Uncertainty and panic sweeps India

NEW DELHI – Political uncertainty and financial panic swept India yesterday as the stock market was shut down after it worst-ever plunge and two powerful communist parties refused to join a new government alliance under Congress party leader Sonia Gandhi.

The market crash, which began when election results were announced last week, has cost Indian investors more than 2 trillion rupees (US$45 billion). As Gandhi prepared to seek formal approval from the president for the formation of what will now have to be a minority government, Hindu nationalists added to the turmoil with street protests against Gandhi’s bid to become the nation’s first foreign-born leader.The communists said they would back Gandhi’s ascension as prime minister as early as tomorrow, but not from within the coalition ranks.That puts them in a position to dictate policy from behind the scenes.”The entire left will support the government from the outside,” D. Raja, spokesman of the Communist Party of India told The Associated Press.The Communist Party of India-Marxist also declined to join, saying her new alliance could force them to concede too much to India’s right wing.Investors feared Gandhi would have to backtrack on her pledge to go forward with India’s economic liberalisation, or that the leftists, with 62 seats in the 545-member parliament, could block key reforms such as the privatisation of state-run companies.That triggered the worst ever sell-off in the history of the Bombay Stock Exchange’s 129-year history.Regulators twice halted trading at the main bourses when share prices tumbled more than 15 per cent within in 90 minutes.Share prices began recovering when markets resumed trading for the third time.The Sensex closed at 4505.16 point, down 11.1 per cent.The Nifty index of the National Stock Exchange, the country’s largest, which opened in 1994, plunged 12.3 per cent.By midday, both the Congress party and the leftists were declaring their support for a business-friendly environment.”We would like to appeal to all those who have any doubts that we are for… stable economic growth,” said Jyoti Basu, senior leader of the Communist Party of India-Marxist.Gandhi needs the leftist parties to secure a majority in parliament.Even with the backing of the socialist Samajwadi Party, which announced yesterday it would join the alliance, the Congress would have only 257 seats, short of the 272 it needs.Political analyst Pran Chopra said the future of the Gandhi-led government was uncertain.- Nampa-APAs Gandhi prepared to seek formal approval from the president for the formation of what will now have to be a minority government, Hindu nationalists added to the turmoil with street protests against Gandhi’s bid to become the nation’s first foreign-born leader.The communists said they would back Gandhi’s ascension as prime minister as early as tomorrow, but not from within the coalition ranks.That puts them in a position to dictate policy from behind the scenes.”The entire left will support the government from the outside,” D. Raja, spokesman of the Communist Party of India told The Associated Press.The Communist Party of India-Marxist also declined to join, saying her new alliance could force them to concede too much to India’s right wing.Investors feared Gandhi would have to backtrack on her pledge to go forward with India’s economic liberalisation, or that the leftists, with 62 seats in the 545-member parliament, could block key reforms such as the privatisation of state-run companies.That triggered the worst ever sell-off in the history of the Bombay Stock Exchange’s 129-year history.Regulators twice halted trading at the main bourses when share prices tumbled more than 15 per cent within in 90 minutes.Share prices began recovering when markets resumed trading for the third time.The Sensex closed at 4505.16 point, down 11.1 per cent.The Nifty index of the National Stock Exchange, the country’s largest, which opened in 1994, plunged 12.3 per cent.By midday, both the Congress party and the leftists were declaring their support for a business-friendly environment.”We would like to appeal to all those who have any doubts that we are for… stable economic growth,” said Jyoti Basu, senior leader of the Communist Party of India-Marxist.Gandhi needs the leftist parties to secure a majority in parliament.Even with the backing of the socialist Samajwadi Party, which announced yesterday it would join the alliance, the Congress would have only 257 seats, short of the 272 it needs.Political analyst Pran Chopra said the future of the Gandhi-led government was uncertain.- Nampa-AP