The government and tripartite ruling coalition are involved in a tug of war over a proposal to create a commission to help troubled but viable companies rebuild, with coalition lawmakers criticizing the government's noncommittal stance.

Taro Aso, policy chief of the Liberal Democratic Party, the dominant member of the coalition, told reporters Tuesday the government does not understand "the seriousness" of Japan's economic condition.

Stressing that the economy is in "a state of emergency," the chairman of the LDP Policy Research Council said, "We will see no solutions to the current economic slump if we remain mere spectators."

Aso made the comments in favor of a recent proposal by Hirotaro Higuchi, a special adviser to Prime Minister Junichiro Koizumi, that the government create an Industrial Reconstruction Commission.

The proposal by the honorary chairman of Asahi Breweries Ltd. envisages promoting the liquidation or reconstruction of heavily indebted companies, especially those in the construction, retail and real estate sectors, under the government's leadership and with financial contributions from the Bank of Japan if necessary.

Kazuo Kitagawa, Aso's counterpart in New Komeito, a member of the coalition, voiced support for the proposal. , saying prompt liquidation and reorganization of troubled companies would have "very good effects" on the Japanese economy, which is weighed down by financial institutions' huge bad loans. In contrast, government leaders have expressed reservations about Higuchi's proposal. Said Financial Services Minister Hakuo Yanagisawa: "No one has a divine eye for determining the fate" of companies.

Katsusada Hirose, vice minister of economy, trade and industry, said heavy involvement by the government in deciding the fate of struggling companies would run counter to the principle of a free-market economy.

Koizumi took a noncommittal stance on the issue earlier this week, saying he will "take appropriate steps after listening to various people's opinions."