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PC proposes, left & right
- Rural new deal with reforms burst

New Delhi, Feb. 25: Finance minister P. Chidambaram looks set to unwrap a budget on Monday packed with Left-friendly programmes that will seek to offer a 'New Deal to rural India', create more jobs for the poor and splash out more money for elementary education and healthcare.

The Surjeets, Yechurys and Bardhans would have rejoiced when they heard President A.P.J. Abdul Kalam's address to the joint session of Parliament or read initial reports of the economic survey presented by the finance minister a little later.

The budget will probably articulate the pro-poor concerns that resonate in the common minimum programme of the government because the President's prestige and Prime Minister Manmohan Singh's promises to the Left are at stake.

Extending a pilot project providing 100 days of guaranteed work to one member of a poor family, spending more money on elementary education and adult literacy and nudging the spend on healthcare towards the goal of 2 per cent of the GDP that Nobel laureate Amartya Sen never tires of preaching to Manmohan Singh seem on the cards.

But is that all that the Budget for 2005-06 will contain'

Read carefully between the lines of the fine print in the survey and there is the resolve to continue with the Reforms Express that Chidambaram flagged off when he announced banking reforms this week and followed it up two days later by relaxing foreign investment in housing.

The finance minister has set his agenda, at the top of which lies cutting import duties to Asean levels even as tax exemptions are pruned drastically to neutralise the loss of revenue.

Also on the list are simpler procedures and relaxed entry-exit barriers to start or shut down businesses. Labour laws need to be changed to allow easier redundancies and reservation for small-scale industries phased out.

Many of these are contentious issues that will run into opposition from the Left, as will the proposal to revisit foreign direct investment caps in coal mining, insurance, real estate and retail.

Subsidies, especially on food, says the survey, have to be re-targeted to help reach them to the really poor even as the cost to the exchequer is slashed.

It suggests injecting greater competition into banking (read easier foreign investment in private banks and mergers and acquisitions).

Pensions and small savings schemes need to be encouraged to invest in equity and long-term debt markets.

The survey proposes introducing minimum subsidy bidding (where the firm which bids to undertake a service for the lowest subsidy from the exchequer wins) to bring in private entrepreneurs to build infrastructure.

However, the big question doing the rounds in Delhi is how much of the reform menu the finance minister actually serves on Monday.

Ministry mandarins say the reforms they have been planning remain on the cards. But they admit that the question whether these will come in one burst as part of the budget or be staggered over the year or years will depend on 'the kind of noises we hear on the streets after these announcements'.

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