The Hindu Business Line : Draft CMP: Market manipulators beware

WHILE there would not be any disinvestment of profitable public sector units by the United Progressive Alliance (UPA) Government, tough times could be ahead for erring capital market participants.

The draft common minimum programme (CMP) of the UPA Government has clearly said that tough measures would be initiated against all errant market participants who violate the laws and regulations governing the stock markets.

The CMP that has been circulated by the UPA coalition leader, the Congress, has also said that measures would be taken to further strengthen the hands of the Securities and Exchange Board of India (SEBI) for effective intervention in implementing the rules of the capital market.

The draft has also proposed to bring about a stable structure on direct taxes conducive for growth and has said that efforts would be made to increase collections through greater compliance.

The draft CMP clearly proposes that the PSU disinvestment would be taken up on case-to-case basis. It has also said that no disinvestment would take place in profitable PSUs such as IOC, ONGC, BPCL, HPCL, Gail India and BHEL would not be considered. It has said that that disinvestment wherever preferred should ensure that it lead to greater competition.

On the banking front, the CMP has said that the UPA Government would propose to retain the public sector character of the Government-owned banks. The draft CMP has also said that it would be ensure increased competition in the financial sector.

The Prime Minister-elect, Dr Manmohan Singh, had virtually given out the UPA Government's mind on both the issues of PSU disinvestment and public sector banks in his maiden press conference held on Thursday.

The alliance partners of the UPA Government are currently vetting the draft. A final programme of governance would be formulated only after taking into consideration the views of the parties.

The Left parties who are giving outside support to the Government had indicated that they would be satisfied with the CMP in the event the broad policy focus mention by Dr Manmohan Singh on Thursday is adhered to. "We have held discussions with the Congress on the CMP. If what the PM-designate has said yesterday is adhered to it would be generally acceptable to us," senior CPI leader Mr D Raja said.

Echoing similar feeling Secretary, CPI, Mr Atul Anjan told Business Line that "if the boundary walls and the parameters set out by Dr Manmohan Singh are reflected in the CMP we would have no problem in accepting the document."

The draft CMP has said that the doors would be wide open for foreign investors with FDI to be invited in all key sectors. However, the UPA Government is unlikely to allow FDI in retail sector.