FDI in retail: Mamata Banerjee's ministers to resign today, PM to address nation

Mamata Banerjee's ministers will meet Prime Minister Manmohan Singh around 3 pm today to resign from his government over the new reforms he cleared last week. They will then head to Rashtrapati Bhawan where they will formally withdraw their letter of support to the ruling UPA coalition in which Ms Banerjee's Trinamool Congress was the second-largest ally.

This evening, the PM is expected to explain on television the economic measures for which he has staked his government. Even the opposition BJP concedes that he is likely to win his vote of confidence. The survival of the UPA depends on regional heavyweights Mulayam Singh Yadav and Mayawati, who provide external support to the government. So far, neither has indicated a change of heart, though Mr Yadav has warned that his party should not be taken for granted.

On Facebook last night, Ms Banerjee attacked the government for the notification it issued yesterday stating that its new policies for foreign investment in the retail sector are in effect. A week ago, Ms Banerjee said she would not accept either this or a hike in diesel prices and a cap on subsidised cooking gas for households. "Is it ethical, moral and democratic for a minority government to issue government order forcibly and hurriedly when massive protests against it are taking place across the country?" she posted on her Facebook page.

The relationship status for the UPA and Ms Banerjee has for long been "It's complicated" with the chief minister often challenging the policies the government wanted to champion. Last year, when the cabinet first cleared 51 per cent foreign direct investment for multi-brand retail, Ms Banerjee threatened to quit the government, and the policy was shelved, provoking international criticism, and a loss of both face and investor confidence. This time around, the Prime Minister was resolute about standing his ground.

So though Ms Banerjee gave the government 72 hours of notice, creating a window for negotiations, no concessions were offered. The fact that the new retail guidelines were notified hours after she said she was sticking to her schedule for exiting the UPA was a clear message that the coalition was resigned to a future without her.

Agriculture Minister Sharad Pawar, whose party is another key member of the UPA, refuted Ms Banerjee's accusations that she hadn't been consulted about the new economic measures. He said that he was present along with Ms Banerjee at a meeting of senior leaders of the coalition when Dr Singh discussed FDI in retail. "Nobody was happy to do this...not even the PM....but it was required," Mr Pawar said.

Sources say that to appease other crucial partners like Mulayam Singh Yadav and Mayawati, the government is likely to announce a 50 paise rollback in diesel prices, and increase the quota of subsidised cooking gas cylinders per household from six to nine, and that the decision was not shared yesterday to prevent opposition parties who called a massive nationwide strike from claiming credit for the concessions.