NEW DELHI: The two-year-old United Progressive Alliance Government overcame its first serious crisis on Thursday when Prime Minister Manmohan Singh agreed to give in to the Dravida Munnetra Kazhagam's demand on the issue of disinvestment in the Neyveli Lignite Corporation. The DMK earlier in the day threatened to walk out of the Government — but not out of the UPA — if its opposition to NLC disinvestment was not heeded.

In Chennai, Tamil Nadu Chief Minister M. Karunanidhi told reporters, "when the Union Government is not in a position to accept the demand of the workers, the DMK is thinking whether to continue in the Union Government and be a party to the decision of the Union Government. I have instructed our Union Ministers to inform this stand to the Prime Minister."

Mr. Karunanidhi's views were formally conveyed to Dr.Singh by Minister for Communications and Information Technology Dayanidhi Maran in the morning before the Union Cabinet met. Soon after the Cabinet finished its weekly business, Mr. Maran met the Prime Minister again. By that time, the Chief Minister's announcement had already sent the Congress' crisis-managers into hurried consultations.

Soon after consultations with Finance Minister P. Chidambaram and Defence Minister Pranab Mukherjee, the Prime Minister decided to put on hold the entire disinvestment process.

Dr. Singh's media adviser issued a statement: "There have been representations from some of the constituents and allies of the United Progressive Alliance about the process of disinvestment in some public sector enterprises. Taking into account their concerns, the Prime Minister decided to keep all disinvestment decisions and proposals on hold, pending further review."

CPI(M) hails decision

The DMK and the Left were quick to welcome the Prime Minister's decision on a key issue, which had come to be popularly perceived as central to the "economic reforms."

The CPI(M), which had been airing its differences with the UPA Government on disinvestment, recorded its appreciation of "the stand taken by Mr. Karunanidhi in defence of the public sector." In a statement, general secretary Prakash Karat also congratulated the "employees of the two public sector undertakings [NLC and NALCO] on their firm struggle against disinvestment."

On its part, the Congress "endorsed" the Prime Minister's decision.

Invoking coalition dharma, party spokesman Abhishek Singhvi said: "Till this exercise of give and take is complete in depth, things [disinvestment] have been put on temporary hold. There is no doubt a holistic and constructive solution will emerge after a proposed discussion in the near future."

This talk of coalition dharma notwithstanding, there is considerable disquiet in the Congress camp. While some believe that the DMK leadership yielded to unions' pressure in Neyveli, others believe this was an avoidable situation. As one senior Cabinet Minister put it, the Prime Minister had to needlessly "eat humble pie."

On the other side of the political divide, the Bharatiya Janata Party accused the Prime Minister of making a compromise to stay in power. And the chambers of commerce, too, have reacted unfavourably to his decision.

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