Early polls only solution to suffering economy: Yashwant Sinha

Says the govt has no control over the way markets are presently behaving

Bharatiya Janata Party (BJP) leader Yashwant Sinha on Wednesday suggested that the country should go into early Lok Sabha elections to bail the economy out of its present slump, and said that the economic future under the Congress-led UPA Government looks bleak.

'The only thing which will stabilize the market and the rupee is for the government to resign and to go for fresh elections-that is the only thing which is going to stabilize the market. I shudder to think what is going to happen over the next eight-nine months, if this government continues in power. Without any prejudice, I am saying let's go for elections otherwise we will suffer even more,' Sinha said.

Further, Sinha alleged that the Centre had no control over the way markets are presently behaving in the country.

'The more important point that I have been making for many, many months now is that the government has lost control over the economy completely. They are helpless before the forces of the market and the result is that the market is behaving, pretty much, as it likes. ...The stock market is in a free fall, the rupee is in a free fall,' Sinha said.

On Wednesday, the rupee continued to topple and hit its record low of 68.75 against the U.S. dollar.

In order to arrest the rupee slide, RBI had announced measures such as restriction on Indian firms investing abroad and on outward remittances by resident Indians, triggering talks of return of capital control regime.

On the same day, during a debate on the economic situation in the Lok Sabha, Finance Minister P. Chidambaram attributed much of the current economic woes to the stimulus provided to help the industry to tide over the problems emanating from the global financial meltdown of 2008.

Chidambaram said: 'Fiscal deficit limits had been breached. The CAD had swelled. These were the two main challenges, apart from the number of other challenges that we had to face.'

He, however, claimed that situation had improved till the unexpected development on May 22, 2013, when the US Federal Reserve announced tapering of bond purchases which sent the emerging markets in a tizzy.

'In the last 12 months there have been days when I have been more upbeat; days when I been more downcast. But the fact is some stability did return to the economy until a completely unexpectedly unexpected event took place on May 22, 2013', he said.

He attributed tumbling of rupee to that announcement of Federal Reserve.

Meanwhile, global ratings agency Fitch on Monday said India's fiscal numbers 'look weak' and warned of a downgrade if the country is unable to meet the fiscal deficit target.