NEW DELHI, 23 May 2004 — The Congress party which leads the alliance forming India’s next government circulated a draft “common minimum program” among its allies yesterday that supports selective privatization and encourages foreign direct investment.

The Congress party’s Manmohan Singh was sworn in yesterday evening as prime minister heading a coalition government of the United Progressive Alliance (UPA) comprising, at the last count, 12 parties, mostly regional like the DMK of Tamil Nadu and NCP of Maharashtra.

The government is being supported from the outside by the left parties which won about 60 seats in the general elections.

Several of these parties have differing views on economic policies, social programs, security issues and foreign policy.

The effort to come up with a common minimum program which incorporates the election manifestos of the various parties is an attempt to avoid wrangles over policy within the new government and make Manmohan Singh’s task of managing an unwieldy coalition easier.

Congress party president Sonia Gandhi set up a committee headed by Manmohan Singh to draft the program which was completed Friday night and is now being circulated among the alliance partners for their comments.

The draft common minimum program of the UPA supports selective privatization. Public sector units with a proven track record of sustainable profit will not be sold. This would include the crucial oil and power public sector undertakings (PSUs). Loss-making PSUs would be privatized on a case-to-case basis and steps would be taken to encourage foreign direct investment.

The program also gives high priority to agriculture and employment-oriented growth and stepping up of investment in the rural sector.

Regarding labor reforms — an issue which has caused jitters among foreign investors — the program categorically rejected “the idea of automatic hire and fire.”

It said that flexibility had to be provided to industry in matters of labor policy, but this must ensure that workers and their families were fully protected.

The draft also proposed the repeal of the controversial Prevention of Terrorism Act (POTA) enacted by the outgoing government in 2002.

It also envisages a new law on communal violence under which investigations would be carried out only by central agencies and prosecution by special courts.

Dialogue with Pakistan, it said, would be pursued systematically and on a sustained basis.

It said the UPA government would maintain the independence of India’s foreign policy stance on all regional and global issues even as it pursues closer strategic and economic cooperation with the United States.

Senior leaders of the leftist CPM and CPI and some smaller UPA partners have found the draft common minimum program to be “generally acceptable”, news agency UNI reported.

New Coalition Promises 7-8 Percent Economic Growth

The new coalition government will aim for 7-8 percent annual economic growth.

Analysts said the common minimum program should bring down volatility in the stock market, although there was little likelihood of a surge any time soon.

“It sets a 7-8 percent annual growth for the economy. There will be increased investment to the agriculture sector,” D. Raja, a senior leader of CPI told Reuters.

The CMP outlined the new government’s commitment to orderly development of stock markets and encouragement for foreign portfolio and direct investment.

Fiscal consolidation will continue, with the government aiming to match revenues with expenditure within five years.

India’s fiscal deficit is among the largest in the world with the combined deficit of state and federal governments at over 10 percent of the GDP. Analysts say India’s burgeoning deficit is the biggest hurdle to growth.

Markets have been worried over the policies to be followed by the coalition, especially over the influence of the leftists and whether they would derail the country’s economic reforms.

But it seemed there would be no let-up in the reforms, although more resources will be centred on rural India.