Though the UPA can boast of a massive popular mandate, the new Cabinet will be heavily influenced by the powerful corporate sector, says Shantanu Guha Ray
TWO INCIDENTS in two key Indian cities last week reflected the intrinsic but hidden link the corporate world has with Indian politics — or rather, with politicians.
In Mumbai, the country’s financial capital, brokers watched in awe as the share indices surged nearly 15 percent within seconds of opening on Monday, May 18, triggering circuit breakers that halted trade, first for two hours and later, for the day. Investors were clearly celebrating a sweeping election victory for the ruling United Progressive Alliance (UPA) coalition.
In New Delhi, top corporate captains weighed the powerful mandate the voters had handed the Congress party.
Brokers in Mumbai said this was the first time a circuit breaker had been triggered by a rise in the Bombay Stock Exchange (BSE) and that the benchmark 30-share BSE index rose 14.7 percent to 13,963.30 points, the highest since September 23, 2008. The 50-share National Stock Exchange index jumped 14.48 percent to 4,203.30, also an eight-month high. Earlier, the BSE said its index had risen 10.7 percent before the halt. “It is surprising, since the turnover was not much. It’s very hard to understand how the circuit breakers were triggered when the volumes were so low,” said TS Harihar, vice president, ICICI Securities. Circuit breakers are based on moves of 10 percent, 15 percent and 20 percent, using the close of the previous quarter as a base.
What surprised the Congress was Mukesh Ambani’s fascination for the Third Front
“There has been a combination of a number of factors that pushed the market. The broader market indices on the BSE has outperformed the benchmarks. Led by the smaller companies, the market breadth has been positive,” says stock analyst Hemen Kapadia. Of the 13 sectoral incides on the BSE, the public sector index gained the most, rising 2.75 percent.
A report released by the government showed that the headline inflation rate held near a three-decade low, enabling the Reserve Bank of India more room to cut its key policy rates. “Western investors are on a high on the stability factor of the Indian market,” says one of India’s top brokers, SP Tulsian.
While the markets rallied, in Delhi, corporate czars pushed their agendas, aware that a stronger Congress meant a coalition free of pressures from its former Left Front supporters and a potential fillip to the reforms process. While it was known that Reliance supremo Mukesh Ambani was keeping a close eye on the formation of the Third Front and had a number of meetings with NCP leader Sharad Pawar and CPM General Secretary Prakash Karat, the elder Ambani brother soon distanced himself from the formation and was keen to have Murli Deora retain his petroleum minister’s portfolio and Kamal Nath — failing that, current Planning Commission Deputy Chairman Montek Singh Ahluwalia — get the coveted finance ministry. “The elder Ambani has always had direct access to 10, Janpath. Unlike some other top industrialists who hailed Gujarat Chief Minister Narendra Modi as an economy shaper, he chose to word his sentiments very carefully. The only thing that surprised the Congress was his fascination for the Third Front. But that is a thing of the past,” a tycoon tracker told TEHELKA.
Mukesh Ambani’s top man, Sandip Tandon, has seen his wife, Anu Tandon, elected to the Lok Sabha from Unnao in Uttar Pradesh on a Congress ticket, while Rajya Sabha MP NK “Nandu” Singh, is already tracking Nitish Kumar for the mantle of the country’s richest man. Ambani’s representatives in Delhi are in touch with senior member of the DMK, amid speculation that the Congress’ Dravidian ally would demand more berths in the Cabinet (it had seven in the previous government), boosted by its impressive showing. Efforts are also on to gauge the mood of the Trinamool Congress.
But Ambani is not the only Indian industrialist who wants to have a hand in shaping the Cabinet’s structure. Telecom tycoon Sunil Bharti Mittal was once keen for a Congress ticket from Jalandhar, and will certainly want to have a hand in the appointment of the telecom minister — previous incumbent A Raja clearly certainly did not meet with his approval. Capital sources say the Ruia brothers (Sashi and Ravi) along with Jaiprakash Gaur (Jaypee Group) and Punjab liquor baron Ponty Chadha are still smarting under their miscalculated move of backing BJP and BSP candidates respectively.
Manmohan Singh wants continuity as the organising principle for the new Cabinet
Tata Group chairman Ratan Tata — he once felt Gujarat CM Narendra Modi was the best bet for investors in India because he offered the best packages — maintained his usual stoic silence after the Congress victory, but the chances of his being in the thick of things remain high, because of his proximity to Prime Minister Dr Manmohan Singh.
Strangely, Anil Ambani kept a low profile. He visited New Delhi often before and after the elections, but is said to have privately told friends he was happy that the Samajwadi Party (SP) will not be part of the UPA government. “It would work better for us, otherwise almost anything and everything would be attributed to the SP,” says a Reliance ADAG insider, hinting that Anil felt that it was not right to push for his candidates after party general secretary Amar Singh met Pranab Mukherjee, lobbied hard for two berths but got no satisfactory answer.
Besides, the thinking in Reliance ADAG is that it would make little sense to lobby when Dr Singh wants continuity as the organising principle in constituting the Union Cabinet.
INCUMBENT HOME MINISTER P Chidambaram, considered close to Ambani junior, is likely to stay in North Block, while External Affairs Minister Pranab Mukherjee would not refuse the finance ministry if it was offered, but could also prefer to retain his current portfolio. The Congress is also keen that previous ministers who have retained their seats in these Lok Sabha elections be re-nominated: apart from those already mentioned, the list includes Sushil Kumar Shinde, Jaipal Reddy, Meira Kumar and Kapil Sibal.
But there are ministers who are no longer in the Lok Sabha, having lost the elections or not having contested them: obviously they are likely to replaced.
As the delicate dance of government formation begins, it’s payback time for those who remained loyal and a double whammy (from the voters and the Congress) for those who ditched the Grand Old Party just before the election. And for the rest, they might just have to sit on the sidelines.