National

Swadeshi - videshi war in Planning Commission

By Alok Mukherjee

NEW DELHI MAY 28. The `swadeshi vs videshi' war has erupted in the Planning Commission, which could spell more trouble for the Union Finance Minister, Yashwant Sinha. A report of the Special Group of the Planning Commission has opposed many of the reform measures already adopted by Mr. Sinha such as lowering the import duties and changing the labour laws as well as dereserving the small-scale sector and permitting foreign direct investment in retail trade.

On the face of it, the report of the Special Group, headed by the Planning Commission member, S. P. Gupta, directly contradicts some of the recommendations made by a similar Task Force of the Commission headed by the then member, Montek Singh Ahluwalia. Both the reports deal with the employment situation but while the Montek panel report advocated more economic reforms to achieve higher employment, the Gupta panel sticks closer to the line advocated by the Swadeshi Jagran Manch and focusses on agriculture, food processing, small and medium industries and khadi and village industries as areas which could generate gainful employment.

Caught in the crossfire, and aware that the Gupta panel report is likely to find greater favour within the Sangh Parivar, the Deputy Chairman of the Planning Commission, K. C. Pant, has adopted the middle path by suggesting that the two reports were complementary and should, therefore, be taken together in order to get a holistic picture of employment prospects.

The Gupta panel has even reached out to the McKinsey Report, presented to the Prime Minister, Atal Behari Vajpayee, and commented that the report from the multinational consultant "clearly fails to give an answer to India's problem of unemployment.''

While Mr. Ahluwalia is now nowhere in the policy-making picture, the strong reservations voiced by the Gupta panel on some of the proposed reform measures could further pile up the odds against Mr. Sinha, who, of late, has been under pressure from within his party and sister organisations to alter and roll back many of his announced proposals. Mr. Sinha has already laid out the time-frame of three years for lowering of peak import duties to Asian levels and included in his last year budget a proposal to amend labour laws making it easy for industry to shed workforce.

The Gupta panel report, on the other hand, has not endorsed the move towards lowering import duties on the ground that increased competition from imports could adversely affect employment among domestic industries. Consequently, it has reserved comment on this measure till a detailed study is made on this issue.

On amending labour laws to permit the shedding of excess labour, the Gupta panel report said that it would benefit only the organised sector and that only eight per cent of the total employed labour force would be affected. On the contrary, such relaxation might create "more firing than hiring'' in the near future, "given that the market is carrying excess labour and the Government is following downsizing policy.''

On small-scale sector dereservation, the Gupta panel has taken exception to the Montek panel's recommendation for dereservation within four years and increase in foreign direct investment (FDI) limit and has instead said that dereservation should be a gradual process without any time limit.

Also, there should be no increase in FDI investment limit at the moment. Similarly, on retail trade, the Gupta panel is against any FDI in this sector as suggested by the Montek panel. On the recommendation for a switch to a modern retail trade, it feels that retailing should be allowed both in the modern and the traditional sector with encouragement to the traditional sector to improve productivity.

While sources in the Planning Commission were tightlipped on the "contradictory'' reports, insiders suggest that the pro-liberalisation bias evident during Mr. Ahluwalia's tenure is now sought to be altered by what is being termed a "socialist-swadeshi'' group within the Commission. The other ``activist-liberaliser'' within the Commission is N. K. Singh, but he is said to be maintaining a low profile after the high-visibility job in the Prime Minister's Office (PMO) from where he was moved out under pressure.

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