The government has told political parties at a meeting today that its policy on Foreign Direct Investment or FDI in retail has been suspended to allow for wider consultations. This has led to a truce that will allow Parliament to get back to work after squandering half of the short Winter Session over the controversial reforms.
At a meeting that lasted less than half an hour, Finance Minister Pranab Mukherjee read out a short statement -"The decision to permit 51 % FDI in retail trade is suspended till a consensus is developed through consultations among various stakeholders." Mr Mukherjee shared the same resolution in the Lok Sabha at 11 am. He stressed that stakeholders include Chief Ministers and political parties. Without the involvement of state governments, he said, the new FDI policy cannot be implemented. The BJP's Sushma Swaraj said she thanked Mr Mukherjee and said it was a victory of democracy that had forced the government to bow before the "will of the people." The Speaker of the House, Meira Kumar, then said because a compromise has been reached between the government and the opposition over the need to discuss FDI in retail, she disallows adjournment motions filed by different political parties that asked for the Lok Sabha to discuss the FDI policy followed by a vote.
The Left says that the government's announcement amounts to a "virtual rollback" - a rollback was the pre-requisite declared by the BJP and the Left for Parliament to start functioning again. "Members of the UPA coalition, however, say the reforms have been paused, not cancelled.
The Winter Session of Parliament ends on December 21. Sources in the government say that the reforms in retail, which will allow the entry of global super-chains like Tesco and Wal-Mart, will be pushed to the backburner till after the UP elections, expected within the next few months. Though the Prime Minister pushed for and defended the 51% foreign ownership of multi-brand retail stores, there was subtle opposition within his party, the Congress, partly because of the elections in UP, a key state.
But it's the government's biggest ally - Mamata Banerjee - who owns responsibility for forcing the U-turn on FDI in retail. First, she made it clear that her party, the Trinamool Congress, will not support FDI. Then she announced on the weekend that Mr Mukherjee had phoned her to share that the policy would not be implemented for now. Ms Banerjee has the muscle of 18 Lok Sabha MPs. The opposition said that if the government did not rollback its decision, a vote was needed in Parliament. With Ms Banerjee making it clear that she would not vote for the government, the math was precarious for the UPA. It would skid through a vote, with a serious dent to its moral authority.
For the government, it is critical that Parliament begin functioning. Half the Winter Session has gone without any work transacted. In the next two weeks, it must clear a huge backlog that includes several important Bills, including the Lokpal Bill, which comes with the threat of another Anna Hazare hungerstrike and mass agitation attached. "We hope that Parliament will run smoothly after the all-party meeting", Parliamentary Affairs Minister Pawan Kumar Bansal had told PTI early on Wednesday.