New Delhi, August 2
Ever since the Left parties announced a formal separation from the UPA government, finance minister P. Chidambaram has been preparing to proceed speedily with its reforms agenda that had been stalled by the Communists.
However, Chidambaram’s enthusiasm for rushing through with the unfinished economic reforms agenda is not shared by the Congress and the UPA allies who are of the view that it is far too close to elections to undertake any far-reaching policy decisions. There is a lurking fear that this exercise may undermine the focus on the “aam aadmi” programmes and strengthen the opposition’s campaign that the ruling coalition is “anti-poor”.
Congress spokesperson Veerappa Moily recently stuck a note of caution saying the government should undertake those reforms, which give priority to the “aam aadmi”. Moily said the party would advise the government against going in for unrestricted economic reforms and that it should instead focus on policies to control inflation.
Senior UPA ministers agreed saying any major policy decision, which could be controversial, was best undertaken at the beginning of a government’s term. “Now that elections are less than a year away, every political party will be looking at the electoral impact of these decisions,” said a senior UPA minister, adding that even the allies may not be willing to endorse any major reforms which they had enthusiastically backed three years ago.
The coming days will show how far Chidambaram will be able to go in pushing ahead with the reforms agenda. Among the urgent tasks his ministry has identified for completion is the disinvestment in public sector undertakings (PSUs) and the passage of the banking, insurance and pension Bills in Parliament.
Although it is technically possible for the government to undertake reforms that require an executive order, getting Bills through Parliament may prove to be a tough task.
The ruling coalition has a wafer-thin majority in the Lok Sabha and it requires the Opposition’s support to complete its legislative agenda. A furious BJP, however, has already made it clear that it is in no mood to cooperate with the government. There is also no clarity about the timing of the next Parliament session, which could even be deferred till this year-end.
The finance minister will, however, make a strong pitch for disinvestments in PSUs as this will
bring in the much needed revenues for the deficit trapped government and do not require Parliamentary approval. Among the public offerings, which are listed
for disinvestment, are NTPC (which has plans to raise Rs 6,000 crore), HPCL
(Rs 5,000 crore), Coal India (Rs 3,000 crore) and Gujarat State Petroleum
(Rs 4,000 crore).
Sources say the government is fast-tracking the proposal to sell 10 per cent each in two public sector companies - Oil India Ltd and hydropower generator NHPC. The initial public offerings of Rites India, IRCTC and Ircon International could be among the second batch of disinvestments.
Officials said the earliest date for the issues to hit the market was September. By that time stock market sentiment is expected to improve. Capital inflows could also improve as global crude oil prices may stabilise and domestic price situation could ease out by then.
Atomic energy generation, which is barred to even domestic private companies, may also be opened to private investment. The government may also choose to open up some speciality retail sectors like sports goods and electronics to foreign participation. All these were kept in abeyance because of the veto exercised
by the Left.
