The United Progressive Alliance's Common Minimum Programme has put on the backburner reforms in at least three crucial areas -- divestment of profit-making public sector undertakings, labour law changes and privatisation of power utilities.

The 12-party rainbow coalition also proposed a cess on Central taxes to fund education and promised to initiate a national dialogue for job reservation in the private sector.

While promising managerial autonomy to public sector banks, the CMP said steps would be taken to cut the interest rates on farm loans.

The CMP, released by Prime Minister Manmohan Singh today, rejected the idea of automatic hire-and-fire and ruled out labour law changes before full consultation with trade unions.

It called for a review of the Electricity Act 2003, and decided to extend the June 10 deadline for unbundling of state electricity boards.

The CMP also categorically kept the navratnas off the privatisation roster. "Generally, profit-making companies will not be privatised," the 24-page document said.

Minimum programme for maximum returns

On Labour

• No automatic hire & fire
• Legal changes after consulting trade unions

On Power

• Review Electricity Act
• Deadline for unbundling of SEBs to be extended

On Privatisation

• No to navratnas' sell-off
• Pvt revival of sick PSUs

On Employment

• Act to guarantee job for a minimum of 100 days
• Talks on pvt sector quota

On Fiscal Policy

• 7-8% GDP growth
• Elimination of revenue deficit by 2009
• States' share in Central taxes to be hiked
• Lower interest rates on loans to states
• Cess on Central taxes to fund education

On Capital Markets

Despite opposition from the Left parties, the CMP said foreign institutional investors would continue to be encouraged, but the misuse of double taxation agreements would be stopped.

The vulnerability of the financial system to the flow of speculative capital would also be reduced and new savings avenues would be provided to small investors.

The Securities and Exchange Board of India would be strengthened and market manipulators would be dealt with strictly, the CMP said.

The government would, however, push for an early introduction of value added tax after sorting out issues like tax integration in the service sector and compensation to states.

Committing to the elimination of revenue deficit by 2009, the draft stresses special schemes to unearth black money and assets.

States can also expect to realise more funds with the CMP advocating an increase in their share (29.5 per cent now) in the divisible pool of Central taxes.

The government would immediately enact a National Employment Guarantee Act to provide legal guarantee for at least 100 days of employment. The agricultural sector would benefit given the highest investment, credit and technology priority accorded to it.

The CMP said, to increase the tax-to-GDP ratio, the government would undertake major tax reforms to expand the taxpayer base, increase tax compliance and make the tax administration more efficient.

The tax rates, it said, would be stable and conducive to growth, compliance and investment. It promised enhanced public investment in the infrastructure sector and said subsidies would be made explicit and provided through the Budget.

It has promised a roadmap in 90 days to ensure that all subsidies were targeted sharply at the poor and the needy such as small and marginal farmers, farm labour and the urban poor.

The government would also not cut deficits by reducing or curtailing growth of investment and development outlays, the CMP said.

The UPA government also laid special emphasis on the public sector by promising to devolve full managerial and commercial autonomy to successful, profit-making companies operating in a competitive environment.

For pensioners and senior citizens, the CMP promised higher interest rates and said that the employees' provident fund (EPF) interest rate would not be changed without prior consultation and approval of the EPF Board.

For reviving industrial growth, it promised incentives to boost private investment and encouragement of foreign direct investment.

A National Manufacturing Competitiveness Council would be set up to provide a continuing forum for policy dialogue to energise and sustain the growth of sectors like food processing, textiles and garments, engineering, consumer goods, pharmaceuticals, capital goods and IT hardware.

To raise public expenditure in education from less than 2 per cent of GDP now to 6 per cent over the next five years, the government will introduce a cess on all Central taxes.

It will take steps to remove the communalisation of the school syllabus and ensure all institutions of higher learning and professional education like the IIMs retained their autonomy.