Now, UPA wants to go slow on controversial reforms

Congress members say the government cannot afford to upset its allies

The UPA might have rid itself of the Trinamool Congress bogey — the major impediment in its economic reforms process — but it will now tread “more cautiously” before it unleashes further reforms, “lest it angers its existing allies".

According to a senior Congress cabinet minister, "The government cannot push the tolerance level of our allies to break point.”

The Samajwadi party and the BSP are the two key pillars of support from outside that the UPA is banking on. Economic reforms that the government is likely to bring in without ruffling any feathers include sugar decontrol and power reforms.

A senior cabinet minister told Business Standard: “We can’t push our allies too far. Already we have gone ahead with some reforms and in the coming days we will be going ahead with measures like sugar decontrol and financial restructuring of power distribution companies.” However, big ticket reforms such as FDI in insurance and pension are not on the anvil. The SP, for instance, has publicly announced its opposition to FDI in both these sectors.

The minister says, “Mamata Banerjee and the TMC were not the only ones opposed to FDI in pension etc. There is no way we can afford to antagonise our existing allies.”

The TMC parted ways with the UPA over its opposition to FDI in multi-brand retail, cap on LPG cylinders and diesel price hike.

The reform measures that have been unleashed thus far involved non-legislative decisions; in the coming days the UPA will be going ahead with more such decisions that will not require the legislative route.

“Earlier, there was a piecemeal approach. But now we have decided that we will do whatever reform steps needs to be taken at one go and then ensure that they are implemented,” another Congress minister said, adding that the UPA coordination committee which has all alliance partners on board will continue to function as usual.

Naresh Agarwal, senior SP leader, told Business Standard: “We are wholly opposed to FDI not just in retail but also in insurance and pension. We believe that too much of foreign investment is a sell-out of the country to foreign powers.”

The UPA is certainly aware of the tightrope walking that it now has to embark on and will ensure doubly that it does not do anything to upset this delicate balance.

The UPA has its maths intact with 306 MPs supporting it, including 22 of the SP and 21 of the BSP.