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Journalism of Courage
Trying to strike a balance between addressing the concerns of the “aam aadmi” in both urban and rural India and the need to pursue a vigorous, if nuanced, economic reforms agenda, Prime Minister Manomohan Singh today formally released the CMP which, in his words, “seeks to accelerate the tempo of social and economic change” while “paying particular attention” to the needs of farmers, agricultural labour, workers and other weaker sections of society.
The Prime Minister emphasised that the 24-page document was not a comprehensive agenda but “does lay down the broad principles that will guide the work of our government.” The CMP, the document added in conclusion,”is the foundation for another CMP—collective maximum performance.”
To emphasise the “collective” aspect, the entire spectrum of UPA and Left leaders formed the backdrop at the Panchavati auditorium at 7, Race Course Road when the UPA chairperson Sonia Gandhi first introduced the CMP and the Prime Minister later read out its salient features.
While several features of the CMP—the decision to repeal POTA, the promise to enact a National Employment Guarantee Act, comprehensive protective legislation for agricultural workers, pledge to raise public spending on education to 6% of GDP via a cess on Central taxes, and “remove communalization of the school syllabus”—were in keeping with the UPA’s “secular and progressive” credentials, issues relating to privatisation, fiscal policy, capital markets and economic reforms were also addressed. On the controversial issue of privatisation of PSUs, the CMP promised to retain existing “navratna” companies in the public sector. But its formulation that “generally profit-making companies will not be privatised” leaves open the option of divesting non-navratna PSUs in the future. It emphasised that all privatisations “will be considered on a transparent and consultative case-by-case basis”—and the Prime Minister mentioned the Centaur Hotel sale as an example of “non-transparency” of the previous government.
In order to revive industrial growth, the CMP promised incentives to boost private investment, actively encourage FDI (“the country needs and can easily absorb at least two to three times the present level of FDI inflow”), and strenthen regulatory institutions to ensure competition. The section on capital markets said financial markets “will be deepened” and also underlined the importance of FIIs—despite the Left’s objection to this line in the previous draft. The final CMP states: “FIIs wil continue to be encouraged while the vulnerability of the financial system to the flow of speculative capital will be reduced.” On economic reforms, the CMP reiterated Singh’s oft-repeated commitment to “economic reforms with a human face” that stimulates growth, investment and employment.
On fiscal policy, the UPA government committed itself “to eliminating the revenue deficit of the centre by 2009, so as to release more resources for investments in social and physical infrastructure. ” All subsisides, it added, “will be targeted sharply at the poor and the truly needy like small and marginal farmers, farm labour and the urban poor.” In reply to a question, the Prime Minister said “subsidies for agriculture cannot be done away with” and pointing to the widespread farmers’ distress added: “I cannot pronounce that I’ll get rid of subsidies.” He, however, said subsidies would be reviewed in a manner that ‘‘allows growth” but is “fiscally responsible.” The CMP also indicated that the UPA government will focus on savings and may discontinue the policy of slashing interest rates on bank deposits.
Interest rates, it promised, “will provide incentives both to investors and savers, particularly pensioners and senior citizens.”
The new government will also “never take a decision on EPF without consultations with and approval of the EPF board.”
In keeping with the Left demand, it said LIC and GIC will continue to be in the public sector and play a social role, while the “social obligations imposed by regulatory bodies on private banks and private insurance companies will be monitored and enforced strictly.”
While the above may please the leftists, the CMP does not meet their demand of “renegotiating” WTO agreements. Instead, the document states: “Commitments made earlier will be adhered to, even as efforts are mounted to ensure that all agreements reflect our concerns fully.’’
On foreign policy too, the final CMP took into account suggestions from the Left regarding “multi-polarity” and traditional ties with West Asia, but refused to dilute the pro-US stance or adopt an explicit anti-Israel one.
According the “highest priority” to building closer ties with South Asian neighbours, the CMP stated that “dialogue with Pakistan on all issues will be pursued systematically and on a sustained basis” and :outstanding issues with Bangladesh will be resolved.” In view of the presence of the pro-Tamil Dravidian parties in the UPA, it also notes that the government will support peace talks in Sri Lanka “that fulfil the legitimate aspirations of Tamils and religious minorities within the territorial integrity and solidarity of Sri Lanka.”
Privatisation
CMP draft
• All privatisation on a case-by-case basis, profit-making PSUs like GAIL and ONGC not be privatised
Left
• Clear commitment not to privatise profitable PSUs and those in core sector, besides navratnas
Final
• Profit-making companies not to be privatised. All privatisation on transparent, consultative basis. Navratnas to be in public sector
NDA
• Disinvestment will continue to enhance and realise the hidden wealth of PSUs… Restructuring of PSUs to enhance profitability
Labour
CMP draft
• UPA rejects automatic hire and fire. Some flexibility has to be given to industry in labour policy, ensuring workers are protected
Left
• No automatic hire and fire. Delete the reference to flexibility
Final
• UPA rejects automatic hire, fire. Changes in labour laws may be needed but these must fully protect workers
NDA
• Strengthen welfare, training and employment-creation provisions
Foreign policy
CMP draft
• Maintain independence of foreign policy, closer strategic and economic engagement with the US
Left
• Break with BJP policy. Correction to detach from strategic plans of US and promote multipolarity
Final
• Closer ties with US, a Palestinian state, no Indian mercenaries in Iraq. UPA to maintain independence of foreign policy
NDA
• Future multipolar world order with India one pole. Broaden, deepen multi-dimensional relations with USA
Employment
CMP draft
• National Employment Guarantee Act: at least 100 days of employment on public works every year at minimum wage for every rural household
Left
• Until the act comes, implement food for work
Final
• National Employment Guarantee Act
NDA
• 1 crore employment and self-employment opportunities each year
Power
CMP draft
• Public investment in infrastructure up, role of pvt sector expanded in power distribution
Left
• Privatisation including distribution of power should not be encouraged. Revise provisions of Electricity Act 2003
Final
• Review of Electricity Act. June 10 deadline for replacing SEBs extended. Greater role for pvt generation, distribution
NDA
• Reforms envisaged in Electricity Act to be completed before end of 2004
FDI
CMP draft
• Country needs and can easily absorb at least two to three times present level of FDI inflows…Financial markets will be deepened. FIIs will be encouraged
Left
• Welcome FDI to promote new technology, ‘‘Encouraging FIIs’’ need not be there
Final
• FDI sought in infrastructure, high-tech, exports…FIIs encouraged, reduce vulnerability to speculative capital
NDA
• No specifics except FDI limit in insurance will be revisited to widen India’s insurance sector, strengthen global linkages
