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A key ally in India's ruling coalition said on Thursday it had no plans to withdraw support from the government if it went ahead with the privatisation of state-run firms.
Samata Party lawmaker Prabhunath Singh had told the lower house of parliament on Wednesday his party would pull out of Prime Minister Atal Behari Vajpayee's government within 15 days if it did not reverse its privatisation policies.
"There has been no such party decision," Jaya Jaitly, chairperson of Samata Party's central parliamentary board, told Reuters.
Jaitly said Singh's remarks could have been his personal views and did not reflect the party's stand.
"We are not against divestment as such but we have demanded that it be done in a transparent manner which is beneficial to the people."
State run companies opened lower in early trade on the Bombay Stock Exchange on Singh's comments.
India's decade-old privatisation programme has been hostage to politics and often derailed by opposition from political parties, labour unions and the bureaucracy.
Under Divestment Minister Arun Shourie, a former World Bank economist, the government notched up a string of successful sales of large state firms but the process hit a roadblock in September over the sale of cash-rich oil firms Hindustan Petroleum Corporation and Bharat Petroleum Corporation.
The stalled drive got a fresh lease of life this month when the government said it would go ahead with its plans to sell stakes in the oil firms, ending a bitter rift within the Cabinet over the stake sales in these firms.
The Samata Party has 12 members in the Lower House of Parliament including Defence Minister George Fernandes. But even if it withdraws support, this will not endanger Vajpayee's government because it has a comfortable majority in parliament.
Fernandes, best known for his fiercely socialist stand which led to the banning of Coca Cola in 1977 when he was minister, had last month demanded a mid-term review of the government's privatisation policy.
The government plans to raise Rs 120 billion through stake sales in state firms in the year to March 2003 but has already admitted it would fall way short of the target after the delay in the sale of HPCL and BPCL.
Analysts say the BJP's landslide victory in a crucial state poll in Gujarat this week would give it confidence within the fractious coalition to take politically tough decisions on privatising state firms and cutting subsidies.
India has about 232 state companies, almost half of them loss-making, producing everything from condoms to steel with a collective net worth of $33 billion.