Reforms on mind, Montek could be finance minister

The Congress-led victory of the United Progressive Alliance has unshackled the Manmohan Singh government, thanks to the drubbing received by the Left parties and the cutting down to size of troublesome allies with narrow agendas. The government’s focus, say analysts, will be back on business and economic revival, which may see Montek Singh Ahluwalia being elevated as finance minister

The stock market fraternity is already preparing for a sharp rise in prices when the market opens on Monday, and analysts are talking of a rise of 10% over the next few days as all the political negatives disappear.

While Singh has already promised a 100-day roadmap to revive the economy, the full budget for 2009-10, to be presented some time in June, will emphasise both a strong commitment to the UPA’s social sector schemes while pushing forward the envelope on reforms.

Reforms in the first Singh administration — including sale of public sector equity, pension reform and allowing higher foreign direct investment  in insurance and telecom —were stalled by the Leftist block. “Without the hindrance of the Left, economic policies  move very fast,” a top bureaucrat said.  

The most keenly watched decision of the government will be the appointment of a finance minister. External affairs minister Pranab Mukherjee, who is currently holding additional charge as finance minister and who presented the interim budget in February, was widely considered a frontrunner for the post when the Congress was not expecting such a thumping victory.

But with 200-plus seats under its belt, there is speculation that Manmohan Singh will get a finance minister of his choice. Speculation centres on the names of Planning Commission deputy chairman Montek Singh Ahluwalia and former Reserve Bank governor C Rangarajan.

Congress president Sonia Gandhi will meet Manmohan Singh on Sunday to discuss the distribution of ministerial portfolios, among other key issues. The Congress Working Committee (CWC) and UPA allies are also scheduled to meet on Sunday.

The new Manmohan cabinet is likely to see significant changes with the defeat of several ministers (Renuka Choudhury, Mani Shankar Aiyer, among them). Dayanidhi Maran of the DMK may also be inducted, sources said. Maran was the communications minister during the first few years of the UPA regime. A Raja replaced him after Maran fell out temporarily with Tamil Nadu chief minister M Karunanidhi.

The 100-day roadmap of the UPA government, which could be ready within a week, will focus on pushing up the growth rate back to 9% after last year’s decline, a government official indicated. It is likely to include targets on productivity, disinvestment, financial sector reforms, national security and diplomatic relations with neighbours.

Infrastructure would be a priority area for the new regime, covering sectors such as power, railways, roads and aviation (including airport development). A higher resource allocation for the UPA’s dream scheme, Bharat Nirman, is also not being ruled out.               

The chairman of the PM’s Economic Advisory Council, Suresh Tendulkar, confirmed to DNA that the government would focus on reviving the economy which is likely to slowly start moving upwards in the next six months. He added that a rationalisation in the foreign investment policy is also expected.

Director of the Indian Council for Research on International Economic Relations (Icrier), Rajiv Kumar, said that the government can now push the reforms agenda. One now hopes to see “economic growth with inclusion,” he said.

Reacting to the election results, Assocham president Sajjan Jindal said the growing fiscal deficit would be a cause for anxiety as it has already exceeded an alarming level of over 5%. “Therefore, the top priority of the new government should be to dilute its stake in some public sector units by at least 20% in the first phase.”

Ficci president and JK Paper managing director Harsh Pati Singhania said the election results showed that this was a vote for stability, growth and economic progress. “With this mandate, the government would be able to take quick and decisive actions on economic issues.”

Ficci is preparing a 100-day agenda to be given to the PM. “The overriding theme of the agenda will be to see how to get economic recovery and 9% growth.”

Bharti Enterprises vice-chairman and managing director Rajan Bharti Mittal spoke about reforms that are required in many sectors. “There are still many states where the Agriculture Act needs to be corrected so that we can go and directly buy (the produce) from the farmers,” he said. On the retail sector, Mittal said, “we have been asking for FDI in retail to be opened up.”

The BJP manifesto talked of banning FDI in retail.