When the Left parties met UPA chairperson Sonia Gandhi on July 1, in their apparent bid to find a ?way out? of the BHEL disinvestment imbroglio, they wanted the roll-back of the Cabinet decision approving divesting 10 per cent government equity in the country'spower equipment sector. Reports suggested that Smt Gandhi was left with a difficult choice between ?her? Prime Minister Manmohan Singh and the Left parties, the life-support system of the government. The choice was even more difficult because it was not a problem of the wrong signals going out of the reversal of a Cabinet decision alone. The stakes were quite high, given Manmohan Singh'sforthcoming visit to the US later this month.
The US had made the first move. It restored the GSP (Generalised System of Preferences) on items of interest to India. The US-GSP provides preferential duty-free entry for more than 4,650 products from approximately 140 designated beneficiary countries and territories. In 1992, the US had suspended GSP benefits for a large number of products exported by India to the US, due to a perceived inadequacy of protection to intellectual property rights in India. As a result, 785 agro-chemicals and pharmaceutical products that were otherwise eligible for GSP continued to be denied GSP benefits since 1992. The restoration of the GSP benefits would provide immediate benefits to exports of agro-chemicals and pharmaceuticals from India.
President George Bush signed his proclamation, weeks before Manmohan Singh'svisit to the US. ?After a review of the current situation in India and taking into account the factors set out in Section 502 of the 1974 Act, in particular Section 502(c)(5), I have determined that India has made progress in providing adequate and effective protection of intellectual property rights. Accordingly, I have determined to terminate the suspension of India'sduty-free treatment for certain articles under the GSP.?? The US would obviously expect a ?report card? from Dr Singh in terms of the reforms.
Disinvestment of the PSUs, despite tall claims made in the UPA-Left CMP, continues to remain on top of the reforms agenda of the government. Thus, any reversal of the Cabinet decision on disinvestment would not go well with the US which is on the Prime Minister'sitinerary. While Leftists would have spoiled the game-plan of the Manmohan Singh government in terms of improving its report card by opening the retail sector for foreign direct investment and taking other programmes like privatisation of airports, it is suddenly all quiet for the past few days on supposedly a face-off between CPM-CPI and the government. Has any undersanding been reached again like the one the two had reached for increasing prices of petroleum products? It was the government which accommodated the Left for delaying price revision in petrol prices as the supporting parties wanted the Kolkata municipal elections out of the way. The government will soon be back to its business of opening up the economy to the pleasure of the rich nations who do not want such reforms on their home turf. Take the recent bid by China'sCNOOC on the US oil and gas firm Unocal which Cheveron is also interested in. The Americans went and got a resolution from the Congress stating that the 18 billion US $ bid would threaten the US national security. So much for the open economy paradigm!