'No need for unnecessary panic'

The possibility of a Left-supported Congress government has made the stock markets nervous.

On May 17, the Bombay Stock Exchange's Sensex crashed by 787 points -- its biggest crash in a day ever.

Trading was halted, and only resumed after Congress leader Dr Manmohan Singh reassured sentiment on the bourses.

With the Left parties propping up the new government, there is concern that economic reforms will be the first casualty.

Jairam Ramesh -- secretary of the Congress economic cell in charge of drafting the new government's Common Minimum Programme and a member of Sonia Gandhi's think tank, credited with fashioning the party's impressive performance in the general election -- says the new government's economic programmes will be aimed at taking India to greater heights.

"There is no need for panic and worry. This is a time for change. India is all set for better times," Ramesh tells Deputy Managing Editor George Iype in an interview.

Is the Congress happy about joining hands with the Left parties to form the government?

Yes. The verdict of the people is for a Congress-led government. It will be a Centre-Left government. The Left parties will play a very crucial role in it.

How will the new government go about with privatisation and divestment?

We are not going to reverse the economic reforms process, which, in fact, the Congress government had initiated way back in 1991.

We will give a new momentum to the reforms. We will review the reckless divestment and privatisation policies of the Bharatiya Janata Party government.

Will the new government scrap the divestment ministry as demanded by the Left?

It is a policy decision only the government will take, after it takes charge.

What will be the new government's attitude towards divestment?

Our government's attitude to privatisation would not be ideological. We will not pursue the [outgoing divestment minister] Arun Shourie brand of divestment. Our divestment policies will be governed by purely practical considerations. We do not see any reason why we should sell off profit-making companies or public sector units.

Why should the government sell IOC [Indian Oil Corporation] or ONGC [Oil and Natural Gas Commission]? They are very strategic profit-making companies.

At the same time, we do not see any reason why the government should run bread factories and hotels. The Congress-led coalition government will take up divestment on a case-to-case basis. We will follow the guidelines of former Divestment Commission chairman G V Ramakrishna for divestment.

[The Divestment Commission report, submitted to the United Front government in February 1997, made the following guidelines: strengthen divestment where appropriate to facilitate divestment; strengthen profitable PSUs; financially restructure and revise loss-making PSUs; protect employee interests; provide for employee participation in management; broadbase ownership; enhance retain reach of PSU shares.]

You are in charge of preparing the new government's Common Minimum Programme. Will the Left parties agree to the Congress economic agenda?

We are preparing the Common Minimum Programme in close consultation with the Left parties and other alliance partners.

Our CMP will be a Common Maximum Performance document. The CMP is to ensure that none of us will come up with ideological posturing in the coming days.

There is no fundamental difference between the Congress and Left parties over many economic programmes. There is no fundamental conflict between Dr Manmohan Singh and [West Bengal Chief Minister] Buddhadeb Bhattacharya. We will settle our differences through the mutually-agreeable CMP.

But the stock markets are frightened and are falling.

I see the stock market fall only as a short-term phenomenon. There is no need for unnecessary panic.Do you expect the markets to get back to normalcy soon?

Once our government takes charge, normalcy will return. We will have the most stable government. We will have the most efficient Cabinet. Especially with such brilliant people like Dr Manmohan Singh, Pranab Mukherjee and P Chidambaram around, our economic agenda will be the best.

Will you continue with any of the Vajpayee government's policies?

We are committed to implementing the Kelkar Committee report on taxation. We want to achieve zero-revenue deficit by 2008 as underlined in the Fiscal Responsibility Act.

[The Kelkar Committee had made the following proposals: 'A two-slab income tax rates of 20 and 30 percent, with a Rs 100,000 exemption limit; agricultural income should be taxed at normal rates; interest on housing loans: deduction for mortgage interest on loans to buy a owner-occupied dwelling should be reduced to Rs 100,000 in AY 2004-05, to Rs 50,000 in AY 2005-06 and to nil in AY 2006- 07; deletion of tax concessions.'

Kelkar proposed the elimination of all tax concessions.]