The Hindu : National : Chidambaram should quit: Jayalalithaa

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Wednesday, May 24, 2006

National

National

Chidambaram should quit: Jayalalithaa

Special Correspondent

"Stock market crashes have resulted in huge losses to retail investors"

CHENNAI: General secretary of the All-India Anna Dravida Munnetra Kazhagam (AIADMK) Jayalalithaa on Monday demanded the immediate resignation of Union Finance Minister P. Chidambaram owning moral responsibility for the crash in the stock markets over the last few days. This had resulted in "huge losses" ranging from Rs. 5 lakh crore to Rs. 10 lakh crore to retail investors, she said.

In a statement here, Ms. Jayalalithaa said it was shocking that the crash was attributed to a draft circular of the Income-Tax (IT) Department proposing to tax profits on dealings in shares of Foreign Institutional Investors (FIIs) as business income at tax rates of 40 per cent. She accused Mr. Chidambaram and the IT Department of being primarily responsible for this.

Ms. Jayalalithaa urged Prime Minister Manmohan Singh to direct the State-owned institutions to step in and prevent further damage. She also called for a probe into the "suspicious crash" by an independent authority or a Parliamentary panel.

"Whenever concerns were expressed about the ballooning Sensex, Mr. Chidambaram had justified the roller coaster ride of the Sensex by attributing it to the strong fundamentals of the economy and had repeatedly assured the investing public." If a mere draft circular could trigger such a crash, "it is clear that both the Union Minister and the Stock Market watchdog Securities and Exchange Board of India have miserably failed in their duties," she said.

Ms. Jayalalithaa also alleged that it was widely perceived that this crash had been "engineered by vested interests," pushing millions of retail investors into an abyss. "This crash, therefore, requires a thorough investigation in a fair manner, which would be possible only if the incumbent Union Finance Minister were to resign, owning moral responsibility for this calamity."

Claiming that Mr. Chidambaram had been toeing the American investors' directives, Ms. Jayalalithaa said the FIIs had been kept outside the purview of tax liability. Though the FIIs had been trading in the Indian stock market and making huge gains, strangely enough they had all been classified as "investors" and not "traders."

This was another "strong reason" why Mr. Chidambaram should quit.

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