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New govt not to privatise oil, power sector PSUs
May 21, 2004 22:01 IST
Last Updated: May 21, 2004 22:56 IST
The new Congress-led government will not privatise crucial public sector units in the oil and power sectors while taking up privatisation on a case-by-case basis, with a focus on using disinvestment revenues for social sector schemes.
Seeking upto 8 per cent annual growth and to elimininate revenue deficit by 2009, the draft CMP said there would be no privatisation of crucial PSUs like ONGC and NTPC and rejected the idea of automatic 'hire and fire' in labour policy.
'The United Progressive Alliance government is pledged to devolve full managerial and commercial autonomy to successful, profit-making companies operating in a competitive environment,' the draft Common Minimum Programme said.
Committing to the public sector strategy articulated by the Congress during 1991-96 and the United Front government during 1996-98, it said, 'the UPA government is committed to a strong and effective public sector whose social objectives are met by its commercial functioning. But for this there is need for selective and strategic focus.'
Emphasising on the direct link between privatisation and social needs, particularly the use of privatisation revenues for social sector schemes, it said, 'the UPA government believes that privatisation should increase competition, not decrease it.'
Accordingly, it said, public sector companies and nationalised banks would be encouraged to enter the capital market to raise resources and offer new investment avenue to retail investors.
It also sought to induct private sector industries to turn around companies that have a potential for revival while looking for a selloff or closure option for chronically loss-making PSUs after compensating all workers.
Committing to step up public investment in agriculture and irrgiation and employment oriented growth in the country, the draft, circulted among the allies and supporting parties of the Congress-led government, promised major tax reforms, broadening of tax-payers base and a stable and conducive tax rate for growth and investment.
'A detailed roadmap for accomplishing this will be unveiled in Parliament within 90 days,' it said, and added that reforms would be aimed at stimulating growth, investment and employment with particular thrust on 'rural prosperity'.
It also pledged to develop capital markets through tax and other policies to refelect true fundamentals of the economy while warning of strict action against market manipulators in tandem with further strengthening of market regulator SEBI.
'All privatisations will be considered on a case by case basis. The UPA will retail ONGC, IOC, HPCL, BPCL, GAIL, NTPC, SAIL and BHEL in the public sector while disinvestment takes place,' the draft said.
The draft CMP said the UPA goverment was committed to eliminating the Centre's revenue deficit by 2009 in order to release more resources for investments in social and physical infrastructure.
'Subsidies will be targeted sharply at the poor and the truly needy,' it said.
On tax reforms, it said the government was committed to Value Added Tax after all necessary homework has been completed.
It also spoke about meaures to increase tax:GDP ratio by expanding the tax base, increasing tax compliance and making tax administration more efficient. 'Tax rates will be stable and conducive to growth, compliance and investment,' it said.
On industry, the draft CMP said all steps would be taken to revive its growth and put it in a 'robust' footing through continued deregulation and other policies, and that 'incentives to boost private investment willbe introduced'.
Moreover, the government would set up a National Manufacturing Competitiveness Council to provide a continuing forum for policy dialogue to energise and sustain the growth of manufacturing industries like food processing, textiles, engineering, consumer goods, pharmaceuticals, capital goods, leather and IT hardware.
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