India will learn at around 4.00 p.m. on Thursday how far to the left the new communist-backed, Congress-led government will veer when it announces its policy agenda, hammered out in last-minute talks with coalition allies.

Most analysts were confident that the government, led by Prime Minister Manmohan Singh, seen as architect of India's economic reforms when finance minister in 1991, would announce measures to spur growth and investment in its 'Common Minimum Programme' to be announced on Thursday evening.

"No one wants a rollback. I've spoken to the Left. What they want is to go forward," India's Finance Minister Palaniappan Chidambaram, also known as a reforms champion.

• Allies okay agenda, FM in Budget mode
• No rollback of reforms: Chidambaram

The coalition government reached a broad consensus late on Wednesday with communists and other allies on a common agenda during marathon talks, a communist leader said, although some details still needed to be settled.

The agenda will focus on economic issues but also tackle foreign, education and other areas.

The Communist Party of India-Marxist holds 43 seats that are key to the government's survival. The coalition government needs to live up to the mandate for change it got earlier this month when the National Democratic Alliance was swept from power on a tide of anger over a failure to deliver the benefits of a booming economy and reforms to poor Indians, especially in rural areas.

Fears about the future of reforms have rattled investors even though a draft document said the government was aiming for 7-8 per cent growth. The economy is expected to post 8.1 per cent growth for the year to March 2004.

Chidambaram also said at a news conference earlier this week the government was committed to fiscal responsibility.

"We don't expect big changes," said S Naren of REFCO Securities. Still share markets slipped for a second day Wednesday, nervous about any surprises in the policy document that analysts said could foreshadow the budget.

The government has already said there will be no privatisation of state-run cash cows like oil giant ONGC or telecom giant MTNL and declared while it is pro-reform, reforms would need to have a 'human face.'

Asset sales in which the previous government raised over $3 billion in just three weeks earlier this year were vital in cutting India's deficit to 4.8 per cent in the year to March 2004 from 5.9 per cent.

"Agriculture and manufacturing require massive investments, both public and private, and it will be my endeavour to promote investments I believe are key to growth of jobs," Chidambaram said this week.

Unemployment is officially pegged at eight percent but economists say the figure is far higher and add many Indians are 'underemployed.'

Some 65 per cent of Indians depend on agriculture for their living while the sector kicks in just 25 per cent of GDP and that is falling due to what critics say is lack of investment in such areas as irrigation.

But some analysts are concerned the government's spending spree will bloat the fiscal deficit which, including the state governments' red ink, is near 10 per cent. Analysts say this is stopping the economy hitting its stride.

Some analysts call for better utilising existing funds, targeting subsidies to the truly need and widening the tax net.

In any event, said D H Panandikar, economist at think-tank RPG Foundation, "the economy is going to have a growth rate of 7 per cent this fiscal year whatever the government does," thanks to the knock-on effect of last year's bountiful monsoon that boosted industrial demand.

-- AFP