India puts FDI in retail on hold; govt gives in to pressure

Finance Minister Pranab Mukherjee on Monday told Opposition leaders, including Sushma Swaraj and Sitaram Yechury, that the decision on allowing FDI in retail was being put on hold and a final decision will be taken only after consulting all opposition parties.

"The government is willing to keep the decision in suspension. It will take a final decision only after consultations with all opposition parties and the stakeholders," sources said after Mukherjee spoke to BJP MP and leader of the Opposition in Lok Sabha Sushma Swaraj, and CPI(M) MP Yechury on Monday morning.

Swaraj is believed to have told Mukherjee that the government should come out with a statement on the issue, which has created a logjam in Parliamentary for several days now.

Yechury is understood to have told the finance minister that an all-party meeting be convened before the next sitting of Parliament on Wednesday during which the parties could be informed about the decision.

An announcement could then be made in Parliament, the sources said, adding that the all-party meeting could be held on Wednesday morning before the proceedings begin.

Mukherjee had last week told an all-party meeting, which had asked the government to reverse the FDI decision, that he would get back to them after he consulted the prime minister and the Union Cabinet which had taken the decision.

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Yechury is understood to have told Mukherjee on Monday that it would be in fitness of things that all political parties are informed about keeping the decision to allow 51 per cent FDI in retail in abeyance.

The opposition, however, is still firm on having a discussion in Parliament on major issues like price rise and black money under rules which entail voting, the sources said.

On Sunday, Trinamool Congress chief Mamata Banerjee too, after talking to Pranab Mukherjee on the phone, had announced in Kolkata that the Centre was putting the policy in abeyance.

Fearful of an adjournment motion without sufficient numerical support in the two Houses of Parliament, the government on Saturday 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 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 per cent FDI in multi-brand retail.

Banerjee said 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 on Saturday. He wanted to meet me but I had other commitments. We spoke twice on the phone and he told me the retail issue is being suspended until consensus is evolved", she said in a media briefing at the 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.

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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 is the second largest ally in the UPA coalition. TMC has 18 Members of Parliament in the Lok Sabha, second only to Congress, which has 207 MPs.

Banerjee was vocal in her opposition to the FDI move from the beginning and had been exerting pressure on the Congress.

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.

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A meeting of the Core Committee (comprising the Congress party and the government) 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 the hospital. But he could not meet her.

He then spoke to her on the phone and cited all the arguments in favour of the move. Banerjee said her understanding from her party was that FDI in retail would harm the interest of the farmers.

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 the farmers. There was no further discussion after that.

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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 duelling 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 to a consensus," she said.

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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.

Twitter was abuzz after the announcement with several tweets including those by TMC 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.

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But the government was undoubtedly in an uncomfortable position. "There is no question of a rollback. This is unprecedented in an executive decision. 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 22 December.

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 was her third intervention.

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