Shettigar referred to having ``reservations'' even about SEBI, he asked: ``Why is it politicians have reservat ions about every institution and yet never leave it to the market?'' It was a question to which Mr Shettigar had no answer.

The Agra Summit was another subject of hot debate this week. Ms Barkha Dutt's guests on We the People this Sunday included Mr Amar Singh, leader of the Samajwadi Party, Mr Salman Khurshid, Chairman, Policy Planning, AICC and Ms Tavleen Singh, a journalis t who has travelled extensively in Pakistan. Mr Khurshid, who was very critical of the way the Summit had been handled, did not bat an eyelid when it was pointed out that the Congress had caused the problem in the first place. ``If we have created the pr oblem, give us a chance to solve it!'' he said. Ms Tavleen Singh was the most coherent of the speakers. She believed we needed third party mediation and pointed out that Gen Pervez Musharraf was the man responsible for the Kargil war, and summed up the A gra Summit thus: ``Gen Musharraf did not come here for the Summit. He came here to tell his people something and went back a hero,'' she said.

In a week that had several very watchable programmes, Mr Karan Thapar did an unusually warm Face to Face interview with Mr Ratan Tata. Mr Tata spoke of how, as a young boy when even telephone calls were uncommon, he came back from Los Angeles because his grandmother missed him, and how he was ``deeply offended'' when, within 15 days of returning, he was sent to the shop floor in Jamshedpur and told he would have to use a bicycle like all the other apprentices. Even at that age, he had so much pride that he preferred to walk instead.

Mr Tata was also very open with Mr Thapar (did we really hear him say he regretted not marrying and that if he met the right person, it would still not be too late!). He came across as a man with a great sense of humour. Mr Thapar asked him about his mim icry skills and Mr Tata responded with: ``I will mimic you as soon as this show is over!'' What a pity he did not do it right there on the show, but then Mr Tata would be too well-mannered to embarrass his interviewer, even though Mr Thapar is reputed to have quite a sense of humour as well.

If there is one strength that Mr Thapar has, it is drawing out people who are known to be particularly reticent. He once got Ms Maureen Wadia to talk about how, immediately after her wedding, the newlyweds sat like two ``banias'' on the bed, counting out all the money they received as wedding gifts because they were so broke. The interview with Mr Tata was not quite in the same league, but it was just as memorable.

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