The Telegraph
Since 1st March, 1999
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PM sets reform course

New Delhi, Feb. 9: Prime Minister Manmohan Singh today set the economic agenda for the next six months by directing his ministers to slash subsidies, prepare a white paper on divestment, push labour reforms and initiate infrastructure projects to spur growth.

The agenda indicated the government's resolve to push reforms despite pressure from its Left allies.

All the measures the Left sees as red rags were on the agenda: divestment, labour law reforms and privatisation of airports at Delhi, Mumbai, Bangalore and Hyderabad (though the words Singh used were 'restructure or develop').

The biggest worry for the government has been the ballooning subsidies that have gone way past the estimate of Rs 43,516 crore this year.

Singh directed the department of economic affairs to prepare a policy on subsidies that would identify target groups, goods and services and devise an exit strategy to weed out those that are inconsistent with the policy.

The experts have speculated that these would cover some subsidies on petroleum, especially on cooking gas, and some on food. The department of fertilisers has also been asked to rationalise subsidies.

Singh emphasised the need to revamp the public distribution system. In his last budget, finance minister P. Chidambaram spoke of the introduction of food stamps ' a concept followed in the US ' to ensure supplies through ration shops reach the poor.

The department of disinvestment has been asked to prepare a white paper on divesting a part of the government's stake in public sector companies, an issue over which differences with the Left are the most contentious.

A statement issued by the Prime Minister's Office said the finance ministry had been asked to develop a comprehensive policy on foreign direct investment (FDI). The government has been keen to ratchet up FDI inflows to around $10 billion a year from a little over $4 billion now.

There are other issues that the detractors of reforms will be uncomfortable with. Singh has asked the department of mines to implement steps aimed at attracting private investment ' domestic and foreign ' in mining.

He asked the commerce ministry to devise a policy on special economic zones that will include a hassle-free regulatory regime for labour, among other things. A hire-and-fire labour policy could be tested out in these zones.

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