India has to pursue privatisation, PM warns

NEW DELHI, Tuesday (AFP) Prime Minister Manmohan Singh has warned India's political parties they must agree on the privatisation of state-run firms to raise badly-needed funds for development.

Singh, who faces stiff opposition from left-wing parties on privatisation, said the returns would be deployed in public sector spending.

"We require political consensus both within our own party and across political parties to take this agenda of fiscal reforms forward," Singh told a Congress party committee meeting, according to Tuesday's Economic Times newspaper.

"We must once again pursue disinvestment in public enterprises, both to raise resources for development and to make public enterprises more accountable and efficient," he said at the meeting late Monday.

Singh's Congress-led government says strategic state firms should be retained to protect national interests and avoid job losses - a key demand of its communist supporters - but wants reforms in others to make them more accountable and efficient. In the 1990s as finance minister Singh earned the sobriquet "economic liberator" for opening up India's inward-looking economy to the world.

Singh made it clear that his government had no ideological aversion to privatisation, The Economic Times said.

"We need the public sector in strategic areas but we need an efficient public sector run by professional and competent managers in a transparent manner," he said. A majority of Indian state firms are run by bureaucrats.

India plans to raise more than a billion dollars in fiscal 2005-2006 by selling state-run companies, according to Finance Minister Palaniappan Chidambaram. Successive finance ministers have in the past announced privatisation targets but failed to meet them.

Singh's left-leaning government earned privatisation revenues of roughly 40 billion rupees (875 million dollars) for the fiscal year 2004-2005.

However, industry analysts say Singh's government now has no choice but to pursue privatisation to fund ambitious multi-billion-dollar development projects.

India on Monday said it was launching a massive programme to build tens of millions of homes for the poor but warned the project was likely to cost more than 40 billion dollars.