Tough economic decisions await new government

MANDATE 2004

The Congress-led government will have to decide on the fate of at least a half a dozen major economic issues within the next 60 days, including the continuation of exemption on capital gains and dividend taxes and setting of an annual rate of returns on deposits with the Employees Provident Fund.

It would also have to decide on the appointment of at least ten secretaries at the Centre and take a call on the Rakesh Mohan committee on interest rates on small savings.

One of the first test of the new government will come with the announcement of the minimum support prices for kharif crop.

The Left and the Congress have been vocal about protecting the interests of the farmers and this would demonstrate their ability to translate that concern into action.

Among the controversial decision would be whether to continue with pension reforms in the country.

While senior left party leaders have said that they are not against liberalisation per se, the present Pension Fund Regulatory Development Authority has only got the mandate to cover new central government employees only.

The RBI report on including new state government employees will therefore be examined afresh, before the government will allow any forward move on it.

When the elections were announced the department of company affairs was working on a fresh draft for the Companies Amendment Bill based on feedback received from the industry.

The moves include increasing the number of independent directors on the board of companies and framing provisions for women directors to join company boards.

Also, based on the opinion of the Supreme Court, the government will have to decide on filling up eight vacancies in the Competition Commission of India, including its chairman.

In the government itself, several important posts including that of 10 secretary level officers, who would be retiring by the end of June, will have to be decided upon.

Another 10 top officers will retire in another three months among the 56 senior IAS officers, who will retire between April and the end of November.

This includes the post of finance and revenue secretaries, along with that of commerce secretary. Secretary I&B, Heavy Industries, Youth Affairs, and Food Processing will also retire before the budget is presented.

The government will also have to grapple with the applicable interest rates for the 2.4 crore depositors of the Employees Provident Fund. In the last fiscal, the Fund finally got its act together on May 13 when it sent advises to its regional offices to retrospectively fix a 9.5 per cent interest rate.

More than that, the government will have to decide if it would accept the Rakesh Mohan committee recommendations on interest rates on small savings. This includes a decision on launching the Dada Dadi bonds.

However no forward movement is expected on firming up India's position on agriculture in the negotiations at the World Trade Organisation.