Foreign investment cap haunts Manmohan Singh

Saturday, 18 September 2004, 07:00 Hrs
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NEW DELHI: A proposed hike in foreign investment limits in the civil aviation and telecom sectors has again become an irritant for Prime Minister Manmohan Singh's government, with divisions among some ministers and opposition by the Left parties.

The issue was to be discussed by the Cabinet Committee on Economic Affairs at its meeting here Friday but was dropped at the last moment to get more feedback from Left parties which support the United Progress Alliance government from outside.

"The prime minister wanted a more meaningful debate on the issue, not just with his cabinet colleagues, but also with political parties that are supporting the government," a senior official said.

The issue was also deferred as the Communist Party of India-Marxist (CPI-M) politburo met here Friday to discuss, among other issues, the foreign investment limits.

"What we are not happy about is some policy pronouncements are made by the government before consulting us. The Left parties' sensibilities must be kept in mind," CPI-M leader Sitaram Yechuri told reporters after the politburo meeting.

"That's why we are going public with our opposition," said Yechuri, who had earlier raised the issue during an hour-long meeting with Planning Commission Deputy Chairman Montek Singh Ahluwalia Thursday.

Official sources said the prime minister also wants to hear the views of former West Bengal chief minister and senior CPI-M leader Jyoti Basu, whom he has invited for discussions Saturday.

Congress president Sonia Gandhi and CPI-M general secretary Harkishan Singh Surjeet are also scheduled to attend the meeting, which comes in the wake of sharp criticism of government policies by Basu earlier this week.

Manmohan Singh had also sought to resolve the differences in foreign investment caps in the telecom sector between Finance Minister P. Chidambaram and Communications Minister Dayanidhi Maran, sources said.

Chidambaram had proposed to hike the cap for telecom sector from 49 percent to 74 percent in the national budget for current fiscal announced in July, which was opposed by Maran, sources said.

In the case of civil aviation, the minister overseeing the portfolio, Praful Patel, has publicly opposed the move, saying it would give an undesired foothold to foreign airlines to acquire stakes in domestic airlines.

A leader of the Nationalist Congress Party, Patel feels India has enough expertise both in the private sector and in state-run enterprises to run profitable airline operations.

In his budget speech, Chidambaram had sought to increase the foreign investment limits in civil aviation sector to 49 percent, from the present 40 percent. He had not specified if foreign airlines, too, would be allowed to acquire a stake.

Source: IANS
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