FDI decision put on hold: Mamata

Fearful of an adjournment motion without sufficient numerical support in the two houses of Parliament, the government today had to concede significant political ground to allies and the opposition and confessed it had put in abeyance, the policy to allow Foreign Direct Investment (FDI) in the retail sector.

The coup de grace came from West Bengal chief minister Mamata Banerjee who  announced in Kolkata that the central government had told her it was suspending the implementation of 51% foreign direct investment (FDI) in multi-brand retail.

Banerjee said that she had spoken twice on the phone with union finance minister Pranab Mukherjee who told her of the centre’s call to keep in abeyance the decision on FDI in retail until a consensus was evolved.

“Pranab Mukherjee is in Kolkata today. He wanted to meet me but I had other commitments. We spoke twice on the phone and he told me that the retail issue is being suspended until consensus is evolved," she said in a media briefing at Writers’ Building.

Reacting to her announcement, top  ministers said  FDI in retail had been "held back”. “Holding back doesn’t mean rolling back,” said a union minister. He said it was essential for optics that Banerjee announce the government’s decision, but said all parties needed to have an open mind on the issue.

Banerjee’s Trinamool Congress which is in control of the government in West Bengal is also the second largest ally in the United Progressive Alliance (UPA) coalition, which rules the centre. TMC has 18 members of Parliament (MPs) in the Lok Sabha second only to Congress with 207 MPs.

Banerjee was vocal in her opposition to the FDI move from the beginning and had been exerting continuing pressure on the Congress since the decision was passed in the cabinet meeting last week.

The drama heightened with traders taking to the streets and the Winter Session of the Lok Sabha being wiped out because of the united opposition to the move. A meeting of the core committee on Friday night asked Mukherjee to speak to Banerjee and assess for himself how flexible she was.

Mukherjee tried hard to meet Banerjee, even visiting her ailing mother in hospital. He could not meet her. He then spoke to her on the phone and cited all the arguments in favour of the move. Banerjee merely said her understanding from her party was that  FDI in retail would harm the interest of farmers. There was no further discussion after that.

On Thursday Banerjee took the Prime Minister’s call after making him wait for a day. She told him in no uncertain  words that while she did not want the government to fall she would not support the government on FDI in the vote.

On Saturday, Banerjee appeared the stronger of the dueling coalition partners when she congratulated every trader who had protested the move, saying, “I think the matter has been resolved."

She further said that people could rest assured that the decision to put FDI off is not temporary.

“It is not a temporary decision. I even asked him (Pranab Mukherjee): what will happen if the government withdraws this decision later? He has assured me that nothing of that sort will happen until we reach a consensus,” she said.

Those in Mamata Banerjee’s inner circle claimed that the rollback of the FDI decision is a huge political victory for her given that she has been able to block a marquee policy decision of UPA-II while being able to score brownie points with farmers - her core constituency.

Social networking site Twitter was abuzz after the announcement with several tweets including those byTMC Rajya Sabha MP Derek O’Brien extolling Mamata Banerjee’s success in blocking the decision.

The BJP, which was hoping it would be the one to claim the government’s scalp, was initially taken aback but recovered quickly. "There is no official conformation of the statement made by government. However, if such a decision is made, it is a good step and we will support it. But if there should be any rollback, the announcement should come from the government not from the alliance," said Siddharth Nath Singh, BJP spokesman.

But the government was undoubtedly in an uncomfortable position. "There is no question of a rollback. This is unprecedented in an executive decision. The government will take the call at an opportune moment," a top government official from the Ministry of Commerce and Industry told Business Standard. Making the best of a bad job, party spokesman Janardan Dwivedi said the Congress welcomed any move that ended the stalemate over the issue. He said consensus would guide future decisions. The government is hopeful of notifying the decision after the Parliament session ends on December 22.

Mamata Banerjee has intervened to veto a government decision for the third time in the two and a half years of UPA rule. She led her opposition to the petroleum price hike be known publicly. After giving assurances to the Ministry of Water Resources that she would not oppose the decision, she publicly embarrassed the Prime Minister and put India in a spot on the issue of sharing Teesta waters just before the PM's visit to Bangladesh. This is her third intervention.