India's communists, a vital prop of the ruling coalition, urged the government on Tuesday not to sell a stake in engineering firm Bharat Heavy Electricals Ltd (BHEL) and not to allow more foreign investment in private banks. Leaders from the left parties met with Finance Minister Palaniappan Chidambaram for nearly three hours on Tuesday to give inputs for the federal budget, likely to be unveiled on February 28.
"The government should honour the commitment (it) made ... there should be no disinvestment of shares in such PSUs (public sector undertakings) like BHEL," a statement from the communist parties said.
The Congress party-led coalition had deferred a decision to sell a 10 percent stake in the profitable state firm last week, under pressure from its communist allies, who oppose selling stakes in state firms to bridge India's large fiscal deficit.
Instead, in a bid to appease its critics, the government set up an investment fund of stake sale proceeds for social projects and the expansion of state-run firms.
The communists also asked the government to step up spending on health and education by allocating 500 billion Indian rupees ($11.5 billion) in the federal budget, as promised in the government's policy blueprint.
But Delhi is likely to be cautious in the coming budget as it is bound by law to cut its deficit. India's combined state and federal fiscal deficit, one of the world's largest, stands at a whopping 10 percent of gross domestic product.
The communists want the foreign investment cap in private banks left at the present 49 percent. The government had announced its intention to raise foreign investment limits in telecoms and banking in the previous budget.
The communists also want the government to tax all foreign exchange outflows, which they said would not only generate revenue but also help protect against capital flight.
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