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Jaya threatens to derail BJP's Budget

All India Anna Dravida Kazagham general secretary J Jayalalitha now threatens to derail the economic agenda of the the Bharatiya Janata Party-led coalition.

As the alliance government gears up for the crucial Budget session of Parliament, beginning on May 27, Jayalalitha has come down heavily on the present three-tier income tax structure.

Addressing the coalition's co-ordination committee meeting on Saturday, the former Tamil Nadu chief minister demanded that the government introduce a two-tier income tax system -- 25 and 50 per cent.

The present income tax structure, introduced by then finance minister P Chidambaram, has a ceiling of 30 per cent. Chidambaram's argument was that lower taxes would increase revenue.

However, now that his theory has been proved ineffective with the revenue collection falling short of the target, Jayalalitha may force the BJP to accept her suggestion. She may also convince them that this was the only way of generating revenue to meet the increasing demands of the states.

Despite such 'sound arguments', the BJP may not find it easy to accept the suggestion as any efforts to raise the income tax ceiling would be seen as anti-reform. Former finance minister Manmohan Singh has backed the ceiling.

Some of the allies, according to a leading business newspaper, backed Jayalalitha's demand even as the BJP leadership was squirming in discomfort.

Adding to the BJP's woes is the fact that AIADMK MP R K Kumar is the minister of state for revenue in charge of banking and insurance.

What has come as a shock to political circles is that Kumar, who was earlier said to have had a one-point agenda of allegedly clearing Jayalalitha's name in various case pending against her, will now fuel her vote-catching gimmicks.

Besides demanding a 'pro-poor, pro-people' Budget, Jayalalitha said that support to the small scale and the public sector companies should be stepped up to help the government generate more jobs.

That is not all. Jayalalitha is also keen on having her finger in the interest rate pie. Sources said that the AIADMK leader wants the Atal Bihari Vajpayee government to slash interest rates for labour-intensive industries. This would help them compete with foreign companies, she is said to have argued.

Another significant demand is that no sick industrial unit be allowed to die. She said that the Board for Industrial and Financial Reconstruction should ensure that no industry referred to it would closed down.

Sources said that Prime Minister Vajpayee promised to refer these suggestions to Finance Minister Yashwant Sinha.