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Vajpayee government to push economic reforms |
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June 24, 2000
NEW DELHI, (AP) - Prime Minister Atal Bihari Vajpayee's right-wing coalition is expected to give a new thrust to privatization of state-owned companies despite a stiff resistance from trade unions and leftist groups.
The Cabinet Committee on Disinvestments at its meeting Friday is expected to announce a schedule for selling some of 240 state-run companies, ranging from condom to car making.
The Vajpayee government, which came into power last year, has had a string of legislative successes in parliament that four governments in the past four years couldn't achieve.
The government has opened up the insurance sector to private companies, allowing up to 26 percent foreign investment, put in place a budget that reduced subsidies on food and fertilizer and introduced a new information technology law paving the way for e-commerce.
"The pace of disinvestments is slower that what I expected and is desired, Press Trust of India news agency quoted K.C. Pant, deputy chairman of the Planning Commission, as saying. "It is high time that a proper disinvestments policy is put in place."
The state-run commission prepares the government's five-year development plans and deals with financial allocations to state governments from the federal pool.
News reports say the government is likely to identify eight or nine companies and sell its majority stakes. But the move is expected to face a fierce resistance from trade unions and the leftist groups who fear job losses.
The main opposition parties control trade unions in India.
"Reforms in the state-owned companies will be the next major hurdle the government will face," Shashanka Bhide, an economist with leading think tank, National Council for Applied Economic Research told Dow Jones Newswires.
Bhide said the government's privatization effort was a watershed in the reforms process. "They have to do it as they have very little alternative," he said.
Last year, the government sold Modern Foods Ltd., a bakery firm, to Hindustan Lever Ltd. It also announced that it would sell a majority stake in the state-run Air India airliner and Hindustan Teleprinters Ltd.
K. Ramachandran, an analyst with Birla Sun-Life Securities Ltd., said the federal budget for 2000-2001 target of 100 billion rupees (dlrs 2.2 billion) in receipts from sales of state company shares was within reach.
He said if shares of Bharat Heavy Electrical Ltd. , an engineering company, and Maruti Udyog Ltd., a 50:50 joint venture between the Indian government and Suzuki Motor Corp. of Japan, are sold, the government could easily meet its target.
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