Union Rural Development Minister Raghuvansh Prasad Singh was on his way to attend a private function on Thursday evening when his aide’s cellphone rang: a meeting of the Cabinet Committee on Economic Affairs (CCEA) had been scheduled for Friday. Puzzled, he asked if there was an agenda, and learnt that none had been circulated.
When the ministers reached the venue this morning, they were handed a detailed note on the current global financial crisis.
The CCEA had also met on Thursday afternoon but the crisis faced by the global financial sector was not discussed.
Mindful of the attacks by the UPA allies on Home Minister Shivraj Patil for his alleged failure to control terrorist attacks, a cautious prime minister didn’t want his finance minister to face a similar situation and decided it would be politic to educate his colleagues before they pilloried the government for not doing so.
In the wake of the September 13 Delhi serial blasts, the allies had put immense pressure on the Congress, forcing it to convene a special Cabinet meeting to take them into confidence.
The CCEA today held a detailed discussion on the current global turmoil and, more importantly, its possible implications for India.
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Finance Minister P Chidambaram, with the help of two officers (most ministers were unable to recognise them), gave an elaborate presentation on the US financial and derivative crises. He dealt with the three companies at the centre of the crisis — AIG, Lehman Brothers and Merrill Lynch — separately and even spoke about the US government’s initiatives so far.
The broad message to his Cabinet colleagues was: we are alert and there is no need to panic.
The finance minister also went to great lengths to convince the ministers that Indian banks were on solid financial ground. As they (except ICICI Bank) had virtually no exposure to the affected US institutions there was no reason to fear repercussions in India. And even if a credit crisis were to affect this country, the government had enough measures in its arsenal to tackle it.
That the members of the Cabinet were satisfied with Chidambaram’s briefing was evident as none of the ministers raised a single question. “Even External Affairs Minister Pranab Mukherjee, who otherwise puts relevant queries, was silent,” observed a minister.
Another minister said: “Not many ministers know exactly what is happening in the US. So, they weren’t much bothered. And people like Planning Commission Deputy Chairman Montek Singh Ahluwalia or Defence Minister AK Antony already know what’s happening. So they too were silent.”
Patil, who had recently faced a similar special meeting with the Cabinet colleagues, was absent.