After two days of stormy debate, lawmakers in the Lok Sabha voted in favour of the government's big policy decision to open up the country's highly-protected retail industry to foreign chains such as Walmart. 471 of the Lok Sabha's 545 members voted; 253 MPs voted against the BJP motion that challenged the policy and 218 voted for it. (Highlights of the debate in Lok Sabha)
Immediately after, the government also won a crucial vote on amendments to Foreign Exchange Management Act or FEMA, needed to operationalise FDI in various sectors.
The government has said reforms have won and India Inc is cheering.
The majority mark in Lok Sabha was brought down from 273 to 251 by the Bahujan Samaj Party (BSP) and the Samajwadi Party, which provide external support to the Manmohan Singh government, walking out to help the government. Samajwadi Party chief Mulayam Singh Yadav had a made a strong speech against FDI in retail in the Lok Sabha and the BSP had suggested that the government not rush into implementing it. (Govt wins FDI debate in Lok Sabha-10-point cheat-sheet)
The other vote that the government won today was by defeating a motion moved by the Trinamool Congress against amendments to the Foreign Exchange Management Act (FEMA) to facilitate foreign investment in multi-brand retail. Before the debate on FDI began yesterday, opposition parties had sought that the two be delinked and voted on separately, but the Speaker ruled that they could be debated together. The government was keen to push the crucial FEMA amendments through.
Congress President Sonia Gandhi said that she was happy with the Lok Sabha win and wasn't worried about the vote in the Rajya Sabha, which will begin debate on FDI in retail tomorrow and will vote on Friday. (Who said what after the govt won the FDI vote)
The government is on thin ice here, as it is in a minority and will need the active suport of the SP and the BSP to scrape through. BSP sources have said party chief Mayawati could go a step further in the Rajya Sabha and bail out the government by voting for FDI; she reportedly told party MPs that it would not be politically prudent to fall foul of the Congress. The BSP leader reportedly fancies her chances as an important player in government formation after the 2014 general elections. (Why the BSP might bail the govt out in the Rajya Sabha)
The government's floor managers are counting on Mulayam Singh Yadav abstaining in the upper house too. After walking out today, Mr Yadav said, "Five crore (50 million) people in retail trade will be destroyed. This decision has ignored the interests of 20 crore (200 million) farmers and their families. The decision on FDI was taken under pressure of foreign companies. This is the reason the party boycotted it." Despite its strong words, the Samajwadi Party has indicated that it will not do anything to "trouble the government".
In her closing remarks in the Lok Sabha today, Leader of Opposition Sushma Swaraj slammed both the BSP aand he SP for not walking their talk. "How vociferously Mulayam ji had opposed FDI...if he had voted with us, FDI would not have been implemented. It is not a question of BJP, this is not a communal issue. But the problem is the issue has now become FDI vs CBI...When the BSP wants support, they come to us and then we aren't communal. This dichotomy won't work." Ms Swaraj said referring to Ms Mayawati's recent comment that keeping "communal forces" at bay was a priority. After the vote Ms Swaraj said the government has "won politically but lost morally." (Watch)
Mamata Banerjee, whose Trinamool Congress had moved against amendments to the Foreign Exchange Management Act (FEMA) vote said on her Facebook page, "It is a shame! The mandate today proves that the UPA-II is a minority Government...This Government has lost its credibility. They must take fresh verdict from the people."
A loss today would not have reversed the policy, but it would have dealt the government a severe blow and would have set back efforts to push through other reform measures. In his reply to the debate Commerce Minister Anand Sharma said, "Consensus does not mean unanimity. If you have to wait for unanimity, you wait till eternity. The states are free to choose whether to implement it or not." (Watch)
The government's pro-market push, which includes efforts to cut subsidies, comes as India faces a sharply slowing economy, a gaping fiscal deficit and high inflation, which has stoked pressure on an administration already under fire for corruption.
During the debate, opposition MPs lambasted the idea of foreign supermarkets in India, saying they would harm traditional family-owned shops where most Indians do their shopping as well as hit farmers.Mulayam Singh Yadav, an ally of the government but an opponent of foreign supermarkets, invoked the memory of independence leader Mahatma Gandhi who burned foreign cloth as a protest against British products.
Supporters of the arrival of chains such as Walmart, Tesco and Carrefour say it will revolutionise shopping in India, with consumers offered cheaper food in large, modern supermarkets, as well as improving the wasteful supply chain. Among conditions imposed on foreign supermarkets, they will have to invest a minimum of 100 million dollars, open stores only in towns with a population of more than one million and source 30 percent of produce from India. Previously the groups were restricted to owning wholesale operations in India.
Walmart, the foreign chain seen as the most keen to tap India's vast consumer market of 120 crore people, has since been tripped up by two separate investigations in the country.The prospect that has raised fears among opposition parties of small shopkeepers being put out of business.
The company is carrying out an internal probe into possible corrupt payments by its local joint-venture, while the government is investigating whether it broke the previous rules barring investment in the retail sector.
(with inputs from Agencies)