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Left raises hell over FDI limit hike in key sectors

Saturday 10 July 2004

NEW DELHI, JULY 10. The Left, which nurses pretensions of shaping the UPA government’s policies, today persisted with its protests against the move to hike FDI in the three key sectors of insurance, civil aviation and telecom

While the Leftists today reiterated that they will not allow the passage of an amendment to the IRDA Act for hiking the FDI limit, the CPM has convened a meeting of its politburo on Sunday to take stock of the Budget.

For the finance minister, it could be a repeat of 1997, when the then-United Front government could not work out a consensus on the IRDA Bill. The Left commands the support of 61 members and they are adamant that the increase in FDI cap is not acceptable.

Although the Congress government acknowledges that the Left will have to keep its protests within politically permissible limits, lest it gives an opportunity for the Opposition to ram in its political point that the UPA is a quarrelsome coalition, there is considerable pressure on the Left from its trade unions to resist the FDI proposals.

The Leftist unions have sizeable presence in the insurance and telecom sectors and any stand that goes against their wishes could be politically costly.

On the issue of privatisation, too, the Left failed to have its way as the P-word found a place in Mr Chidambaram’s Budget. While he stuck to the CMP formulation that gives him elbow room to restructure equity, his speech made it clear that funds for the PSUs will not be allowed to be misused.

Major investments will be made in PSUs falling in the sectors of power, telecommunications, railways, roads, petroleum, coal and civil aviation,” Mr Chidambaram had said in his speech.

In other words, allocations will be more targeted and not random.

The Left, which privately concedes that Mr Chidambaram has travelled the path laid out by his predecessor Jaswant Singh, feels that its acquiescence to the FDI proposal will send a wrong signal to its constituency. In any case, states where Leftists have substantial presence have not benefited much from the Railway Budget or the General Budget.

The fact that Montek Singh Ahluwalia, once described by the Left as “an IMF agent”, will be redesigning the rural development schemes, will also leave little scope for any major Leftist intervention.

The prime minister is determined to improve the delivery system and that is sure to be reflected in the Ahluwalia prescriptions. The Left government’s delivery track record is not encouraging and flow of funds will require these governments to make the system in their states more accountable.


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in The Economic Times, Saturday, July 10, 2004.

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