BJP executive asks Govt. to be vigilant over all FIs

By Our Special Correspondent

NEW DELHI, JULY 28. Despite an attempt by the BJP national executive committee to focus on the positive economic achievements of the Vajpayee Government, the ruling establishment came in for sharp criticism from members about the happenings in the financial sector, particularly the stock market crash in March this year and the potential of a scam in the Unit Trust of India (UTI).

In fact, the Committee gave out a clear warning to the Government to be extra vigilant in the case of all financial institutions, along with the UTI where the US-64 scheme has practically collapsed, causing distress to some 20 million investors.

The committee's concern about the goings-on in the other financial institutions was articulated to presspersons by the convener of the BJP's economic cell, Mr. Jagdish Shettigar. ``We are also aware of what is going on in other financial institutions, apart from the UTI. In fact, a Reserve Bank report placed before the Joint Parliamentary Committee (JPC) looking into the stock market crash has raised some alarm about the ICICI, IDBI and the LIC. We have asked the Government to be extra vigilant about these organisations,'' Mr. Shettigar said.

He said the national executive members also wanted the possible nexus between the corporate sector and the financial institutions to be probed thoroughly. Asked whether the Government was responsible for the happenings in the financial sector, Mr. Shettigar said this was not the time to put blame on individuals and it would be better to wait till the reports of the JPC and the independent probe into the UTI affairs are available.

However, other national executive members expressed unhappiness in private, saying the Government could not escape responsibility for the scams. While the responsibility for the 1998 UTI crisis could be passed on to the previous Governments, the scams breaking out three years after the NDA came to power had blemished its record of scam-free Governance, they felt. Meanwhile, the executive committee adopted a revised final economic resolution today - the harsh tone and tenor of the earlier draft was toned down - where it focused on the fact that the first two years of the Vajpayee Government had seen considerable economic progress. The third year had turned out to be otherwise because of the overall sluggishness in the world economy ``from which India could not be insulated.''

Consequently, the national executive urged the Government to improve the purchasing power of the rural sector by diversifying farm produce and promoting agro-based industries; facilitating free movement of foodgrains; reducing the issue price of foodgrain for the below poverty line population as had been done recently for the above poverty line people and bringing forward a comprehensive policy package for the promotion of small scale and village industries.

The executive also stressed on maximising returns from disinvestment of public sector equity and, significantly, called for internal valuation of assets apart from valuation by global advisors. This suggestion seems to be a direct fall-out of the allegations of under-valuation of assets in the case of Balco and the likely scenario in the case of Air India.

The committee called for professionalisation of all stock exchanges, strengthening of the Securities and Exchange Board of India (SEBI) and barring investment of mutual funds in private placement of shares at prices higher than the prevailing market price of shares. It was also suggested that the board of trustees and other senior officials of financial institutions should be made accountable for any violation of investment norms.

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