Despite the stand-off in the House on reform measures like opening up foreign direct investment (FDI) in multi brand retail, Parliament’s all-party Standing Committee on Finance has taken a strongly pro-reform stance in its report.
The panel has recommended a slew of measures, including slashing fuel subsidies and boosting flow of FDI, to improve the economy.
In a report on the current economic situation, to be presented in Parliament on Thursday, the panel has backed a recommendation by the standing committee on petroleum that diesel and LPG subsidies should be limited to the poor.
The panel said no family with more than Rs 6.5 lakh of annual income should be given subsidy to LPG cylinders. It has recommended decontrol of diesel prices too.
It also said that FDI inflow should be increased. The panel suggested that FDI in infrastructure, high-end technologies and export oriented sectors should be improved.
The panel is headed by the senior BJP leader and former Finance Minister Yashwant Sinha. The report is not unanimous as MPs belonging to Left parties have submitted a dissent note on the recommendations by the panel.
“The panel was trying to be more Catholic than the Pope,” a Left MP said. The BJP, sources indicated, wanted to reinforce that it is not against reforms. The party has been saying that the Congress is not keen on reforms as the UPA is divided on the issue.
The Government, citing the protests against FDI in retail and Pension Bill, has blamed the Opposition for blocking reforms. The report, though silent on FDI in retail, is expected to kick up a new debate on FDI.
Inflation was another issue taken up by the standing committee. The panel said rather than short-term strategies, there should be long-term and medium-term measures to combat inflation.
The panel recommended a Producer Price Index instead of Wholesale Price Index to reflect inflation. RBI Governor D. Subbarao had also suggested that PPI should replace the WPI.