Last week’s Joint Parliamentary Committee (JPC) hearing was rough on the country’s two leading bourses. Eyewitnesses say that JPC members, who dominated the interrogation of the Bombay Stock Exchange and National Stock Exchange, had done their homework and were clearly well briefed on their line of attack. Among the issues that turned really hot was the disciplinary action against the BSE’s chief of surveillance Tirodkar, who was suspended for allegedly revealing the Anand Rathi Tapes. The BSE’s executive director (ED) and public representatives were hard pressed to explain why Tirodkar was singled out for punishment and if it did not amount to shooting the messenger. Things got worse when Tirodkar confessed to the JPC that he had often complained to the ED, AN Joshi about the broker president’s propensity to seek confidential market information. Joshi in turn admitted under persistent questioning that Tirodkar had indeed made such complaints at least twice before. As an upshot of the JPC hearing, the junior official who released information to the former president Rathi may also face disciplinary action. As for the NSE, it continued to be interrogated in connection with its Advanced Lending and Borrowing Mechanism. Specifically, a few JPC members seemed keen on the identity of the corporate house that financed ALBM in a big way and abruptly withdrew funding sometime in February.
A Nobel story
Joseph Stiglitz’s Nobel may have nothing to do with this trenchant criticism of the World Bank-IMF-WTO troika and their four-point fit-all prescription for poor nations. But the honour to him will certainly gladden every NGO protesting against WB-IMF dominance and diktat. An interview by Greg Palast of The Observer of London (dated October 10) with the World Bank’s former economist is already zipping around the email circuit. Stiglitz chillingly compares the WTO-style free trade to the Opium Wars. ‘That too was about opening markets,’ he told Palast. ‘As in the 19th century, Europeans and Americans today are kicking down the barriers to sales in Asia, Latin American and Africa, while barricading our own markets against Third World agriculture’. The World Bank’s financial blockade, he says, is as effective and sometimes just as deadly as the military blockade of the past. He also says that the new global order and intellectual property rights treaty has ‘condemned people to death’ by imposing impossible tariffs and tributes to pay to pharmaceutical companies for branded medicines. ‘They don’t care,’ said the professor of the corporations and bank loans he worked with, ‘if people live or die.’ (for more details see Cheques & balances October 14).
The power advantage
Everybody knows that the steel sector forms the biggest component of declared and undeclared non-performing loans in the books of financial institutions. With steel prices refusing to look up, and the economy continuing to remain in the doldrums, competition between manufacturers is only getting stiffer. So much so that companies are willing to grab any advantage to cut costs and gain a price edge. Since cost of electricity forms a fairly large chunk of input costs, all steel companies work overtime to reduce it. Jindal Vijaynagar fell out with Tractabel because the former wanted power supplied cheap to its steel project. The financial institutions led by ICICI supported Jindal and even picked up 32 per cent of Tractabel’s equity, because it would otherwise hasten the classification of their loans to the steel project as NPAs. Similarly Essar would never really sell its power project (remember it claimed to have struck a deal with Marathon of the US which later fell through) because it would otherwise have to buy more expensive power from the Gujarat State Electricity Board. And that, say insiders is why Ispat Industries is so reluctant to pay for power at Dolvi–it keeps input costs down. Ispat has arrears of Rs 270 crore and had even been defaulting on monthly payments to the Maharashtra State Electricity Board (MSEB). The MSEB’s decision to tie up the company into a binding agreement has however led it to timely daily payments so far.
Cell price hike
Even as the Telecom Regulatory Authority of India threatens to investigate alleged cartelisation in tariff hikes by Mumbai’s cellular phone operators, users who fail to read to the end of their glossy brochures have probably missed the hike itself. While the companies focus their advertisements on the low airtime charges, the billing pulse has quietly been hiked from 30 seconds to a minute. Also, after MTNL’s Dolphin failed to touch value-added service users, the cell companies have decided to hit them big. Those using roaming services have been told that incoming STD/ISD calls will now be charged a hefty administrative fee of 15 per cent. Given the sad state that most businesses are in, it will probably force users to switch from voice to email and SMS.