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Wednesday, March 14, 2001

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Sensex crash: Sinha rules out JPC probe

By Our Special Correspondent

NEW DELHI, MARCH 13. The Government today rejected the Opposition's demand for a Joint Parliamentary Committee (JPC) probe into the crash in share prices over the past few days. The Securities and Exchange Board of India (SEBI) was in the middle of an investigation and specialised investigative agencies would be called in if the law had been violated.

``We are in complete control of the situation and therefore there will be no JPC probe,'' said the Finance Minister, Mr. Yashwant Sinha, while replying to a calling attention motion on the issue in the Rajya Sabha. The Shiv Sena joined the Congress, the Left and other parties in demanding a JPC probe as the SEBI's role in dealing with the stock exchange crisis that began from Dalal Street had left much to be desired.

(According to PTI, Mr. Sinha announced a three-point strategy to corporatise stock exchanges, give more teeth to the 1992 SEBI Act and extend rolling settlement to 200 category ``a'' stocks by July. These steps were in addition to those initiated by the SEBI to improve institutional mechanisms and trading practices in the face of bear-hammering in the stock markets, two days after the presentation of the budget.)

Giving a clean chit to the SEBI Chairman, Mr. D. R. Mehta, despite the Opposition's protests, Mr. Sinha said, ``there is no reason to doubt the competency or the integrity of the stock market regulator'' and that the Government ``cannot accept criticism against the SEBI chief as his integrity is totally above board.''

Surveillance system safe

The Minister also defended the surveillance system saying it was ``as safe as an aircraft black-box'', and refuted a charge by the former Finance Minister, Dr. Manmohan Singh, that some measures taken by the SEBI in the recent past had artificially ramped up stocks of ICE economy companies. The Minister was also unaware of the underworld financing the stock market though he admitted that he ``can't stand and vouch for it.''

While promising to punish the guilty, Mr. Sinha sought to outline the parameters of his reply. ``What we are looking at is not the volatility in share prices but at the issue of manipulation, if there is any.'' He also emphasised that stock markets the world over had been skidding for the past 12 months. ``This is not a phenomenon peculiarly associated with Indian stock exchanges.'' He also asked the Opposition not to evaluate national wealth with the rise and fall of the stock market.

Dismissing suggestions about a laxity on the SEBI's part in waking up to the problem, he felt the regulator had been taking adequate measures to contain the sudden spurts and declines in stock indices. Listing the measures taken by the SEBI in the past few days, Mr. Sinha said the problem of insider trading could not be solved unless stock markets were corporatised. Such a step would put an end to participation of brokers in management of bourses since recent experience had shown that ``it becomes difficult for brokers to resist receiving information they are not entitled to''.

Probing queries

The Minister faced six probing questions from Dr. Manmohan Singh who had initiated the calling attention motion. The former Finance Minister had wanted to know whether the SEBI had acted on its own or was persuaded by the Government; whether the SEBI would investigate the bear as well as bull cartels. Mr. Nilotpal Basu (CPI-M), Mr. V. V. Raghavan (CPI), Mr. Manoj Bhattacharya (RSP), Mr. Kapil Sibal (Cong), Mr. Ramdas Agarwal (BJP), Mr. Prem Chand Gupta (RJD) and Mr. S. Nirupam (Shiv Sena) were among those who participated in the calling attention motion.

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