Armed with a clear mandate, UPA plans to draft another National Common Minimum Programme to serve as its policy beacon, just as it had done after coming to power in 2004. But Congress leaders are emphatic the document this time will be upfront about taking reforms forward in all sectors, like finance, taxation, education and even legal services.
Congress general secretary Janardan Dwivedi said the programme would be drafted after a UPA constituents? meet on Monday morning. Dwivedi said his party was all for economic reforms but would take care of the public sector companies. In a similar vein, Congress spokesperson Abhishek Manu Singhvi reiterated the party?s left-of-centre leanings in a television debate, tempering the expectations of faster reforms.
The current UPA government had jettisoned disinvestment under pressure from its erstwhile Left allies. A decisive verdict for UPA sans the Left parties has been interpreted as a welcome news for economic reforms.
Endorsing the line of thought, commerce & industry minister Kamal Nath told FE, ?This is a victory for economic stability. In these challenging times of global recession, the people of India have reposed their trust in the Congress party.?
The commerce & industry ministry is ready with an action plan for the next Budget. The plan includes exempting exporters from the fringe benefit tax on foreign travel, a package for labour-intensive sectors like textiles and a special package for small & medium enterprises?in line with the Congress? poll promise of a ?new deal for SMEs.?
Nath?s colleague Kapil Sibal said the party will press for reforms even in controversial sectors like higher education and legal services. Sibal said, ?We will work for reforms and ensure their benefit reaches the common man?.
The backdrop of the global economic crisis and the economic slowdown, however, will be a formidable challenge for the economic leadership of the new government.
A top priority will be to balance the pressing need for fiscal stimulus with the ballooning fiscal deficit?which will be further challenged by the rising oil prices and a resultant issue of oil bonds to PSUs. Add to this the likely continuation of other spending programmes that formed the backbone of UPA?s first term, and the fiscal situation may soon turn dire. Still, the government needs to resurrect the Fiscal Responsibility and Budget Management Act urgently. Early in the term would be politically the best time to do that.
The 100 days roadmap drawn up by India Inc on Saturday ranked reforms in pension, insurance, banking, a clear infrastructure policy and a roadmap to implementing the goods and services tax (GST) regime as its top priorities. Harsh Pati Singhania, president, Ficci, said, ?UPA would now not have any excuse. Ficci also wants that the non-banking finance companies should be granted the status of banks, which has been a long pending demand of the chamber.?
Other policy changes that need no legislative approval, and which can be acted upon quickly, include liberalising the policy regime for foreign capital flows, particularly FDI in many sectors.
Given that India still remains a destination that offers relatively high returns on investment compared to economies growing in negative numbers elsewhere, the government must move to capitalise on this quickly.
Sunil Mittal, chairman & group CEO of Bharti Enterprises, said, ?The new government should work towards bringing about a stable spectrum policy, and expedite the auction of 3G and broadband wireless access spectrum.?
Ficci has also urged for more investment in infrastructure, ensuring completion of existing projects like the highways and speeding up the Commonwealth game projects. Singhania said overall interest rates have to be brought down to make the projects viable.
Reiterating the demands to take pension, insurance and banking reforms forward, Hari S Bhartia vice-president of CII hoped the new government would give a boost to the export sector, introduce tax reforms and reduce repo rate and reverse repo rates by 50 basis points each. Chandrajit Banerjee, director-general, CII, said,?We now need the government to provide us with a clear infrastructure policy.?