When the CPI-M and the Left parties withdrew their support from the Manmohan Singh government for going ahead with the Indo-US nuclear deal, one section was particularly joyous. This section comprised the pro-economic reformers, who had never let pass an opportunity in the past to attack the Left for opposing capital account convertibility and preventing the opening up of the insurance and banking sectors.

This pro-reform section has been paralysed into silence after the meltdown in the US and other world economies. The Left which till the other day was hooted is now looked at with new respect. For no less than two weeks now, political circles are grudgingly praising the Left for saving the Indian economy from worse. "Seeing what has happened to AIG," said a senior politician, "imagine our situation if we had opened up the insurance sector."

And the less said about private-sector banks even without the opening up, the better. With its image battered, the largest private bank, the ICICI Bank, has had to hire the actor, Shahrukh Khan, to rebuild its confidence with markets and depositors. Good luck to Mr Khan. Neither does it seem hot with some public sector banks. One of them made the extraordinary announcement that it was safe and liquid.

But even without it being worse for the Indian economy, it is not good at all. The markets have been crashing all of last week, and today, Monday, was no different. The bottom, it appears, has fallen off the market. Nobody knows when the crash will arrest. Beyond a point, it would be perilous for the government and RBI to intervene. Increasingly, there is the talk that the market was pumped up, and what is being witnessed is a much-needed correction that has become a bubble burst.

What's to be done? It is sentiment more than technicals that have crashed the markets. While certain Indian financial entities are shaky, they have not gone bankrupt like several American and European institutions have, and there is nothing about the shakiness that cannot be contained. Over and above whatever needs to be done to clean up the technicals, ensuring, for example, that both private and nationalized banks are financially sound, that banks out of fear are not choking on industrial lending, and so on, the sentiment of despair and doom needs to be promptly put to flight.

How is that done? This is tricky. Changing managements is one way. It is the way the markets naturally understand. Except that a change of management, in this case, has to be more thoroughgoing than most will accept, and it will have to start with the finance ministry. Whatever the virtues of P.Chidambaram, he has outlived his utility in the finance ministry. Moving him out months before the general elections would straightaway tell what a failure he has been on the job, but that's hardly a secret anymore.

It is this writer's view for whatever it is worth that Chidambaram was competent as a commerce minister back in P.V.Narasimha Rao's cabinet, but managing the economy has proved beyond him. So apparently thought Manmohan Singh, but he failed to have him replaced. But the markets will probably appreciate if Chidambaram is asked to go, and somebody more naturally fitted for the job is brought it. Remember, this is mainly about getting a positive sentiment going, and there are some candidates (no names) who could fill the bill.

Some financial entities in the private sector (no names, again) that have expanded too fast on weak fundamentals may also be prodded for management change. The new RBI leadership is not confidence-giving, partly because it has been seen not to be quite independent of the finance ministry, which it has to be, as far as possible, for the good health of the economy. But with Chidambaram going, there will be a correction there.

But none of this will assist unless Manmohan Singh with his formidable reputation as an economic manager steps in. In Beijing, at the Asia-Europe meeting, he attributed the market crash to a "casino" syndrome. The question that follows is, what did he do in the last four-and-a-half years to cure that syndrome? Objectively, nothing.

So when Manmohan Singh wants the CPI-M/ Left back together with the Congress for the general elections, he is snubbed, and not altogether without justification. The Left wants an entire rollback of the UPA government's neo-liberal economic policies and withdrawal from the Indo-US nuclear deal. But if the PM tries another tack, calling both the BJP and CPI-M to come assist in economic recovery in this emergency, and making concessions that are possible - dropping Chidambaram would help - then it is just conceivable that market sentiments may improve.

It is mostly about telling the market that things are in control, and nobody is being able to tell that.