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Stop propping up FIIs: Yechury

Kozhikode: Communist Party of India (Marxist) Polit Bureau member Sitaram Yechury has warned the Congress-led United Progressive Alliance (UPA) government at the Centre against propping up foreign institutional investors (FIIs) to overcome a liquidity crunch experienced in stock markets in the country.

Inaugurating a seminar on ‘Global crises and India’ organised by the Syndicate Bank Staff Union here on Sunday, Mr. Yechury said the FIIs had already pulled out a major chunk of investments from the Indian stock markets, but the government was still going ahead with policies to bring them back. He criticised the decision of the government to re-allow participatory notes used by foreign investors to invest in Indian bourses. It only permitted hawala money to transact in the Indian markets. Besides, it had got a lot to do from the security point of view during these times of terrorist activities, he said.

Instead of insulating the country from the ripple effects of the global financial meltdown, the government was creating a situation of greater vulnerability. All decisions taken by the Manmohan Singh government to prevail over the crises would be counter-productive. Recently, it had decided to raise the foreign direct investment cap in the insurance sector from 26 per cent to 49 per cent, he said, adding that the matter would have to come to Parliament.

Mr. Yechury said the economic crisis in India would have been much worse had not the Left parties prevented the Congress-led government from taking crucial decisions such as opening up the banking and insurance sectors.

If foreign investors had been given 74 per cent stake in banks, none of the private banks would have survived now. The Left s had also prevented the government from removing the 10 per cent cap fixed for voting in companies by foreign participants.

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