Released on = February 21, 2007, 2:29 am

Press Release Author = dma

Industry = Government

Press Release Summary = The UPA\'s honeymoon with its political allies is over. The
allies like Left parties, Rashtriya Janta Dal, Nationalist Congress Party

Press Release Body =
New Delhi, 21st February 2007
The UPA\'s honeymoon with its political allies is over. The allies like Left
parties, Rashtriya Janta Dal, Nationalist Congress Party, PMK in Tamil Nadu and even
Samajwadi Party, are veering towards unfriendliness towards the Congress and a
coldness amongst the leader and allies is distinctly visible.

Sectoral issues, non fulfillment of states\' aspirations and last but certainly not
the least, perception of non-implementation of the UPA\'s Common Minimum Programme as
seen by the UPA allies are the most important problems that will need to be
surmounted. Added to this is the acid test of assembly elections in seven states
in the country in the current year.

Nobody denies that as the countdown for 2009 general elections will begin in 2007,
the UPA is going to be in for a tough time in the second half of its term at the
Centre. According to Congress leaders who would rather not be identified, we have
done the doables already. What are left are the tough ones - Indo-US nuclear
civilian deal, pension and labors reforms and improving the agricultural sector-form
part of the to-be-done list. The success or failure of the UPA initiatives the
national rural employment guarantee scheme - being the most prominent will become
visible in 2007.

But three political issues that originated in 2006 will possibly continue to haunt
the Congress and UPA. These are price rise (which is being tackled rather late)
unemployment, managing the fallout of foreign policy and handling conflicting caste
interests. The AICC general secretary Digvijay Singh has said price rise will be
the prime concern for the party in the coming months. The issues that brought the
UPA government to power were the drawbacks of the National Democratic Alliance - Its
emphasis on GDP growth while employment growth was negative and the nation-wide
electoral reaction to Gujarat riots and favorable caste coalition in states like
Bihar and Tamil Nadu - which catapulted UPA to power. Now it perceives risks of
reversal in this trend.

Despite a series of initiatives, prices of essential commodities, particularly that
of pulses has not come down while the reaction to the second cut in petrol and
diesel prices is still to be felt. In the last Congress Working Committee meeting
in December 2006, almost every member had raised the issue though it was not on the
agenda. Also, tentative assessments do not indicate any substantial growth in
employment in the organized sector and certainly not commensurate with nine percent
growth of GDP.

Congress leaders in private admit that companies are not hiring despite the growth.
Those who are unemployed are also witnessing the unprecedented consumption around
them, by participants in growth. This is politically very dangerous for the party.
The solution lies in implementing flexible labour laws that would let companies
shed extra workforce in times of slump. Getting Left support on this would be the
UPA government\'s main task in 2007.

Over and above this, foreign policy is increasingly a field for domestic political
contest. The latest examples is the aftermath of Iraqi leader Saddam Hussien\'s
execution are a case in point - Samajwadi Party attacked UPA for the government\'s
mild and inadequate response. CPI (M) said India\'s strategic relations with USA
now on the front burner, must not continue. In 2006 assembly elections of Assam and
Kerala, India\'s proximity with USA was indeed a serious campaign issue. Even now,
Congress cannot give up the nascent strategic partnership with USA, but will have to
seek the approval of its domestic Muslim constituency.

Managing caste conflicts and the recommendations of the Moily Commission on
reservation for backward classes in education, will be the third challenge. In the
first reality check on UPA plans to implement 27% OBC quota over three years through
54% expansion of the higher education sector, allocation for expansion in the first
year may not be more than Rs. 1,555 crores. The Human Resources Development
Ministry had sought nearly Rs. 2,700 crores in the first year to push through plans
for both OBC quota and general category seats. Sources say just how difficult it
may be for the government to stick to its three year plan for quota can be gauged
from the fact that planning Commission, which is preparing the first year\'s plan,
has been told by Finance Ministry to keep the allocation for expansion of higher and
technical education within Rs. 1,555 crores.

Congress party is haunted by the electoral defeat the Party received in just
concluded municipal elections in Maharashtra. In the elections concluded in the
last week of January, the Congress could neither capitalize on the split in Shiv
Sena nor on the confusion in the BJP after Pramod Mahajan\'s death to make electoral
gains. The result parties leaders say are bound to demoralize workers ahead of
assembly polls in Punjab, Uttrakhand, Uttar Pradesh and Goa. Privately, some
leaders maintain that saffron forces have had a blood transfusion that could boost
the morale for even the 2009 Lok Sabha and Maharashtra assembly elections.

Not to be left out in the race for demanding Mrs. Sonia Gandhi\'s attention are the
Left parties. In their note on the Budget 2007 submitted to Finance Minister P.
Chidambaram, Left parties have asked him to provide some relief to the salaried
employees by re-introducing standard deduction in income tax for them that was
withdrawn in the last year\'s budget.

They have also proposed that senior citizens be provided with tax relief. The
withdrawal of standard deduction of salaried employees along with the raising of the
basic income tax exemption limit to Rs. 150,000 made in Budget 2006-07 have put the
salaried employees in a disadvantageous position compared to the businessmen, states
the note of proposals and suggestions made by the Left parties on the forth coming
budget. If the Left wish is not fulfilled, Congress may be earning their
displeasure. Left has also asked for formulation of a sub-plan to allocate 15% of
all resources on all development programmes for minorities, especially Muslims.

It seems that for the Congress and UPA time till \"009 Lok Sabha polls will be tough
and testy, with the nation looking on


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