Govt in damage control mode after retreat

No question of PM's resignation: Cong.

A day after DMK forced the government to put disinvestment on hold, the Congress set rolling an action plan to placate its allies.

The Core Group of the Congress, which met here today, decided not to go ahead with contentious reform programmes in the future without obtaining the consent of Left allies.

Prime Minister Manmohan Singh will hold a meeting with the Left parties before the monsoon session of Parliament to build a consensus on issues like public sector disinvestment, according to sources present at the meeting. The PM will also hold a meeting with UPA constituents on this issue shortly.

Earlier in the day, the Prime Minister's Office had to issue a denial to queries about Manmohan Singh's resignation. Congress spokesperson Jayanti Natarajan also refuted "rumours" that Singh had offered to resign. "It is absolutely wrong.

There are no differences, and will never be, between the party and the prime minister. We stand as one," Natarajan said at a press briefing.

However, tension between the government and the Congress persisted. To iron out the wrinkles that have been developing in their relations in the last six months, a meeting of the core committee of the party, comprising senior leaders and some ministers, was held.

The prime minister and Congress President Sonia Gandhi held a separate meeting ahead of the core group discussions, though the Congress spokesperson described it as a "routine meeting."

Several top Congress ministers conceded that Singh had acted to protect the government, and that "there was no way out" other than to put all disinvestment on hold. They further admitted that the government had been left "looking ridiculous."

Informal talks with ministers suggested they were all concerned about the fate of events had the PM stood firm, and told the DMK that disinvestment in Neyveli Lignites would go through, come what may.

The ministers said there was no doubt that the DMK would then have joined Chandrababu Naidu and others in the Opposition to strengthen the formation of a third front, thus increasing the chances of the UPA government being brought down.

"No one wants an election just now. But it is true that we see light at the end of the tunnel," a senior Congress minister said. By implication, he did not rule out a change in leadership.

Inside the Congress, a blame game was in full play. Leaders said the prime minister had been compromised, as he was led to believe that Finance Minister P Chidambaram had convinced the Tamil Nadu allies of the UPA that disinvestment was the only way to save NLC.

In fact, an informal understanding had been sealed with the Left parties four months ago, under the terms of which 75 per cent in non-navratna companies would be disinvested slowly. This happened at a meeting where the finance minister convinced the Left parties that disinvestment was not anti-PSU.

However, the sustained efforts of a group inside the government repeatedly undermined this consensus, party leaders said, citing controversies over seat reservation, wheat import, and price rise, each of which was designed to diminish the prime minister's stature.

"There is a group that is always on the lookout for creating tension between the party and the prime minister, as this tension can be leveraged to get the party leadership to think of a change at the top," a party leader said.

Sports Minister Manishankar Aiyar's reported statements criticising wheat imports (which he has since dissociated himself from) and Commerce Minister Kamal Nath's abrupt exit from WTO mini-ministerial talks have been cited as two examples.

It is not that the prime minister is without well-wishers in the government. Unfortunately, they "" like Agriculture Minister Sharad Pawar "" have performed poorly in the government, leading Singh's detractors to make the point that he has been specially indulgent of those who recognise him as the only boss in the UPA.

Owing to the background of the Pawar-Sonia Gandhi ties (the Nationalist Congress Party's sole plank was that the Congress-I was headed by a person of Italian origin), relations between the Congress president and Pawar are cool and purely functional.

Suggestions have been made by party leaders that keeping in mind the UP elections early next year, the Congress would be better served by having a Dalit head the UPA government.

For Manmohan Singh, sources said, the negotiation and the conclusion of the Indo-US civil nuclear deal at the end of the year would be a matter of personal satisfaction. Both could become important dates.

PSU IPOs on track: FM

The proposed initial public offers of public sector undertakings will not be affected by the decision to put all disinvestment plans on hold, Finance Minister P Chidambaram said today.

The remarks came in response to questions by reporters on the fate of the proposed public issues of power PSUs like PFC, NHPC, PowerGrid, and REC, and those of Indian Airlines and Air India. Chidambaram clarified that public issues did not mean disinvestment.

Government sources said some minor changes may have to be made in one or two of these proposals where the government intended to ride piggy-back on the companies, and undertake an offer for sale.