Lawmakers Storm Out Over India’s Financial Scandal : Politics: Opposition wanted government to justify its conduct in security scam. Finance minister is expected to keep job.


Opposition members of India’s Parliament stormed out in a huff Thursday when Prime Minister P. V. Narasimha Rao did not take the floor to justify his government’s conduct in a gigantic securities scam.

The lower house, the Lok Sabha, adjourned without setting a date for reconvening, and Finance Minister Manmohan Singh seemed assured of his job, at least for the immediate future.

Singh tendered his resignation Dec. 23 after his ministry was accused by a parliamentary panel of failing to act to prevent the biggest financial scandal in India’s history. Banks and stockbrokers colluded to pump huge amounts of public money into the Bombay stock market in 1991-92 to make a quick buck.

The cash-rich market soared artificially, and when it crashed millions of private investors lost an estimated $1.5 billion.


Fellow members of the ruling Congress-I Party have said it would be a disaster if Rao accepted Singh’s offer at this critical juncture.

Business and industrial leaders also rallied behind the former academic who, since July, 1991, has been piloting India toward free-market reforms and an opening of the country to foreign capital.

A special two-day session of Parliament that opened Wednesday to debate the lawmakers’ probe of the securities scandal was expected to bring a day of reckoning, but it produced mostly rhetoric.

Speaking with renewed public confidence as “the finance minister,” Singh said it was the actions of his ministry that unearthed the scandal in the first place.


He also promised that within three months, the government will announce how it will restructure the country’s banking and financial systems to bar a repeat.

Opposition members, some of whom sought the entire government’s resignation in the scandal, had demanded that Rao himself take the floor.

When Lok Sabha Speaker Shivraj Patil ruled that they could not compel the prime minister to speak, pandemonium broke out.

Ultimately, almost all of the members of the Janata Dal (People’s Union) and Bharatiya Janata (Indian People’s) Party left the chamber, with BJP leader Atal Behari Vajpayee accusing Rao of “contempt of the house.”

When the prime minister did speak, it was to a Lok Sabha virtually devoid of opposition lawmakers.

Rao gave assurances that he will take “whatever action” is necessary based on the findings of the joint parliamentary commission, but he gave no specifics.

Some lawmakers, though recognizing Singh’s reputation for personal probity, say that a key principle of government is at stake and that a minister must accept responsibility for mistakes and oversights committed on his watch.

“If the finance minister does not resign and sticks to his chair like a leech, posterity will never forgive him,” said Ashok Mitra, a legislator from the Communist Party of India.


Singh’s defenders countered that a “systemic failure,” and no single individual’s acts, were to blame for the scandal.

In another development that shocked many of Rao’s adversaries, his Congress Party finally secured a parliamentary majority Thursday when 10 members of a Janata Dal faction defected.

“We are no longer a minority government, and this is a New Year gift,” Congress Party spokesman V. N. Gadgil said happily.

Gadgil told reporters that Ajit Singh and nine members of his Janata Dal splinter group met Patil, the Speaker, and gave him a letter announcing their decision to join Congress-I.

The defections will bring Congress’ strength in the 528-member Lok Sabha to 266, he said.