Government Cannot escape responsibility for stock market crash

Saturday, March 31, 2001

Press Statement

The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:

The fraud perpetrated by stockbroker Ketan Parekh has led to the loss of over Rs. 800 crore to the banking sector including three nationalised banks. Thousands of small depositors of a cooperative bank in Ahmedabad are threatened with their loss of savings. The scale of this crime is reminiscent of the Harshad Mehta scandal of 1992.

Neither the SEBI nor the RBI have been able to put in place any effective regime to check insider trading, rigging of share prices by a cartel of brokers and misuse of bank funds for illegal trading.

The CPI(M) has been repeatedly warning that under the guise of liberalisation and deregulation loot of bank funds and gross corrupt practices are being promoted.

For the Vajpayee government, this scandal is yet another blot on its disgraceful record. The finance minister, Yashwant Sinha, has a direct responsibility and has much to answer for. He has been systematically trying to boost the stock markets to promote his budget while ignoring the ample evidence of crookedness in the stock market circles. Neither the finance minister nor the government can escape responsibility for the shocking state of affairs in the stock markets and the banking sector.