Stormy session likely

A.M. Jigeesh Richa Mishra | Updated on November 25, 2012

FDI in multi-brand retail… stirring up a storm. — K.K. Mustafah

This week will severely test the ruling Congress-led United Progressive Alliance’s (UPA) political mettle in overcoming a determined Opposition onslaught over the decision to allow foreign supermarket chains to set up shop in India.

Surviving this challenge will also be crucial in terms of demonstrating its ability to push through other key legislations — whether relating to raising the foreign direct investment (FDI) cap in the insurance and pension sectors or amending the Banking Regulation Act to allow the Reserve Bank of India to grant fresh private bank licences — during the current winter session of Parliament.

The outcome of the all-party meeting being convened on Monday — to decide whether or not a debate that ends in voting is necessary on the Government’s decision to permit FDI in multi-brand retail — is, therefore, going to be keenly watched.

The Opposition, led by the Bharatiya Janata Party (BJP) and the Left, has already moved adjournment motions under Rule 168 in the Rajya Sabha and 184 in the Lok Sabha, both entailing voting, against the Government’s decision.

One such notice reads that “This House disapproves the Government’s decision to allow FDI in multi brand retail.”

Washout likely

The Government, on its part, has made it clear that while it is all for a debate, this should not, however, necessitate voting. Its first strategy would be to convince its own allies — the Dravida Munnetra Kazhagam (DMK), Samajwadi Party (SP) and Bahujan Samaj Party (BSP) — not to push for voting.

That may not be easy though, given that these parties have already expressed their opposition to the FDI decision. In the event of their not going along with the main Opposition’s demand for a vote — which is what all the three parties have apparently conveyed informally — they stand the risk of being seen to have bailed-out the Government on an issue where it can clearly be put on the mat.

“The strategy of the BJP or even a party like the AIADMK would be to embarrass not just the Congress, but even the UPA allies. If the latter decide not to go for voting, they would promptly be accused of running with the hare and hunting with the hounds”, a political observer pointed out.

If getting the DMK, SP and BSP on board may not be possible, the Government’s second strategy would be to work on the wording of the motion itself: Instead of an outright “disapproval” of the decision, the House could be made to debate, say, on the need for “caution” in implementation. But this, again, requires allies’ cooperation.

As of now, with both sides — the ruling alliance and the main opposition — sticking to their respective stances with regard to a motion entailing vote, the current session seems headed for yet another washout.

A casualty in the process would be the key economy and business-related Bills that the Government has lined up for being taken up during the session. That includes the Companies Bill, the Forward Contracts (Amendment) Bill to allow options in commodity derivatives and the Banking Laws (Amendment) Bill, which, apart from paving the way for licensing of new private sector banks, seeks to remove the existing 10 per cent voting rights cap in these banks.

Gas pricing

Besides the stalemate in Parliament, the other major event to watch for this week would be the report of the C. Rangarajan Committee, set up to decide on future pricing of gas and production sharing contracts.

The report of the Committee, constituted this July, is expected to be submitted on November 30 and its recommendations would be crucial for companies such as Reliance Industries Ltd (RIL) that are seeking revision in the price of gas being sold from the fields being operated by them.

The panel’s terms of reference include suggesting “guidelines for determining the basis or formula for the price of domestically produced gas for monitoring actual price fixation”.

The RIL-operated KG-D6 gas is currently priced at $ 4.2/mmBtu at landfall point, with this being valid till 2014. The Rangarajan Committee’s recommendations on what should be the appropriate gas pricing mechanism will have a bearing even on the fields of other companies such as ONGC and GSPC, which are slated to go to production in the coming few years.

Published on November 25, 2012

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