Left sees red, govt drops the bricks

FDI hike in construction deferred.

The decision to defer the easing of foreign direct investment (FDI) norms for the construction sector was taken in anticipation of the Left parties' opposition to the move. The official reason stated for this was, however, that Cabinet ministers from Bihar were absent.

Commerce and Industry Minister Kamal Nath telephoned Communist Party of India (CPI) General Secretary AB Bardhan today soon after the Cabinet meeting in an effort to meet the Left's demands, if any, on FDI in construction and retailing, sources said.

Left leaders appear not to have communicated their opposition to the government on the issue in advance as they had done on the FDI hike in civil aviation, telecom and banking.

"I talked to the media yesterday about our opposition to FDI in real estate, after it was made known that the Cabinet will take it up for clearance today," said D Raja, secretary, CPI.

Nath appeared to have chosen to talk with the Left only after the Cabinet note had been readied for clearance, unlike his colleagues in the ministries of civil aviation and finance, who had prepared the ground before they took issues of economic liberalisation to the Cabinet.

This might have further irked an already combative Left Front, which has come in for criticism for having struck a deal with the government by relenting on the issue of FDI in telecom in exchange for the Employees Provident Fund (EPF) interest rate hike.

Bardhan said there were no plans to discuss the issue further with the government. "Land costs will climb sky high if FDI is introduced in real estate. In the retail industry, India has one the biggest networks in the world and is the most employment-oriented. How can the government think of getting FDI in these sectors?" he asked.

The ministry of consumer affairs, the nodal ministry for the retail sector, has readied a Cabinet note for introducing FDI in the sector. The proposal will be taken to the Cabinet for clearance any time now.

The absence of Railway Minister Lalu Prasad from the Cabinet meeting because of his pre-occupation with the ongoing polls in Bihar also meant that no decision could be taken on granting an extension to the Justice U C Banerjee committee, which is probing the Godhra riots.

In all, there were four items listed pertaining to the railways but all were deferred due to the absence of the minister.