Karat promises stick on reforms

NEW DELHI: A wide gulf separates the reformist section of the UPA government from its main political prop, the Left parties, who are supporting it from the outside. Whether it is disinvestment, foreign investment in retail or labour law flexibility for the IT sector and in special economic zones, the CPM - the main party on the Left - has a different take on it.

Using the Common Minimum Programme (CMP) as the touchstone, the CPM's line on reforms centres around a strict interpretation of the letter and spirit of the document. In an exclusive interview to DNA (See page 25), party general secretary Prakash Karat said the party opposed any disinvestment in Bhel because it was not part of the CMP.

"The CMP says the UPA will retain existing Navratna companies in the public sector while these companies can raise resources in the capital market. What does this mean? This means the government will not disinvest. (But) they can raise capital for their purposes."

The silver lining in this view is that Bhel can raise capital from the market for its own business requirements, even though government can't offload its shares to raise money for budgetary needs. But the UPA government may find it difficult to sell shares even in non-Navratna companies, since the CPM does not accept that stakes can be reduced to 51% from 80-100% in public sector companies.

Says Karat: "They say it's not privatisation when the government holds at least 51%. We say it is creeping privatisation. We will not accept it."

Then how can the government raise resources for even social sector projects? The government has already announced proposals to finance the National Investment Fund and various social sector schemes from the proceeds of disinvestment. But in the CPM's view, the questions of resource-raising and disinvestment should not be mixed up. It is prepared to discuss them only separately.

In other words, the chances of disinvestment of non-Navratna companies are as bleak as ever. Not only disinvestment, the government faces tough opposition to its reform proposals in many other areas as well. The Left is getting ready to place alternative proposals as a counter. It has either already submitted notes, or is about to do so, on several individual areas of economic policy, including FDI in retail trade, WTO negotiations and labour law reforms.

What could these alternate proposals be? Robbing Peter to pay Paul has long been the Left's favourite resource-raising model, and in this vein it is likely to propose ideas like hiking tax rates for companies and people in higher income brackets, apart from implementing more effective measures to unearth black money.

The centre is also cutting no ice with the Left by citing the economic reforms now underway in West Bengal under chief minister Buddhadeb Bhattacharjee. As Karat sees it, the Left Front in West Bengal as a constitutionally-elected body may be bound to implement all-India policies whether it likes it or not, but the CPM as a political party is under no such obligation.

In sum, the return of the Left parties to the coordination committee of the UPA government after a hiatus of four months does not signal any smoothening of the path for economic reforms.

"It is a myth that we are involved in day-to-day policy-making or indulge in administrative interference", said CPM general secretary Prakash Karat in a wide-ranging interview to DNA.

The mighty and powerful - from Mukesh Ambani to LN Mittal - have been making a beeline to Ajay Bhavan, the party's GHQ in Delhi, but the party chief calls it a "popular misconception" that CPM, which lends crucial outside support to the UPA government at the Centre, is a party in power.

Karat explains his party's stand on the gamut of economic policies and on the apparent dichotomy within the party on foreign direct investment (FDI) and workers' rights in the IT sector.

After a gap of four months, the Left parties recently rejoined the UPA-Left coordination committee on government's assurance that it was putting the Bhel disinvestments on hold. Is there also a softening on your part? Are you now willing to consider disinvestment in those profit-making PSUs that are not Navratnas?

What was the Bhel issue? There is a separate mention of Navratnas in the CMP (common minimum programme). The CMP says the UPA will retain existing Navratna companies in the public sector while these companies can raise resources in the capital market. What does this mean? This means the government will not disinvest. They can raise capital for their purposes.

 This applies to Bhel and other Navratna companies. We had differences on this and we didn't participate in the coordination committee. But when they said they will neither disinvest in Bhel nor any other Navratna company, we rejoined the committee.

Did the letter (from UPA chairperson Sonia Gandhi) say that clearly for all Navratna companies or just for Bhel?

No. They told us during the talks. The Prime Minister told us three or four times that they will not touch any Navratna company. That settled the issue about Navratna PSUs.

What about other profit-making PSUs?

Now, the CMP says, generally profit-making PSUs will not be privatised. The provision here is privatisation. That is what the argument is about. They say they can bring down the government's holdings in these PSUs to 51% from 80% or 100% now. We do not agree. They say it's not privatisation when the government holds at least 51%. We say it is creeping privatisation.

 We will not accept it. The question then is how do we raise resources for the social sector schemes or for the National Investment Fund (NIF). Before we rejoined the coordination committee, we discussed the matter (with the government). We said we will discuss the issue of mobilisation of resources separately. They will give their proposals and we will give our proposals. We can discuss that.

Does it mean that you do not agree to disinvestment even in non-Navratna PSUs?

We have said we should discuss this in the coordination committee in the overall context of how to raise resources? If they propose disinvestment in some PSUs for raising resources, we may also have some proposals for raising resources through other means. So let's discuss that.

Could you explain the dichotomy in your party. In West Bengal, the party seems to follow one line and at the Centre it takes an opposite line.

There is no dichotomy on Bhel. There is no Bhel in West Bengal. It's not just about PSU disinvestment but about the whole range of economic policies that your party is perceived to be following two different approaches.

There is a very superficial view. Take FDI. The party congress had adopted a document. The party is bound by it whether in West Bengal or in Delhi. The party is in the government in West Bengal. As a government, it will have to implement policies decided by the central government. So they have a different sphere, a different role. It's not now, but since 1967, when we formed the United Front government in West Bengal.
 
We have had to implement many decisions taken by the central government though we did not agree with those. The state government is bound to do certain things under the Constitution. When it comes to an all-India policy, for the country as a whole, the state government cannot say it won't implement it.

 We may not agree with it. We may fight it even after it has become an all-India policy. As a party, things are different. We are there as a party in West Bengal but we are also in the government there. Why only West Bengal, it applies to Kerala and Tripura as well. We may implement certain things as a government that we are not advocating as a party.

So you will implement in West Bengal what you oppose in Delhi?

We may like to do things in a different way, but we can't do that as a state government. It can be done only when all-India policy can be changed.

But at the Centre also, you are seen as a party in power?
That's a popular misconception. We are not in power and they do not consult us on basic policy matters. It is only when policy has already been made that we raise the matter. And we do not expect the government to be run on that basis. It will not be fair for us, who are not in government, to expect the government to be looking behind its back all the time and asking us what should be done.

We don't expect that. We expect the government to broadly adhere to this (points to a copy of CMP document). When a new issue (not dealt with in CMP) comes up, not only economic but also political, it would be nice if the government consults us. They can do this in two ways: one, inside Parliament, and the other, outside Parliament. That's all. Beyond that it is a myth that we are involved in day-to-day policy-making or indulge in administrative interference.       (To be concluded)