Opposition slams FDI decision; industry says reforms timely

In sharply diverse reactions, opposition today slammed the government's decision to liberalise FDI norms in various sectors, while industry groups welcomed the move.
The Bharatiya Janata Party described the government's decision to increase FDI in telecom and insurance as a "panic reaction" when the economy is going downhill.
"The panic decision taken by the government on FDI is not going to impact the Indian economy, which is indeed in a terminal state," BJP Deputy Leader in Rajya Sabha Ravi Shankar Prasad told reporters. "The story of India has come under a serious cloud under the leadership of Sonia Gandhi and Prime Minister Manmohan Singh."

The government yesterday announced liberalisation of FDI norms and caps in about a dozen sectors. These include increasing the cap to 100 per cent in telecom and 49 per cent in insurance, allowing foreign capital beyond 26 per cent in defence production and fast-tracking FDI in sectors such as oil refineries, commodity bourses and stock exchanges.
"FDI in telecom sector has been increased from 74 per cent to 100 per cent. 74 per cent is a dominant investment. If at 74 per cent India is not able to get foreign investment, then how can one expect this at 100 per cent," Prasad said.

The BJP asked if the FDI decision was a fallout of Finance Minister P. Chidambaram's recent visit to the US, where, the BJP alleged, he drew flak for problems with the Indian economy.

On allowing 49 per cent FDI in insurance, the BJP said the matter is with the Parliamentary Standing Committee and an understanding had been reached, in which the Congress was also a party, that the limit should be 26 per cent.
"Then why this panic reaction?" Prasad asked.
Left parties lambasted the government for "mortgaging" the economy and demanded immediate rescinding of the decision.