Congress, Left gun for Chidambaram's 'baby'

George Iype in New Delhi

The Congress and Left parties have demanded vital changes in Palaniappan Chidambaram's much-acclaimed market-friendly budget for fiscal 1997-98.

Parliament resumes its Budget session on Wednesday, April 30, especially to pass Chidambaram's growth-oriented Budget. Prime Minister Inder Kumar Gujral, who currently holds the finance portfolio, has already assured investors and corporates that the new United Front government "is owning up" the Budget without making any changes in it.

But the Congress party, having pulled down the H D Deve Gowda government, now wants its economic viewpoints to be reflected in the Budget. The party's economic cell, headed by former finance minister Dr Manmohan Singh, has submitted to Congress president Sitaram Kesri a set of recommendations and amendments to be incorporated in Chidambaram's "baby".

A copy of the economic cell's report being circulated among Congress Working Committee members and available with Rediff On The NeT reveals that the Congress is demanding major changes in the Budget.

The Congress has opposed the lowering of import duty from 50 per cent to 40 per cent as well as the peak income tax rate from 40 per cent to 30 per cent. Instead the income tax exemption ceiling limit should be raised from Rs 40,000 to Rs 60,000 without reducing the import duty, the party feels.

The Congress also opposes the introduction of full capital account convertibility reasoning that the time is not ripe for it.

The party also feels that Chidambaram's Voluntary Disclosure Scheme will be redundant if the peak income tax rate is not reduced. Instead an amnesty scheme should be introduced, the party says.

The policy paper says such far-reaching changes in the fiscal policy should wait for a more stable government.

The Left parties also want the Gujral government to make some significant amendments in the budget. They include increasing the power sector allocations by Rs 20 billion, pumping in at least Rs 10 billion more to achieve the 4.5 per cent growth rate in the agricultural sector and jacking up the allocation for rural development and poverty alleviation programmes.

Sternly opposing any move to open up the country's insurance sector to foreign companies, the Left leaders have demanded more funds to restructure loss-making public sector undertakings.

Whether the Congress-Left recommendations will translate into reality is to be seen as Gujral and his ministerial colleagues are still persuading Chidambaram's Tamil Maanila Congress to re-join the government.