As the Adani crisis – after a report by a short-seller alleging 'stock manipulation' against the firm – takes the market by storm, finance secretary T V Somanathan Friday give a macroeconomic point of view on the situation and said it was a "storm in a tea cup" and that India's public financial system is robust. The senior most bureaucrat in the finance ministry also said that the stock market turmoil was not the government's concern and that independent regulators are there to take necessary action.
He also responded to a question on the implications of the fraud allegations against Adani group on the financial system considering banks and insurance companies exposure to the group. "There is absolutely no concern from the point of view of financial stability, either for depositors, or for policyholders, or for anyone holding shares in these institutions. The share of any one company is not such as to create any impact at the macro level and so there is absolutely no concern from that point of view," he told news agency PTI in an interview.
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On whether the turmoil will impact revised estimates of disinvestment collections, Somanathan said: "They are a side show. They are of interest to those who are interested in stock markets and investment. From macroeconomic point of view, this is a non-issue. It's a complete non-issue from our point of view. It's a storm in a tea cup as far as macroeconomics are concerned, not in respect of markets."
{{/usCountry}}On whether the turmoil will impact revised estimates of disinvestment collections, Somanathan said: "They are a side show. They are of interest to those who are interested in stock markets and investment. From macroeconomic point of view, this is a non-issue. It's a complete non-issue from our point of view. It's a storm in a tea cup as far as macroeconomics are concerned, not in respect of markets."
{{/usCountry}}"The government's concern is with creating the right investment environment, creating a well regulated set of financial market... making sure there is transparency and that the market functions well; making sure the information asymmetry is reduced; and making sure the government's own macroeconomic policies are sound," he added.
Adani Group stocks have taken a massive hit after US-based short-seller Hindenburg Research report alleged fraudulent transactions and share price manipulation by the Gautam Adani-led group. The conglomerate has dismissed the allegations as "bogus" and also threatened legal action. In a video speech Thursday, Gautam Adani stated that the group’s balance sheet was healthy. More than half the value of his companies have been wiped out since the report came out. Earlier, Adani Enterprises called off its $2.5 billion FPO offering, hours after it lost a staggering 28% in value over a single session. The crisis has snowballed into a national issue with lawmakers disrupting parliament for two days to demand discussion on the Adani stock rout.
(With PTI inputs)