New Delhi: The United Progressive Alliance government may have put on hold its decision on foreign equity in retail, given the fierce resistance from both opposition as well as key allies, according to West Bengal Chief Minister Mamata Banerjee. But there was no formal announcement from the government on the issue.
Banerjee — who heads the Trinamool Congress, a key partner in the ruling United Progressive Alliance (UPA) that is against the reform policy — said Finance Minister Pranab Mukherjee had told her that the decision would be suspended for sometime.
“I had telephonic conversations with him (Mukherjee) twice today (Saturday). He has told me that the centre has decided to suspend implementation of the decision to allow (foreign direct investment) FDI in retail. He has told me that the decision will not be implemented unless there was consensus on the issue,” Banerjee told reporters at the state secretariat, Writers’ Buildings, in Kolkata.
Banerjee said during the talks, the union minister asked for the opinion of the Trinamool Congress – the second largest partner, with the DMK, in the UPA – to find a solution to the vexed issue that has led to a stalemate in parliament. The Trinamool and the DMK have 18 members each in the Lok Sabha.
However, there was no formal announcement from the government in this regard even as Mukherjee confirmed having spoken to Banerjee twice.
“It is not possible for me to make an announcement. Any government announcement will be made in parliament. I talked to her twice, but officially I can’t make any announcement,” Mukherjee told reporters at his residence in Kolkata. But he didn’t either deny Banerjee’s comments.
The sudden move, comes a day after the government firmly ruled out any rethink on the cabinet decision. It took many by surprise, even the main opposition Bharatiya Janata Party (BJP).
The BJP asked the government to officially announce the decision if made.
“Mamata is saying something on the basis of what the finance minister allegedly told her. Unless a formal comment is made by the PM or the finance minister, it would not be proper for BJP to react,” party’s chief spokesman Ravi Shankar Prasad said.
The decision to allow global retail giants like Wal-Mart into India’s retail market was the first major economic reform since the UPA returned to power in 2009.
Stakeholders maintained that a reversal now will be a major setback to investment sentiment.
“Right now a signal has gone out to international companies that India has a long-term plan for developing its retail industry and the back-end operations. But back-tracking will spoil the investment sentiment,” said Alessandro Fichera, whose corporate consultancy firm Octagona gets foreign companies to invest in India, told IANS.
According to Asim Dalal, managing director of niche apparel and furniture outlet, The Bombay Stores, back-tracking would send wrong signals on the continuity of reforms.
“We were expecting this to be a groundbreaking reform. Political brinkmanship is ruining everything. The government must not succumb to political pressures. This is a move that will help farmers and consumers.”
In justifying the FDI into the retail industry, the government had also said it was key to sustaining India’s economic growth and was taken in the interest of farmers.
The decision was severely opposed by the BJP, Left parties and the ruling Congress allies — the DMK and the Trinamool. They said that the move to allow foreign shops in retailing will hurt millions of small traders and farmers.
Communist Party of India (CPI) leader Gurudas Dasgupta said the prime minister needed to announce in parliament whether the government was keeping the decision. “I cannot comment. Let the government announce it. How do I know what is the official position,” Dasgupta said.
Nationalist Congress Party (NCP) spokesperson D. P. Tripathi said the government’s latest decision was “correct” and would pave the way for ending the parliament logjam. The NCP is also a key UPA ally.
If announced formally, the move to suspend the decision is likely to end the logjam in the ongoing winter session of parliament.
Nearly half of parliament’s 21-day-long winter session has been lost to BJP-led protests mainly over government’s decision to allow FDI in retail. UPA’s outside supporters Bahujan Samaj Party and Samajwadi Party were also opposing the move.