"Centre's prescription to address the grim economic situation would only lead to "side-effects" and result in manifold problems," he said.
In big-ticket reforms push, the UPA government on Tuesday decided to hike foreign direct investment (FDI) in a dozen sectors, including 100 per cent in telecom and higher caps in insurance and defence sectors, to boost the sagging economy.
State-run BSNL was already incurring losses for the past few years, he said quoting statistics.
"But our Central government has opened up avenues for revenue generation for foreign companies," Karunanidhi said.
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On the insurance front, the Centre had opted for a "short-cut" to increase FDI cap to 49 per cent from 26 per cent despite a Parliamentary Standing Committee's recommendation against it and if that be the case what was the need for a standing committee at all, he asked.
A Bill to raise FDI cap in the sector is pending in the Rajya Sabha.