Listless Market Worries Vaghul

Taking part in Rediff Chat, an on-line internet programme, here yesterday, Vaghul said the capital market was looking for a trigger. He hoped that the trigger would come sooner rather than later. But the strangest thing is that the capital market seems to bear an inverse relationship with the fundamentals of the economy. How otherwise can one explain a sluggish capital market despite six per cent growth for the third successive year, industrial growth of 10 per cent for the third year in succession and the corporates recording a growth of 30 per cent on an average, he wondered.

Vaghul, who is also the chairman of the recently set up Foreign Investment Promotion Corporation (FIPC), impressed the participants in the internet programme with his candid responses to questions ranging from the prospects of foreign investment in India to the problems of growing corruption in the Indian system.

 

On the role of FIPC, Vaghul said the Council will investigate the reasons for a somewhat tardy progress of infrastructure development in the last five years and advise the government on what needs to be done. Another role assigned to FIPC is to work with overseas investors to understand their difficulties in dealing with India and help them to overcome them.

Vaghul felt that with state governments vying with each other to attract foreign investment, there was a consensus on foreign investment across the country. Enron issue was an aberration... no foreign investor needs to have any apprehension on account of any inconsistencies in the government policy, he said.

On the crucial question of the Indian government allowing foreign media to invest in India, Vaghul admitted that this was a politically sensitive issue and had to be handled with a great deal of discretion.

Vaghul admitted that corruption was an important issue. But some of the recent happenings in India which have focused on political corruption could well be an eye opener and perhaps pave the way for resolving the issue, he said. Vaghul later added that graft in India as also in much of the world reflected the extent of greed which mankind had acquired as a by-product of the capitalist and market economy.

The ICICI chairman said that any policy that could lead to throwing surplus workers to the streets will not be acceptable in a country like India. At the same time, drastic solutions like convertibility and sharp reduction in customs duties were too simplistic a solution to a complex economic problem. Before moving over to convertibility, the economy has to attain macro-economic stability and that is why fiscal deficit reduction is a big priority for the government, he said.