Parliament debate wasn't about FDI, but about polls

The Samajwadi Party and the Bahujan Samaj Party saved Dr Manmohan Singh's chair today; will they tug it away from under him tomorrow? asks T V R Shenoy.

The debate in Parliament was about anything and everything but Foreign Direct Investment. It was about which party is prepared to fight a general election in the immediate future, and which party wants such polls postponed until as late as possible.

Mamata Banerjee's plan was fairly straightforward. She wants to have polls while she can take advantage of lingering anti-Left Front sentiments and while she can blame the Union government (meaning the Congress party) for lack of support to West Bengal, but before voters begin to blame the Trinamool Congress.

Rightly or wrongly, Mamata Banerjee believes that she can emerge with even more seats in the next Lok Sabha, increasing her bargaining power. A similar rationale probably drives other powerful regional parties like the AIADMK and the Biju Janata Dal.

The Congress and the Bahujan Samaj Party are equally desperate to avoid a general election. They are both battered by charges of corruption, and have dug equally deep holes for themselves in the crucial state of Uttar Pradesh.

Time, they believe, will expose the misgovernance of the Samajwadi Party ministry. In addition, the Congress hopes the national economy will revive just enough for voters to forgive it; the Congress also needs time for money from its various welfare schemes to reach the voter's purse. And parties like the DMK are driven by similar calculations.

The problem for everyone supporting the Congress on the Foreign Direct Investment issue -- meaning no immediate general election -- is that inviting foreigners into the retail sector is (probably) not a vote catcher and is (almost definitely) a vote loser.

There is no time for the likes of Walmart or Carrefour to set up operations, but there is more than ample time to irritate the local trading community. This explains the gymnastics of several parties.

Mulayam Singh Yadav gave a long and eloquent speech about exactly how and why Foreign Direct Investment in multi-brand retail would harm the Indian farmer. Then, rather than vote against the ministry's initiative, his Samajwadi Party walked out of the House.

M Karunanidhi's DMK said both inside and outside the House that it opposes the concept of Foreign Direct Investment in the retail sector. And then, mindbogglingly, it announced that it would be voting in favour of the Manmohan Singh ministry's proposals.

Sharad Pawar's Nationalist Congress Party supported the proposal in the Lok Sabha. Once that debate ended Praful Patel dashed off a letter to Prithviraj Chavan, chief minister of Maharashtra, saying that the Congress-NCP ministry in the state should not implement Foreign Direct Investment in multi-brand retail.

'We have issues which need to be discussed and clarified,' said the NCP's Maharashtra unit president Madhukar Pichad, adding, 'There are Mathadi labour unions, market committees and we have to ensure that their interests are not harmed while implementing FDI in retail.'

Does any of the above make any sense at all?

Come to that, why did the prime minister choose to make such a song and dance about Foreign Direct Investment in the retail sector anyhow?

Was it because Dr Manmohan Singh ministry covets gushing headlines in the foreign media? Please remember that the prime minister's new-found enthusiasm for 'reform' emerged only after Time branded him an 'Underachiever' and The Washington Post mocked him as 'a dithering, ineffectual bureaucrat presiding over a deeply corrupt government'.

Read Simon Denyer's The Washington Post article of September 5, 2012 here. The interesting thing is that the word 'retail' simply does not appear anywhere.

And the reasons why Dr Manmohan Singh's image took such a battering had been spelled out earlier in Time, on July 16, 2012: 'In a bid to cushion the pain of inflation and keep constituents happy ahead of ever looming elections, the UPA has been burning through its boom-time chests, spending on subsidies and social benefits. But business-friendly laws that could spur growth to offset that spending are languishing, and industry is struggling.'

Essentially, there was an increasing consensus -- abroad as well as at home -- that Dr Manmohan Singh was a poor economist. And so the prime minister suddenly hit upon foreign direct investment in multi-brand retail as the first of his 'bold' reforms.

The game was given away by Deepender Hooda -- the Congress MP now forever linked to the hilarious 'aloo-lauki' exchange in the Lok Sabha -- in a television conversation following the vote in the Lok Sabha. He admitted that foreign direct investment in the retail sector had achieved a symbolic significance probably out of proportion to any actual value.

This is a prime minister who has demonstrated a preference for shortcuts; he prefers to enter Parliament through the Rajya Sabha rather than face voters in a Lok Sabha election, and he prefers the relative ease of an executive decision rather than the laborious process of taking Parliament into confidence.

Opening up the retail sector was so much easier than negotiating with the BJP to enact reforms in pensions and insurance, or actually implementing infrastructure projects.

On balance, it was the wrong 'reform' to push, and the wrong time to do it.

What the vote in the Lok Sabha demonstrated is that this government cannot summon a majority -- 272 votes -- even on an issue where the prime minister stakes his prestige. And the Congress is now ever more hostage to the whims of the Samajwadi Party, the Bahujan Samaj Party, and other smaller parties.

It was also, as I said above, a case of supremely poor timing. In April 2012 news came that Wal-Mart had tried to bribe officials in Mexico. This opened the global giant to investigations by the the US Department of Justice and the Securities and Exchange Commission, for potential violations of America's Foreign Corrupt Practices Act.

In November 2012 Bharti Walmart -- the multinational's Indian arm -- suspended its chief financial officer and its entire legal team. This was reportedly done after America's Securities and Exchange Commission decided to expand its ongoing investigation regarding Mexico to Walmart operations in Brazil, China, and India.

Was this the time to push for foreign direct investment in multi-brand retail?

As to the merits of the case, the supposed benefits will probably not be as wonderful as the Congress claims, nor as destructive as the Opposition would have us think. But it is a moot point anyhow.

The policy will apparently be rolled out only in the eighteen largest cities, and then only with the blessings of the state and local governments. The largest of these -- Mumbai, Delhi, Kolkata, Chennai, Bengaluru -- have either hostile state governments or hostile municipal corporations, occasionally both.

Who is going to pour in money in the face of this? Foreign Direct Investment in multi-brand retail was a dead issue before the Lok Sabha Speaker called on Sushma Swaraj to speak on Tuesday.

The debate in Parliament was not about FDI, but about either precipitating polls or scoring points for the next general election (whenever that may be).

The Samajwadi Party and the Bahujan Samaj Party saved Dr Manmohan Singh's chair today; will they tug it away from under him tomorrow?

For more columns by Mr Shenoy, please click here.