Stock Scam? PM Said The Same Thing In Lok Sabha Last August, But No One Yelled Scam

R Jagannathan

Jun 07, 2024, 11:02 AM | Updated 11:02 AM IST

Prime Minister Narendra Modi.
Prime Minister Narendra Modi.
  • Modi must address market volatility, ensuring economic stability while countering unfounded stock scam allegations.
  • If Narendra Modi has to meet the leadership challenges facing him after his party fell far short of a full majority in Parliament, he has to not only manage allies, but also the opposition, not to speak of members of his own Sangh Parivar.

    Having realised that Modi is not invulnerable, the opposition this time will not only be vociferous, but extremely disruptive. Its gameplan is to make it impossible for Modi to function, and force his allies to pressure him to reverse everything done so far so that the economy goes downhill and the country remains on a political edge. The foreign media and governments will covertly help them do this.

    Even before the National Democratic Alliance (NDA) government has taken office, pressure points are already building up.

    Yesterday (6 June), Rahul Gandhi made the ridiculous claim that the Bharatiya Janata Party (BJP) has indulged in the biggest stock market scam in history, thanks to some needless comments made by the Prime Minister and Amit Shah about how the stock markets will rise after the election results are out.

    Never mind that the purpose of making those statements was to send a message that the BJP was coming back to power. In fact, the Prime Minister made similar statements last August in Parliament, but no opposition leaders thought he was trying to play the markets at that time. So what’s different this time, apart from the opposition’s growing cockiness?

    The markets soared on the back of exit poll results, and then crashed when the actual results seemed to deny Modi a majority of his own. Anyone who sold stocks on 3 June (when markets soared after the exit polls of 1 June gave the government a massive majority), and bought on 4 June would have made a killing.

    The markets have since stabilised, but the allegation is that Modi and Shah enabled this killing.

    The problem is that at a time of political volatility, the markets will be volatile too. For example, the minute savvy investors realised that this time Modi will be heading a coalition, they assumed that the Centre will be spending oodles of money not only in the states run by the allies, but also in distressed rural pockets. FMCG stocks, currently facing weak demand, suddenly spiked. 

    (Disclosure: I sold some FMCG stocks two days ago because they suddenly rose spectacularly. I needed no inside information from someone in government to tell me what to do. The same goes for domestic and foreign institutional investors). 

    The problem with the “stock scam” allegation is that it not only has nothing to back it up by way of proof, but ignores the reality that every major political development tends to have a massive impact on market sentiment.

    The BJP was among the ones most startled by the adverse election results, especially in Uttar Pradesh and Maharashtra, and could hardly have assumed that the market would behave the way it did to enable insiders to make money from the volatility. But, of course, logic is lost in the current situation where the opposition is smelling blood. 

    For those interested in the back story, please note that in August 2023 — nine months ago — the PM made the exact same point about stocks in Parliament.

    He said that the opposition was trying to damage the economy by its negativity. But his government had improved the working and profits of banks, the public sector, Hindustan Aeronautics, and the Life Insurance Corporation.

    He said: “Opposition spoke lies about LIC. Today, LIC is growing stronger. Those interested in stocks know they should invest in government companies’ shares”.

    Even as the  “scam” allegation was being made, the Congress feigned  shock over the shifting of the statues of Gandhi, Shivaji and Ambedkar as part of the realignment in the new parliament complex. Party spokesman Jairam Ramesh said this was “atrocious”, while Pawan Khera suggested that if this can be done to the statues of national icons, the Constitution itself would have been dumped if the BJP had got 400 seats.

    Again, any reasonable person knows that old statues and memorials are moved whenever areas are redeveloped to improve the aesthetics. The statues are not being removed, only relocated.

    What these two vociferous interventions of the opposition suggest is that they have no intention to let the government settle down before calling it to account. 

    The idea, let us be clear, is not to rattle Modi, who probably can handle the pressure, but to make his allies skittish as fires are lit under them in the states and at the Centre.

    There are many issues that will provide this opportunity in the near future.

    First, there could be a resumption of the farm agitation — which temporarily hibernated when the elections were announced. Now both the Congress and the Aam Aadmi Party will be happy to encourage the farmers of Punjab to head back to the borders of Delhi and hope that the Modi government makes a mistake, and violence ensues.

    Second, the Agniveer scheme can and will not only be raked up, but made to seem more malevolent, especially because the states immediately surrounding Delhi (Punjab, Haryana, Rajasthan, Uttar Pradesh) are major beneficiaries of the older scheme of army recruitment. 

    Third, the courts may start acting up, now that they sense the government is weaker than before. One can expect judgements on the Citizenship Amendment Act or the law for the appointment of election commissioners before the current chief justice bows out in November.

    If the cases go against the government, more embarrassment will be in store, and you can bet that volumes will be written about how the BJP ransacked the constitution and damaged institutions. Don’t rule out protests on the street also.

    Fourth, if any lynching or incident involving a minority community or Dalit takes place in any BJP state, all hell will again break lose. Look for a chorus of negativity from the likes of New York Times, Guardian, The Economist, etc.

    Is Modi ready to weather this storm? He can, but he cannot do so if he remains aloof as before. This time, he has to put his own reputation on the line, and be more vocal and responsive to adverse events. Among other things, he has to:

    1. Keep allies regularly in the loop on issues and options. A fortnightly meeting with key allies, either physically or via zoom, is vital with the likes of Chandrababu Naidu and Nitish Kumar. Smaller allies also should be shown due respect and spoken to regularly on the phone. This was the BJP’s biggest failure during its previous two tenures.

    2. The PMO must organise regular media briefings so that we know what the government’s stand is on various issues. Modi's office must release statements condemning any attacks on vulnerable sections of the population — but equally so for Hindus, when that happens.

    In the past he chose to remain silent too often, making it seem like he was shielding the guilty. Speaking out more often also brings with it an advantage for the BJP: he can put opposition leaders in the dock when such things happen in opposition ruled states too. Without this balance, a studied silence will only make him seem uncaring and defensive.

    3. The PM must also regularly meet with his own core constituency: leaders in the Sangh Parivar, party workers and pro-BJP social media influencers. There is nothing like personal access to consolidate allegiances.

    4. If the farm lobby plans another agitation, this time the PM must himself get involved, meet them, and seek ways out of any impasse. He can’t let disempowered ministers handle the fire all on their own.

    The PM has to up his game. He cannot remain above the battle this time. The country’s future depends on his making this transition.

    Jagannathan is Editorial Director, Swarajya. He tweets at @TheJaggi.

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