core sector communique

Lacking retail confidence:

If Bengal did not want foreign retailers, it could have ensured so. But why deny Punjab, if it wants them?

Call it a ‘holdback' or a ‘rollback', the fact is that the Congress-led Government has buckled under pressure from the Opposition and its own allies to reverse the decision to open up the country's retail sector to foreign direct investment (FDI). By doing so, it has squandered an opportunity to not just signal an end to perceived policy paralysis, but also defend a bold reform measure in Parliament itself – even if it were through an adjournment motion entailing voting. The people of India, too, would have benefited from a debate, hearing the diverse views of their elected representatives. What would have happened? At the most, the Government risked losing the vote. But an adjournment motion, unlike a no-confidence motion, is not life-threatening. In 2008, the Congress had only 145 members in the house, making the then Government's survival mainly dependent on the Left parties. Yet, it broke ranks with the Left on the Indo-US nuclear deal and went on to win a confidence motion. This time, the Congress alone has 206 – out of the 272 needed for majority – and, despite that, has chosen to shy away from even an adjournment motion. What it shows is a Government lacking confidence in itself and also conviction in its own decision, as evidenced by the Congress President, Ms Sonia Gandhi, and her son, Mr Rahul Gandhi's, baffling silence on the matter.

That brings us to the decision itself, which was largely about promoting competition. The entry of foreign retailers, if anything, would have expanded the range of shopping options for consumers and also the universe of buyers for producers, especially farmers. Would it have been difficult to communicate this simple point in Parliament, more so when the decision here was only an enabling one? Even if 51 per cent FDI was allowed, its implementation was entirely up to the States, as they are the ones issuing ‘shops & establishment' licences or sales tax registration numbers. If West Bengal did not want a Walmart or Tesco, all it needed was to deny them these. But if Punjab or Haryana wanted foreign retailers, why deny that choice? The Government could, in fact, have gone a step ahead by projecting its decision as pro-farmer and those opposing it to represent entrenched mandi intermediaries that stand to lose if firms source produce directly from the field.

Rather than setting the agenda on these terms and, perhaps, turning the tables on the Opposition, the Government has meekly caved in. There can be no better expression of this self-inflicted helplessness than the Finance Minister's statement in Parliament on Wednesday that the decision on FDI “is suspended till a consensus is developed through consultations among various stakeholders”. If that is the case, then what prompted the Government to go for it in the first place, that too when Parliament was in session?

-Umesh Shanmugam