The stock market fetish

Written by YRK Reddy | Updated: Nov 13 2007, 04:25am hrs
There has been some criticism levelled against the government and policymakers for trying to quieten investors when the stock market indices fell steeply. Critics say that undue attention is being paid to issues relating to the stock market and capital inflows in comparison with more serious issues of the wider economy. One well-regarded writer commented that it is like the tail wagging the doghe pointed out that India Inc in the Sensex accounts for just 1% of Indias GDP. An award-winning journalist pointed out the irony of top guns swinging into action within minutes of the stock market falling by a few hundred points, while no one came forward to calm the nation on the day that India was ranked No 94 out of 118 countries by the Global Hunger Index. The Left parties have always cautioned India against the market fetish of market-friendly policymakers. Many suspect that this game of speculation promotes a new faith that greed is good, with small investors and local institutions the eventual suckers.

But then, many of us who are fatigued by all this stock market coverage are not active investors and hardly ever refer to the pages that carry stock quotations. The periodic stacks of paper from mutual funds find their place instantaneously in the dustbin.

However, those who look at the bourses with disdain may want to consider two points to gain a balanced perspective. First, a comment on the stock market from the finance minister need not provoke such a reaction. No other minister will talk about this market, just as the FM is not expected to talk about Nandigram, or farmer suicides, for that matter. Poverty alleviation, rural infrastructure and related economic development issues are indeed central to any finance ministry, as evident during the annual Economic Survey and the Budget speeches. If we want more soundbytes on hunger, poverty and Millennium Development Goals, please consider rechristening the ministry as ministry of finance and socio-economic development, and create platforms to discuss the state of the rural economy, state of poverty alleviation and suchlike.

But are there takers for such statements I recall a dialogue with the then FM some years ago in which he perceptively said that if he talks about a very serious matter concerning agriculture, just two scribes with one camera appear, and it makes a small inside-page news item. But if he were to utter even an inanity on the stock market or finance, TV crews and journalists would come in droves and splurge the papers with dramatised headlines. This is the second pointthe information gathering and reporting system in any country is a function of how the media is structured, which in turn is designed to cater to its business objectives and meet the expectations of its target audience. Naturally, business dailies cover finance and stock-related matters as headlinesnothing less should be expected. Even in the case of other dailies, including the vernacular ones, many readers are active investors. Investment and finance occupy an expanding and disproportionate part of the readerships mind share in comparison with other national issues. Why else do dailies in all countries, including China and Russia, devote so much space to stock markets If we want other issues discussed, we need newer platforms and newer ways of enthusing the public than trying to muff the ever-rising stock-market buzz.

There is a neurosciences analogy to pictorially show the disproportionate stature that the stock market enjoys in relation to other sectors. The Penfields Homunculus is a diagram of a grotesquely deformed man drawn to represent whats on his mind. The lips and tongue, for example, are drawn as big as the whole trunk, and the palms are bigger than the limbs. The stock market has become a preoccupation that is doing something similar to the brain. Just how comfortable we are with this is a matter of debate. It may take a yogi to reconfigure our Homunculus.