Statement of Shri Ravi Shankar Prasad
National Spokesperson And MP

It is increasingly evident that the serious crisis affecting the US economy particularly in the financial sector would have also its impact on the larger Indian economy. The lesson for political leaders is that unless fundamental structures of the economy is strong duly supported by sound financial policy of the government, artificial attempts to boost the economy by a dose of cheap money can never help in the long run. The lesson further is that if there is a virtual free for all to giants financial and banking companies without any proper regulation then crisis is bound to happen. The housing loan was purchased and sold again and again without knowing, who was the actual borrower, who was issuing the security and who was selling or, buying it. Banks like Morgan Stanley, UBS and Citibank had to write down billions of Dollars. Giant institutions like Lehman Brothers has become bankrupt, banks have been sold and many insurance companies are breathing for life.

The US financial crisis has affected many other economies in a significant way and BJP would like the government to tell the nation as to what safeguard actions it is taking to ensure that it does not seriously impact our own banking and financial sector. Is it time to reflect upon the current roadmap for financial sector reform particularly the significant rights which is proposed to be given to foreign investors in Indian banks as proposed by many expert committees? The BJP demands that suitable and timely steps to be taken so that interest of Indian economy is not overtaken by the current global crisis. One issue demands immediate attention. As per the result of quarter ending in June the growth of manufacturing sector was a poor 5.2% and because of the current global crisis lend-able funds in international market may not be available regardless of any steps that may have been taken in that connection. Taking loans in India has become costly because the interest rates are high and the only option shown by the UPA government in containing inflation has been to revise the interest rate. It is clear that the government has clearly run out of ideas nor, it has the will to contain inflation, which remains at a thirteen years high of 12.14%. Therefore the manufacturing sector would continue to suffer because of this rank mismanagement of Indian economy. The crisis would also severely impact the export sector, which remains the largest employer.

The BJP has been strong advocate of the interest of small investors but the situations on the stock market front too appear to be grim. After the US financial crisis erupted in September, the Foreign Institutional Investors have withdrawn about two billion dollars from the Indian stock market. However, it is important to note that in between January to September, 2008 the FII have withdrawn Eight billion dollars. The government ought to have seen the signals. Do we also propose to allow the same kind of aggressive free run that led to the US crisis or, the government is seeing the writing on the wall? The BJP is equally concerned about the increasing decline of job opportunities of professional Indians because of this crisis. The Prime Minister Dr. Manmohan Singh is in USA and he must take-up the matters at the highest level there.

The BJP apprehends that the global financial crisis coupled with the highly vulnerable Indian economy which is the creation of the UPA government because of its inept handling is only going to seriously aggravate the situation further bringing more misery to common man.

(Shyam Jaju)
Headquarter-in-charge