Unusual for any politician, Shri Kirit Somaiya, former BJP MP from the north Mumbai constituency, settles for an appointment at 8 a.m. after giving the Organiser correspondent Anil Nair the alternative of meeting him at 11 p.m. All through the interview endless phone calls, people barging their way into his room to pass on petitions and party workers seeking his attention caused many a break in his train of thoughts. Yet he maintained his composure all through. The secret of Somaiya'ssuccess seems to be his firm focus and cheerful countenance. Excerpts from the interview:
You have been busy with your Ph.D. thesis on small investors. What was the need for doing it now, though you are identified with the small investors? cause.
I stumbled upon this idea to do Ph.D. on small investors in the Indian stock markets because it is a subject which needs deep study and understanding. And when I am so involved with the small investors? cause, I need to have an in-depth knowledge as well as the acumen to understand the intricacies of the markets. Because, ultimately, investors, especially small investors who put their life'searnings in the market, are most affected by ?trivial? issues of market operations. Second, I get to meet a lot of knowledgeable people, with new ideas and thinking during the process of writing this thesis. It has been one hell of an arduous task, but, very satisfying.
What is your view on the stock market volatility these days and the government'smeasures to bring stability?
The Union Finance Minister is behaving like a bull operator. He is getting involved in day-to-day volatility of the markets; rather, Shri Chidambaram seems to be hard-pressed to ward off any slump in the Sensex. Now that the Union Budget is nearing, he desperately wants a rally in stock prices to cheer another of his ?dream budgets?. He even made a statement in Parliament that he was responsible for the Sensex touching 6000. Does it behove on the country'sFinance Minister to comment on the daily ups and downs in the stock index?
But there are also people who argue that it is the Finance Minister'sjob to protect investors from any meltdown in the markets?
Well, such people are only mixing up the responsibilities. The Finance Ministry should only monitor, through its appointed institutions like SEBI and RBI, the workings of the markets. The job of day-to-day movements in the markets should be left to these institutions which have the wherewithal to do it. Otherwise, the ministry will become a speculator as has happened today. Shri Chidambaram'sstatements are akin to stockbrokers desperately trying to save the markets from sliding further.
Can you specify your concerns regarding the market movements in the light of the Finance Minister'sefforts to stabilise it?
First, Shri Chidambaram should stop politicising the Sensex. There should be a strict vigil to check any extraordinary inflow of funds into the markets which can cause severe instability?like it happened with Harshad Mehta who diverted bank funds to the markets and Ketan Parekh who abused the Overseas Corporate Bodies (OCBs). It is no business of the Finance Ministry to check why the funds are coming in or going out. It should only check if the funds are not coming from genuine sources and if there is any legal discrepancy.
In spite of these checks what if the markets are tumultuous?
Of the Rs 29,000 crore which came in as FII portfolio investments, over Rs 11,000 crore came through hedge funds. If you invite hedge funds, then you should also be ready for the consequences of getting them here. It is healthy to have FII money coming in as they are usually long-term players and are not worried about blips caused in intra-day trading.
How do you view the RBI Governor'sstatement that FII inflow should be taxed to bring credibility?
The SEBI contradicting the RBI Governor is simply not acceptable. One regulator trying to gainsay the other is certainly not in the interest of markets. What is wrong in RBI Governor saying that FII inflow should be closely monitored and that even action should be taken in case of default? Why do we have to wait for the horses to bolt before we close the stable door? Shri Chidambaram, who was unnerved by the recent dip in stock prices, immediately called for an about-turn in the Governor'sstatement because he wants the markets to rise on the eve of his Budget.
What about the Finance Minister'srepeated assertions that the market players, who were responsible for the Black Monday (the stock market melt-down when the UPA came to power in May 2004) would be brought to book?
I am as exasperated with these claims as the investor on the street. It looks as if the Finance Minister has compromised with the manipulators; there seems to be a hand-in-glove deal. Otherwise, instead of making these threats the Finance Minister should have come out with the names of those who rigged the markets in May last year. And probably, SEBI should have taken action against them by now. Why only keep making threats?
There is one more point I have to make. We should attract more and more FII money from countries which possess a better regulatory system than ours. That will bring about automatic checks and balances. You have a problem when you have investments coming through Cyprus, Cayman Islands and Mauritius.
How do you view the Tehelka promoter First Global taking Sucheta Dalal to court?
First Global is trying to stifle the press by taking journalists to court. And even the case is such that First Global is only fighting on a technical point. We support all such writings which bring out the truth just as every small investor will support the cause of transparency in the stock markets.