Left puts roadblock on way to rupee full float

CPM preparing a note to counter the Tarapore recommendations.

The Left parties have decided to oppose the Tarapore Committee's recommendations for a five-year road map for full capital account convertibility.

The CPI(M) is planning to meet Prime Minister Manmohan Singh shortly to lodge a protest.

According to sources, the party is preparing a draft note to counter the Tarapore report, saying the UPA government must realise that developing nations which have undertaken currency convertibility have courted financial crisis.

The note will be adopted by the Politburo at a meeting in Kolkata on September 12 and 13. It would also be placed before the other Left parties for adopting a common stand, party sources said.

Putting forward its contention, the CPI(M) said the country experienced a stock market crash in May primarily due to fund pullout by the FIIs.

By recommending freedom for Indian financial institutions and companies to take large volume of capital out of country, the Tarapore Committee has, in fact, paved the way for a currency crisis, according to the note.

In this backdrop, any attempt by the UPA government would be opposed tooth and nail, the note added.

"While working people gain nothing from such a measure, which is essentially meant to quench the thirst of the rich and the corporates for speculative profits, they have to bear the pain of adjustment when massive capital outflow takes place, leading to currency crisis and runaway inflation," it said. Party sources said the move was not a part of the CMP.

The Forward Bloc has also protested the report. So have Left trade unions like the CITU. More objectionable was the effort of the panel to bring back certain recommendations of the Narasimhan Committee on the banking sector, especially the one related to bringing down government stake in public sector banks to 33 per cent, which the note claimed had not found support from any political quarter, party sources said.

Party sources said it seemed the government was waiting for the Parliament's monsoon session to end to bring out the report.