CMP: Economic Reforms Don A Human Face

New Delhi, May 27 | Updated: May 28 2004, 05:30am hrs
The Congress-led United Progressive Alliance (UPA) along with its Left allies has committed itself to economic reforms with a human face. The common minimum programme (CMP) unveiled on Thursday says a good-bye to privatisation of navratana companies and labour reforms.

It promises introduction of value-added tax (VAT), a new scheme to unearth black money, review of Electricity Act 2003, and initiation of a dialogue on job reservation in private sector.

The CMP sets the direction of further reforms in agriculture, industry and services. The document also gives a fair indication of what is in store in the first budget of the new government. A cess on central tax to fund education and a special scheme to tap black money are the two things which the budget is likely to introduce. Reforms with steps towards stablising tax rates and introduction of VAT will also be taken.

The objective of reforms will be to generate employment for every household, deepening rural prosperity and improving the quality of life of ordinary citizens. The UPA government will strive to achieve this on a sustained economic growth rate of only 7-8 per cent.

Employment and agriculture, the two issues with which the Congress and its allies led the attack on the National Democratic Alliance (NDA), come first in the list of 24 topics on which CMP has spelt out a policy direction.

Addressing mediapersons, prime minister Manmohan Singh made it clear that NDAs privatisation policy would be reversed. He said no profit-making PSU would normally be privatised. The disinvestment ministry would be scrapped and the department merged with the finance ministry.

The UPA government has also committed to eliminating revenue deficit by 2009 so as to release more resources for investment in social and physical infrastructure. The UPA government will not cut deficits by reducing or curtailing growth of investment and development outlays, said Dr Singh. A detailed roadmap for this will be placed in Parliament within 90 days.

He said the new government would encourage foreign direct investment in infrastructure, hi-tech sectors and exports, and assured the industry of measures to boost industrial growth. All subsidies will be targeted sharply at the poor and the truly needy like small and marginal farmers, farm labour and urban poor, he said.

The delivery system for rural credit will be reviewed. Immediate steps will be taken to ease the debt burden and high interest rates on farm loans. Crop and livestock insurance schemes will be made more effective, said the CMP.

The final CMP has certain additions to the original draft in a bid to accommodate views of some allies. For instance, while the original draft promised at least 100 days of employment for every rural household, the final document wants to guarantee this to at least one able-bodied person in every rural, urban poor and lower middle-class household.

CMP rephrased commitment on food subsidy by stating that major changes in functioning of Food Corporation of India would be done to control inefficiencies that increase food subsidy burden. The draft had indicated that the objective would be to control the growth of food subsidies.

CMP has also used the American phrase affirmative action for reservation in privatise sector jobs. The draft had only talked of a national dialogue with industry on fulfilling aspirations of scheduled caste and tribes.

Another significant inclusion which could have a bearing on the real estate industry is a sentence stating that no reversal of ceilings legislation will be permitted. Repeal of urban land ceiling act is one of the reform yardstick which NDA had identified for state governments. The draft did not have this line.

The drat used the word Naxalite for qualifying violence in the section which addressed issues relating to scheduled caste and tribes. The word is replaced by extremist.

Promises on review of Electricity Act 2003 and investment in modernisation of railways are also not part of the draft but find place in the CMP document as an afterthought.

Other additions include a mention of jute industry and sugarcane farmers. The policy towards backward states like Bihar and on Jammu and Kashmir have also been included in CMP.