There's a new equation in the Government's political arithmetic: upa+Left=npa. Of course, NPA here stands for non-performing administration and is the sum total of the impact of the Left parties' support to the UPA Government. It is a sad reflection on a government packed with economic reformers-Prime Minister Manmohan Singh, Finance Minister P. Chidambaram and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Not that they haven't been trying. Chidambaram proposed to raise the FDI limit in insurance, telecom and civil aviation in his July 2004 budget. The hike in FDI limit in the telecom sector (from 49 per cent to 74 per cent) was notified only in October 2005-14 months after it was proposed. That's not bad-the hike in FDI limit in insurance (26 per cent to 49 per cent) is still hostage to the Left's disapproval. Unlike telecom, raising the FDI limit in insurance requires parliamentary approval, for which the UPA needs the Left vote. Maybe Chidambaram over-reached himself by proposing it without taking the Left on board. CPI-CPI(M) leaders can argue that reforms which require legislative change should not be proposed without their consent.

What about reforms that do not require Parliament clearance? These include disinvestment (not privatisation) in PSUs and reduction in the interest rate on EPF contributions. Both can be done with Cabinet approval. Why should the Left object to these measures since it voluntarily decided not to be a part of the Government? Perhaps that was what the Government thought when it proposed dilution of its 10 per cent stake in BHEL in June this year. Yet, despite the Cabinet's nod, the disinvestment is on hold due to opposition from the Left.

COST OF LEFT What does loss of 1% of GDP growth add up to? For instance, in 2004-5 the GDP in nominal terms was Rs 28,38,000 crore. If it had grown by 1% more, it would have been Rs 31,80,700 crore. That's a loss of Rs 3,42,690 crore, over 10 times the money spent by the Centre on health, education.
BITE MEMBERS' ESTIMATES
(As % of GDP growth)	Loss so far	Projected*
Bibek Debroy	1%	1%
Shankar Acharya	0.5%	1%
Subir Gokarn	0.5%	1%+
Ajit Ranade	0%	0.5%
Siddhartha Roy	0%	1%+

The Left can claim that privatisation and FDI aren't all there is to reforms. Measures like Employment Guarantee Act and Bharat Nirman are also reforms, both of which it has supported. But these measures are not new and would only lead to wasteful spending. Says Bibek Debroy, director, RGCIS: "Since the delivery will never happen, these measures will not help the economy. They will line the pockets of politicians and

WHAT'S ON HOLD UNDER LEFT PRESSURE

BHEL disinvestments 49% FDI in insurance Interest rate cut on EPF Labour reforms FDI in retail sector PSU disinvestments Pension reforms

bureaucrats." Siddhartha Roy, chief economist, Tata Group, is a bit more optimistic. He credits the Government for managing inflation well and taking baby steps like the FDI hike in telecom and cuts in customs duty. Besides, he does not blame the Left alone for the slowdown in reforms. "Vested interests cutting across party lines have prevented economic reforms," he says.

No doubt, by default or by design, the Left has found support in many Congress leaders. Mani Shankar Aiyar is dead opposed to privatisation and Murli Deora wrote to Manmohan in September 2004 opposing the hike in FDI limit in insurance. Congress chief ministers from Punjab to Andhra Pradesh have announced free power for farmers, even though Manmohan frown upon such sops. Whoever the opposition may come from, the economic cost of non-performance by the Government is high and rising (see table). The fact that the current boom is despite the Government is its biggest underlying weakness.

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