Modi Regime: Most Statist & Interventionist Since Liberalisation

This is the most market-unfriendly regime in post-liberalisation India, that is, in the last quarter century.

India’s imperious policy-makers, who Lord over the economy via directives and fiats, were humbled by the markets this week:

• Without even a courteous fig-leaf, the Finance Ministry announced the merger of three banks, whose Boards and CEOs were clueless. They were ordered to do it. Bank of Baroda, the strongest with nearly $80 billion in deposits, crashed by 14 percent. The $25 billion Vijaya Bank was mauled by 12 percent. Irate shareholders, taken for granted by an insensitive bureaucracy, had voted with their feet
• With much fanfare, the finance minister announced “bold measures” over a weekend to stem the free-falling rupee. Unfortunately, these actions were puny, designed to somehow suck in short-term dollars to buy a few days’ time. No structural or strategic thought was in evidence. In a brutal repudiation, the rupee crashed by nearly over 100 paise on Monday morning
• The co-founder of Yes Bank was summarily sacked by the regulator. He had helped create billions of dollars of shareholder wealth. But he wasn’t shown cause; he wasn’t asked to defend or clarify his “mistakes”. Could these have been genuine errors triggered by fuzzy guidelines? At least that question should have been asked and settled in a transparent manner. But no. Wham. Sacked. The stock fell by 30 percent in one day, in sympathy with an unfairly treated entrepreneur