Allies okay agenda, FM in Budget mode

Left endorses common policy after tough talk.

The Left Front yesterday climbed down after raising fresh demands, including an end to the policy of encouraging foreign institutional investors (FIIs), innovative new taxes like a surcharge on the super-rich and no privatisation of power distribution companies.

Senior Communist Party of India (Marxist) leaders said while a broad consensus had been reached on the common minimum programme of the United Progressive Alliance government, the Left parties would not be a signatory to it. Although they have endorsed the programme, they have kept the door open for confrontation over issues they disagree with the government.

In its inputs to the fiscal policy of the United Progressive Alliance, the common minimum programme had said the share of states in central taxes be increased from 29.5 per cent to 33 per cent and the interest rates on loans extended to them lowered.

Further, a debt relief package for states, including write-offs and swaps, has been proposed to help them come out of the red.

Sticking to its stand on disinvestment, the CPM had demanded a commitment from the government to end privatisation of profitable public sector companies and those in the core sector, apart from the Navratnas.

Seeking a revision of the Electricity Act, 2003, it said privatisation of public services like power distribution should be stopped as it had "a deleterious effect on the people".

It, however, welcomed foreign direct investment (FDI) to promote new technology and to augment productive resources.

The CPM has also said workers' rights should be protected, thereby disallowing automatic hire and fire. Instead, any changes in labour laws should be made after consultations with trade unions.

Congress President Sonia Gandhi was elected chairperson of the United Progressive Alliance today and the final common minimum programme will be released tomorrow.

The programme is expected to push for a 7-8 per cent GDP growth through increased public investment in agriculture, seek the elimination of the revenue deficit by March 2008 and work towards an early introduction of the value-added tax.

It will also advocate a cess on central taxes to raise funds for education, a legal guarantee for employment for at least 100 days, allow public sector banks to tap the equity markets to raise capital, and encourage higher FDI in core sectors and overseas investment in the hydrocarbon sector.

The programme will, however, put a stop to privatisation of profit-making companies, call for a review of Electricity Act, 2003, and scrap the idea of a hire-and-fire policy.

In the World Trade Organisation, the government will protect the national interest, particularly of the farm sector and industry. It will also play a proactive role in strengthening the G-20 bloc.

The new formula

• Increased public investment in agriculture
• Elimination of revenue deficit by March 2008
• Early introduction of value-added tax
• Cess on central taxes to raise funds for education
• 100 days legal guarantee for employment
• Encourage higher FDI in core sectors
• Stop privatisation of profit-making companies
• Review Electricity Act, 2003
• No hire-and-fire policy
• Encourage G20 grouping in WTO, protect farmers