Left alone,UPA’s reforms unshackled

The unfolding of the crisis that revealed the excesses of the financial system in the US and other European countries may,however,prompt the government to exercise self-restraint. But,given the clear mandate,Prime Minister Manmohan Singh — the original reformer — may take courage and chalk out a definite roadmap for such reforms.

What can,however,be said with certainty is the enactment of the long-pending PFRDA (Pension Fund Regulatory and Development Authority) Bill and the three insurance bills that will make available long-term finance to the corporate sector. The PFRDA has already opened up the new pension scheme to all private citizens,but the Bill is yet to see the light of the day. After the gradual metamorphosis of development financial institutions such as ICICI and IDBI into banks,long-tenure funding has remained inadequate for India’s corporate sector.

Further opening up of the insurance and pension sectors are aimed at filling this gap. Three bills relating to the insurance sector proposed to hike the foreign direct investment limit in the business to 49 per cent from 26 per cent now,strengthen the regulator (Insurance Regulatory and Development Authority) and allow foreign insurers to open branches in India. This will give a boost to the insurance companies and help them penetrate further into the huge domestic market.

Disinvetment and privatization that were abandoned by the UPA given the Left’s recalcitrance will gain currency now,more so given the need for substantial financial resources to further boost demand. “This is more of a necessity now,given the fund crunch. The money should be used to refinance large infrastructure projects,” says Jahangir Aziz,Chief Economist,JP Morgan.

The gross fiscal deficit at 10 per cent of the gross domestic product (GDP) puts major constraints on the exchequer and even if the government wants to spend more to stimulate the economy,it will come with a cost. Selling government stake partly in navratnas and privatizing loss-making and non-strategic public sector undertakings will not only unlock value,but also provide the much-needed funds to continue the big-ticket programmes.

Further liberalisation of foreign direct investment (FDI) norms,reforms in the labour market i.e. the Contract Labour Act,letting the private sector participate in defence production and opening up organised retail trade were all held hostage to the Left ideologies. All these will spur large-scale investment,increase jobs and boost demand — so vital for catapulting the economy to the double digit growth orbit.

Meanwhile,India Inc today wished a Cabinet berth for Rahul Gandhi saying age should not be a factor,thus supporting Prime Minister Manmohan Singh’s views on Gandhi scion.

Though not clear as to what role should Rahul play in the next Cabinet,the corporate honchos rooted for Montek Singh Ahluwalia as the Finance Minister.

Capital market expert Prithvi Haldea said that the finance ministry should go to Montek Singh Ahluwalia and Chidambaram should continue as the Home Minister. Real estate leader DLF clearly favoured Montek to take charge at the North Block.

However,the views are split when it came to sectoral representatives with most of the players giving their wishlist without wanting to be named. A large corporate house wanted Murli Deora to be back as the Petroleum Minister,or to be replaced by his son Milind. Kamal Nath also found favour for a second term as the Commerce and Industry Minister,although a section felt that Jairam Ramesh could be given the charge.

For telecom ministry,CDMA operators favoured DMK leader A Raja to continue,while GSM lobby wanted the Congress to keep this portfolio with itself,so that it can go ahead with reform process without any hindrances.

UN official-turned-politician Shashi Tharoor,who is making debut in the Lok Sabha shortly after loosing the race for the UN Secretary Generalship,also figured in the wish-list of industrialists for a place in the Union Cabinet.

“We hope to see Rahul Gandhi in the Cabinet,” Ispat Industries’ Vice Chairman and Managing Director Vinod Mittal said,adding that age was not a criteria to be a dynamic leader and minister. A cross section of investors,industrialists and analysts also felt that younger politicians,including Jitin Prasad,Sachin Pilot,Naveen Jindal and Jyotiraditya Scindia,should be given ministerial responsibilities.

Many of them felt that P Chidambaram should be given the responsibility of the Home Ministry,but a few others felt he should be given the finance portfolio.