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Indian govt allies urge rollback in price increase

HYDERABAD (India): A key constituent of India's ruling coalition has demanded the government roll back the increase in the price of fertilisers and foodgrain announced in the 2000/2001 (April-March) budget.

N. Chandrababu Naidu, head of the Telugu Desam Party (TDP), the largest constituent of the National Democratic Alliance (NDA), said the increase in the prices of rice and foodgrain sold at subsidised prices under a public distribution system was "anti-poor".

"These proposals, if implemented, will have a very adverse impact on the states. They will lead to financial bankruptcy of Andhra Pradesh as well as many other states," Naidu told reporters late on Wednesday.

"It will burden the state exchequer by 4.0 billion rupees ($91.85 million) a year and deal a lethal blow to the poor," said Naidu, also chief minister of the southern state of Andhra Pradesh.

In the 2000/2001 budget unveiled in parliament on Tuesday, Finance Minister Yashwant Sinha said he planned to increase urea prices by 15 percent.

He added the rate at which food and fertiliser subsidies were growing was not sustainable and he expected the subsidy bill in 2001/2002 to decline by 60 billion rupees.

The TDP has 29 members in the 303-member ruling coalition and could leverage its postion to mount pressure on the federal government headed by Prime Minister Atal Behari Vajpayee's Bharatiya Janata Party (BJP).

Media reports said four regional allies of the ruling BJP had also demanded the government roll back the increase in the price of fertilisers and rice sold under the public distribution system.

But Sinha ruled out a rollback despite resistance from the Trinamool Congress, the Indian National Lok Dal, the Biju Janata Dal and the Shiromani Akali Dal parties, news agencies said.

After Sinha unveiled the 1999/2000 budget, he was forced to roll back some of the price increases announced due to pressure from within and outside the government.-Reuters