Tuesday, June 1

The (Un) Common Minimum Program

The Common Minimum Programme (CMP) of the ruling coalition is being trumpeted as ‘reform with a human face’ but looks suspiciously like ‘populism with a bankrupt face The another impact will be on FDIs and there is a sure reason to believe that India will see muted flows this year.
One big negative for capital is the government's decision not to disinvest public sector units (PSUs). Disinvestment was one of the main triggers for attracting foreign inflows last year.

Out of the FII flows that came into India in the past 15 months, over 40 per cent have gone into PSUs. These flows have caused PSUs to re-rate over 100 per cent in the past one year. Experts point that if there is disinvestment of large companies through the market route, foreign funds will be attracted.

SWAMINATHAN S ANKLESARIA AIYAR writes in Econmoic Times that The CMP claims it will reduce the revenue deficit to zero by ‘09. But it has no credible programme to raise enough revenue to meet even the current deficit, let alone one greatly expanded by explosive spending on education, health and employment. The Full Story can be found in 'Public debt at 85% of GDP in '04' In another article on Economic Times he points out that CMP will lead to nation's bankruptcy
If seriously implemented, the CMP could swell the fiscal deficit from 10% of GDP to an astronomical 16-17% of GDP. Even one step in that direction will cause FIIs and domestic investors to flee, producing a stock market crash that makes the Harshad Mehta and Ketan Parekh debacles look like a picnic. Any JPC enquiry will easily identify the culprits behind such a crash: Manmohan Singh, Sitaram Yechury, and others who drafted the CMP.

The highlights of the common minimum programme can be found at Sify.com

Once again we are seeing a "Garibi Hatao" program from the Garib Banao Congress. There stupid policies and rules of license raaj has created the great divide in indian society and economy which they want to recreate through populist measures again. If there is no disinvestment then how the government is going to raise mony for healthcare and education. They will not sell any profit making PSU, who the hell then would like to buy loss making ones. The job of the goverment is to provide education, defense, healthcare and other important services and to watch and control all others sectors, goverments by definiition of democracy is for/by/of people and it should stay away from "owning" everything under the sun. Goverments job is not to - generate employment, its job is to - provide employment i.e fine tuning the economy to make it more healthy and vibrant. But the Indian Government has always shown the tendency to own , by ownership, the claws of corruption gets deep rooted. The free and conducive business environment lessens the ownership of Government and thus decreases the chance of corruption , which no Indian poltician would want. Lets hope for the best.