BJP economist demands JPC probe into stock market crash

New Delhi, May 21: The BJP today demanded a Joint Parliamentary Committee probe into the stock market crash and the involvement of Foreign Institutional Investors in hammering the market by more than 1100 points in just two consecutive trading sessions.

Mr Jagadish Shettigar, a member of the economic think tank of the BJP, said the conduct of Finance Minister P Chidambaram was not above board as he failed to prevent the crash, resulting in crores of investor wealth being wiped out and the retail investors had a raw deal.

He accused the FM for vicissitudes in his stand relating to Central Board of Direct Taxes circular which drew a distinction between stock traders and investors and triggered the crash.

Mr Chidambaram, he charged, had said the CBDT circular was a democratic process of eliciting information from the public but changed his stand by the night stating that there was no such circular, Mr Shettigar, a former Member of Prime Minister's Economic Advisory Council told UNI.

He said he had seen reports that vested interests in the Government prevailed upon regulatory bodies like Reserve Bank of India and Securities Exchange Board of India who wanted to tighten the havala money being routed through FIIs. "This aspect needs to be probed because this lax attitude has caused the crash", he said.

Mr Shettigar expressed his anguish, over the dubious manner in which Fidelity Advisors (FA) Series, a US based FII was given tax exemption through a decision of the Advance Authority for Ruling (AAR), although it had an permanent office in India and traded in stocks.

"I had forewarned Prime Minister Manmohan Singh way back in October 2004 against granting such 'special favours'. "This move set the ball rolling and the stock index took an unprecedented leap ever since," he said.

He said if the Government was really honest, it should have appealed against AAR decision in favour of Fidelity Advisors and now there were 70 such entities in the queue.

His own estimation was that the revenue loss was at least Rs 1,000 crores to the exchequer because of this concession considering that it was a one time trade on an investment of eight billion dollars. Actual revenue loss would be much higher because these FIIs were also short term investors and the frequency of trading determined the revenue accruels.

UNI