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Pushed to a corner by the 10-day stalling of Parliament by the Opposition parties and dissent from its key allies, the DMK and the Trinamool Congress, the Government on Wednesday suspended its November 24 decision to allow 51 per cent FDI in multi-brand retail.
At an all-party meeting, the Finance Minister, Mr Pranab Mukherjee, said the Government would move a proposal in Parliament on Thursday stating, “The decision to permit 51 per cent FDI in multi-brand retail will be suspended till a consensus is developed through consultations with various stakeholders.”
However, 100 per cent FDI in single brand retail may find its way through. The Government is likely to formally notify the Cabinet decision shortly, official sources said.
The existing FDI cap on FDI in single-brand retail is 51 per cent.
Till Tuesday, both the BJP and the Left were firm that they would only settle for a roll-back and not a ‘hold-back'. However, on Friday, they agreed to end the impasse saying that the Government had assured them that no decision would be taken in this matter till a consensus was reached with all the stakeholders.
The BJP expressed “happiness” over the ending of the logjam in Parliament. “I welcome the Government's decision to respect public sentiments. Bowing to public sentiments should not be seen as the Government's defeat, but as the strengthening of democracy,” said BJP leader, Ms Sushma Swaraj, Leader of the Opposition in the Lok Sabha.
CPI(M) leader, Mr Sitaram Yechury, said “We are happy that this time the Government has yielded without waiting for the washout of the entire Parliament session.” He said his party is also demanding a ban on forward trading in commodities, a rollback of petrol prices and the release of excess foodgrains in Government stocks.
Traders, too, were upbeat. “The decision has established the supremacy of the political leadership over the bureaucracy,” Mr Praveen Khandelwal, Secretary-General of the Confederation of All-India Traders, said. But, India Inc, which had hailed the FDI decision as a step ahead in the reforms process, was despondent.
“The decision is deeply disappointing… It is a highly regressive move,” said Mr Harsh Mariwala, President, Federation of Indian Chambers of Commerce and Industry.
Mr Chandrajit Banerjee, Director-General, Confederation of Indian Industry (CII), said the decision would send a wrong signal to investors. “FDI in multi-brand retail is an important reform agenda and offers India a great opportunity,” he added.
“It's a clear case of a missed opportunity that will dent the country's image as a global investment destination,” said industry lobby, Assocham.
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