Millennium Post

Markets give thumbs down to Food Bill

If there was ever a day worth forgetting for the Indian markets, this was it! On Tuesday the rupee fell to a record low of 66.30 to the dollar before ending at 66.24, down by 194 paise in its biggest ever one-day drop. The Bombay Stock Exchange’s (BSE) benchmark 30-share S&P Sensex plunged by 590.05 points (3.18 per cent) to end at 17,968.08, the broader National Stock Exchange’s (NSE) Nifty index slumped by 189.05 points (3.45 per cent) to 5,287.45, and the MCX-SX’s SX40 index closed down 391.41 points to 10,629.77.
And guess what triggered this market mayhem?

It was Monday’s passage by the Lok Sabha of the landmark Food Security Bill which will give 82 crore people (two-thirds of the population) in India– which incidentally has the world highest poor both in terms of absolute numbers and as a percentage of the population — the right to 5 kg of foodgrain every month at ‘lower than market’ rates. The US and its ally governments in the West, as well as their Indian collaborators in the domestic markets and corporate sector, don’t like this. And their reaction was displayed with vengeance!

Incidentally, the total food subsidy budgeted by the Union Government in the current fiscal (2013-14) is Rs 90,000 crore, of which Rs 10,000 crore is towards implementation of the Food Security Bill — no doubt a paltry figure compared to the type of numbers the market and India Inc players are used to deal with on a day-to-day basis.

In a bid to allay the economic elite’s worries that it would do more for the abysmally poor aam admi of India, Finance Minister P Chidambaram assured, ‘(Fiscal deficit of) 4.8 per cent of GDP and the absolute number indicated in the Budget is a red line and the red line will not be breached.... We have provided enough money for the cost of the food security programme for the remainder of the current fiscal.’

Our national currency has lost over 20 per cent in 2013 and is among the worst performers globally. On Tuesday Rs 1.7 lakh crore investor wealth was eroded as participants sold across the spectrum. Twelve of the 13 sectoral indices closed lower, led by banking, capital goods and power shares.
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