APRIL 2, 1992. On the morrow of All Fools' Day, the 'Ayodhya' of Indian capital, the Bombay Stock Exchange, revealed the first ugly chinks in its armour. The BSE's high-profile broker, 'Big Bull' Harshad Mehta, was raided by tax officials. After two months of incessant boom, the share market went on a tailspin. By April 28 the chinks had grown into a gaping chasm full of scandals unprecedented in Indian financial history.

What had been proclaimed to be the beginning of the Indian economic miracle proved to be the end of the first hot-air balloon floated by the Narsimha Rao regime.

And what a spectacular balloon it was! The pre-budget Economic Survey of the government had painted a grim scenario – fall in exports, decline in industrial output, stagnation on foodgrains front, drop in economic growth, double-digit inflation. ... But came the budget and defying all economic sense the Bombay stock market went mad. Just two hours of frenetic trading immediately after the presentation of budget saw a sharp 200-point rise in the Sensitive Index of the country's premier Stock Exchange in Bombay. What more proof could you demand to confirm the popular enthusiasm unleashed by Manmohan Singh's revolutionary budget! The claims grew louder and louder as the BSE Sensex, which had begun the year at around 2,000 reached a record 4,467.32 points by April 22.

The mesmerised media had little ears for the critics who pointed out that the boom in the stock-market did not reflect any spurt in real economic activity or fresh industrial investment. The trade had been largely in old scrips and that too with little consideration for the profitability of the companies concerned. Even equities of loss-making sick units rose enormously. But now we know that what lay behind the soaring share prices was not just reckless speculation but intricate manipulation by an unholy bank-broker-big business nexus.

Even as the full dimension of the stockmarket scam waits to be fathomed out, it is clear that Mehta's speculative forays were financed by thousands of crores of rupees of public funds. Apart from the State Bank of India, United Commercial Bank and National Housing Bank – a fully owned RBI subsidiary – the needle of suspicion also points to 17 other public and private sector banks and three foreign banks. What had all these months been touted as the indisputable evidence of public support to the new economic policies has thus turned out to be only so much of orchestrated hype.