M A I N   N E W S

Chidambaram to meet Left leaders
Anita Katyal
Tribune News Service

New Delhi, July 12
Finance minister P. Chidambaram will meet Left party leaders soon to explain the reasons for proposing a hike in the FDI cap in insurance, telecom and aviation sectors.

He will clarify the government’s stand on this issue and is confident he will be able to convince them that the move is justified. The Left parties, who are lending outside support to the UPA government, have raised a banner of revolt against this move and have even threatened to take their protest to the streets.

Striking a conciliatory note, Congress spokesperson Anand Sharma, however, maintained there was no confrontation with the Left parties on this issue, adding that the Finance Minister will clarify matters with them before the finance bill comes up for discussion in Parliament.

To begin with, the Finance Minister clarified the various provisions of the Budget and sought to allay the fears of UPA’s own members at a special meeting today. Besides the controversial issue of the FDI cap hike, he also explained the reasons for introdcuing a transaction tax and the utility of VAT.

Mr Chidambaram indicated that he had hinted at a possible FDI hike in these sectors in his discussions with the Left party leaders prior to the presentation of the budget.

He explained that the decision to hike the FDI cap in insurance and aviation sectors to 49 per cent did not mean relinquishing government control which will hold 51 per cent stake. He said this decision was taken primarily to raise funds for thse sectors which require huge investments.

As for the controversial move to raise FDI to 74 per cent in telecommunications, the Finance Minister maintained that the FDI in this sector was already pegged at 70 per cent but the funds were coming in through a circuitious route. By pegging the FDI at 74 per cent, he said, the government had actually made the system of foreign investments more transparent and upfront.

The Finance Minister also explained that since the services tax had now been integrated with the excise and customs duties, the burden on the consumer will not be as high as it appeared. On the other hand, he said, the move will result in revenue losses to the state.

The 90-minute meeting was presided over by Defence Minister Pranab Mukherjee.

Reverse proposal on FDI limit: Left
Tribune News Service

New Delhi, July 12
Two-month-old Dr Manmohan Singh-led UPA government is headed for crucial coalition hard bargaining with the Left parties today asking the government to roll back the proposed increase in the Foreign Direct Investment in telecom, insurance and civil aviation sectors and threatening to take the issue to the streets.

The coordination committee of the Left parties, which met here today, said “we have decided to oppose these measures and asked the government to reconsider them.” The Left parties, which have threatened to oppose the government on the FDI issue in Parliament, said they would take to the streets by mobilising public opinion to protect these sectors from further foreign control.

They also decided to meet the leadership of the United Progressive Alliance to have a consultative mechanism for taking up issues regarding the implementation of the common minimum programme and related matters. They said the increase in the share of foreign capital in telecom, insurance and civil aviation sectors was uncalled for.