The Manmohan Singh government pushed through the proposal to permit 51% FDI in multi-brand retail and 100% foreign equity in single-brand trading on Thursday in the face of vigorous protests not just from the Opposition and ally Trinamool Congress (TMC) but also disquiet in a section of the Congress.
Following up on this, the Congress Core Group met here on Friday evening to discuss the issue: sources said the consensus was that the decision must be defended vigorously by the party inside and outside Parliament. The Core Group members include Prime Minister Manmohan Singh, Congress president Sonia Gandhi, her Political Secretary Ahmed Patel, and Union Ministers Pranab Mukherjee, A.K. Antony and P. Chidambaram. This decision came hours after Commerce Minister Anand Sharma was fielded by the government to hold a press conference to explain the plus points of the policy.
Apart from the government wishing to demonstrate that there is no policy paralysis and that it will not be cowed down by dissenting allies, and sceptics in its own ranks, it feels that with the Shiromani Akali Dal (SAD), an NDA ally supporting the government's decision, the Congress should press its advantage in Punjab, a poll-bound State.
The effort is also to quieten the voices of dissent within the government and the party. For, on Thursday, three Ministers expressed their reservations on the move at the Cabinet meeting, pointing out that the decision jeopardised the future of small retailers: they were Mr. Antony, Rural Development Minister Jairam Ramesh and Small and Medium Enterprises Minister Virbhadra Singh.
Explaining Mr. Antony's stand, a Cabinet Minister told The Hindu : “Mr. Antony's objections spring from the same reason as that of the TMC and [West Bengal Chief Minister] Mamata Banerjee — in Kerala, as in West Bengal, the Left Parties [which have protested against the move to bring in FDI in the retail sector] have to be countered.”
On his part, Mr. Sharma — refuting Railway Minister and TMC leader Dinesh Trivedi's assertion that his party had not been kept in the loop — said he travelled to Kolkata to speak to Ms. Banerjee and then again spoke to her on Wednesday and Thursday, stressing that not only did the States have the discretion to implement or reject the policy, West Bengal had only three cities with a population of more than one million (the policy will kick in only in cities with a one million plus population).
Simultaneously, there was disquiet in the ranks of the Congress MPs representing urban constituencies. An MP representing a constituency in metropolitan Mumbai looked worried as he said: “Many of my constituents — who are small traders — are opposing the move.”
A former Congress MP who used to represent an urban constituency in Uttar Pradesh, too, expressed his concern, saying the new policy would adversely affect the prospects of the Congress in the urban seats in the State in next year's Assembly elections, pushing the powerful trading community back to the BJP.
But official sources told The Hindu that for the UPA it was imperative to be seen to be taking a major initiative to counter the growing criticism of a drift in governance, of “policy paralysis,” and its inability to stand up to its difficult allies.
Indeed, when Mr. Sharma was asked — at a press conference on Friday — why the policy was pushed through even though there were murmurs of dissent in the Union Cabinet, his riposte was: “You are saying, what's the hurry? If we don't do anything, people start talking about government deficit and policy paralysis.”
Indeed, next on the reforms anvil for the UPA government is the proposal to permit FDI in the airlines industry, currently under discussion, and is likely to face the same sort of opposition.
It will now fall to the lot of the Congress to sell the message of Thursday's decision to the people — that it is good for the farmers and consumers, that it will create jobs, and develop rural infrastructure for perishable goods.