Indian companies’ surprising silence on Modi’s third term
The wisest denizens of the Indian corporate world are keeping mum on the Indian election results this time. Though it is indisputably clear that Narendra Modi will return as the Prime Minister of India for a third consecutive term, a record in nearly 77 years since India gained independence (the only exception being Nehru), I suspect that Indian corporates are still unsure about the outcome. The BJP has 240 seats, plus 12 from parties led by Eknath Shinde and Chirag Paswan, but they are merely disguises for the BJP and the influence of Chandrababu Naidu and Nitish Kumar will fade. But Uday Kotak, Anand Mahindra, Sunil Mittal, Mukesh Ambani, Kumar Birla (who was awarded the Padma Bhushan by the BJP), Harsh Goenka and even celebrities and fund managers who are members of the Prime Minister’s Economic Advisory Council have all remained silent and have not congratulated the NDA for winning a majority in the polls. Are they unsure or doubtful that PM Modi will return for a third term? The first and only tweet on social media platform ‘X’ on the day of the poll results announcement congratulating the PM for a third term was by Ashish Chauhan, MD and CEO of NSE.
SEBI’s sudden move after election results
In what seems like a hasty move, the market regulator Securities and Exchange Board of India (SEBI) has appointed Usha Thorat as the Chairperson of the Stock Exchange Settlement Guarantee Fund Committee. SEBI’s move to appoint Thorat as the Chairperson of the committee is stranger than it seems on two counts – the timing and the choice of candidate. Usha Thorat is the wife of Yashwant Thorat. After Yashwant retired as Chairman of NABARD in November 2007, he became the CEO of Rajiv Gandhi Foundation and remained in the position for over a decade. Rajiv Gandhi Foundation is a private trust of the Gandhi family, chaired by Sonia Gandhi and whose trustees are Rahul Gandhi, Priyanka Gandhi and P. Chidambaram. His appointment as CEO of Rajiv Gandhi Trust therefore means that Thorat was a trusted member of the Gandhi family’s inner circle. His wife Usha Thorat was appointed Deputy Governor of the Reserve Bank of India when the Congress was in power and P. Chidambaram and Dr. K.P. Krishnan were heading the Finance Ministry. Not only that, Thorat was also appointed to the board of directors of NSE when Ravi Narain and Chitra Ramkrishna were in power (UPA era) and KPK controlled SEBI. Thus, Thorat’s return as chairman of a key SEBI committee on the day of the election results showed that some high-ranking SEBI officials did not trust PM Modi’s return to power and were appointing people known to be close to the Gandhi family. Incidentally, only Thorat’s name has been announced as the chairman of the new committee; the names of all the other members are yet to be decided. What signal was SEBI sending to whom?
BSE’s deepening dilemma
BSE’s mounting liability towards SEBI fees and its forced cancellation of a large amount of SMS-related fees it had charged to investor funds (both around Rs 1,500 crore) are well known. But what is less known is that as the exchange’s trading volumes grow, it may also have to pay thousands of rupees to the Settlement Guarantee Fund (SGF). The entity that manages the Settlement Guarantee Fund has demanded that the higher the trading volume of an exchange, the higher its contribution to the SGF should be. NSE paid around Rs 5,000 crore more to the SGF last year. The ratio of nominal trading volume in derivatives on BSE is almost three times that of NSE. Even if, at the most conservative level, BSE has to pay around Rs 2-3 crore to the SGF, it will be a major blow to the exchange’s profitability and its surging share price that some investors are trying to boost. Earlier this year, the exchange’s share price fell due to high SGF in its currency derivatives division, the exchange said in a media statement. In this context, SEBI’s move to hastily set up a committee on SGF and appoint Usha Thorat as its chairperson appears to be of great interest to many market experts.