FDI in multi-brand retail: Allies pile up pressure; will Mamata quit UPA?

FDI in multi-brand retail: Allies pile up pressure; will Mamata quit UPA?

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New Delhi:  After announcing a series of bold reforms in retail and aviation, the government now has to convince Mamata Banerjee to remain a part of the ruling coalition. The West Bengal Chief Minister had yesterday issued a 72-hour deadline to the government for the move to allow foreign direct investment or FDI in multi-brand retail to be rolled back. There is also more headache for the government from other parties like Mayawati's BSP and Akhilesh Yadav's Samajwadi Party. Both parties provide external support to the UPA coalition. But this time, they have rejected the FDI move.

Ms Banerjee has rejected the decision to allow 51 per cent FDI in multi-brand retail, which would allow super-chains like WalMart to partner with a local company and sell directly to the Indian customer. She also wants the government to rollback a five-rupee increase in diesel prices and revoke the decision to limit to six the number of subsidized gas cylinders available to each household.

The government will not make any concessions on her first demand. But sources say it may reconsider the limit on subsidized gas cylinders to appease the Trinamool Congress chief. On Tuesday, the chief minister will meet with her party leaders to make what she has described as "hard decisions." Her Facebook page yesterday warned that "loot cholchhe loot (Loot is going on)" and that she cannot accept reforms against the people's interest. Today, she skipped a convocation function at IIT Kharagpur to take part in a protest rally organised by her party to press for their demand.

"We are not in favour of toppling the government. But they should not forget the 'Lakshman Rekha' of the alliance. We will not agree with any anti-people decisions. We have given 72-hour deadline to rethink... if you roll back, it's good. But if not, then be ready to face the consequences," she said at the rally.

Questioned the ways of the Congress, she asked, "UPA isn't made up of just one party. Why weren't other parties in UPA consulted on fuel hike?"

Reiterating her demand for a roll back of the FDI and the fuel hike, Ms Banerjee said she was shocked at how the country was being sold. "The price of human beings is declining, and every other price is rising... Without fuel subsidy, how will poor families bear the burden?" she said. "This may be digestible to one part of the government, but not to us," she added.

Bahujan Samaj Party leader Mayawati too slammed the Congress-led government today for taking "decisions against the common man." The BSP leader who has provided support to the Centre at critical moments, said, "We condemn the implementation of FDI (in multi-brand retail)...We had opposed it earlier and we will oppose it now as well...we will decide on October 10 whether we will support the UPA from outside or not."

Akhilesh Yadav of the Samajwadi Party has also said that he won't allow FDI in retail in his state. "The Samajwadi Party is very clear on FDI. It will not be implemented in Uttar Pradesh," Mr Yadav said today. The Uttar Pradesh Chief Minister's party has bailed out the Congress-led coalition government on several occasions. But party chief Mulayam Singh's recent alignment on several issues with the Left and other parties has given rise to much speculation that there are efforts to open a non-Congress, non-BJP Third Front before the 2014 general elections.

The new retail policy was cleared by the cabinet last November, but was abandoned after Ms Banerjee threatened to quit the UPA coalition. Since then, the PM has been criticized by industry and international media for ignoring the urgent need for reform despite a sagging economy and signals of foreign investors' concerns. Defending the FDI decisions announced yesterday, the PM said today that they were designed to improve the investment climate and bring in foreign investment to reduce debt. He also said that the hike in diesel prices effected on Thursday was "a step in the right direction."

So now, the Congress strategy is to remind Ms Banerjee that the retail policy is not binding on states. Commerce Minister Anand Sharma has stressed that states have the right to reject the multi-brand reforms. "It is an enabling legislation," he said, adding that, "while we respect Mamata Banerjee's prerogative to implement or not implement...equally it is the prerogative of other states to have it," he said yesterday.

The Congress will also furnish statements from chief ministers who say their states are hungry for a new retail policy.  The point will be to establish that Ms Banerjee cannot impose her opposition upon other states.  

Sources say that the chief minister is on board with the new policy for aviation which permits foreign airlines to own upto 49 percent of Indian carriers, a decision that will provide new cash flow for debt-ridden airlines.


The BJP has alleged that the government has approved foreign direct investment or FDI in multi-brand retail and other sectors to divert attention from the coal block allocation scam.

"The timing of this decision is important as it came to divert attention from the scams," the party's spokesperson Ravi Shankar Prasad said in New Delhi today.

The main opposition party had yesterday said that the "hurried" decision was taken under pressure from foreign elements.

Nitish Kumar of the JD(U) has termed the move "suicidal". "It seems the Manmohan Singh government has realised that it's time to leave; so every day they are taking one suicidal step," the Bihar Chief Minister said. Mr Kumar's party, the JD(U), is a member of the BJP-led NDA coalition.

Gujarat Chief Minister Narendra Modi said this would lead to massive job losses. "I don't know what the Prime Minister is doing. Small-time shopkeepers will have to close down due to this decision. Cheap goods produced elsewhere will be dumped in India and it will affect the manufacturing sector of the country as manufacturers of small items will find it difficult to survive," he said.

The NDA has also announced a nationwide bandh on September 20 to protest the government's FDI move as also the recent hike in diesel prices.


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