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Govt heading for a pyrrhic victory

BS Reporter/New Delhi 05 Dec 12 | 12:44 AM

The voting on foreign direct investment in retail and related amendment of the Foreign Exchange Management Act (Fema) is likely to see the government getting a Pyrrhic victory in Parliament tomorrow.

Though the United Progressive Alliance (UPA) government might have the numbers to eventually sail through, it emerged during the debate in the Lok Sabha on Tuesday that a political consensus was eluding it, with its allies and adversaries alike asking for the decision on multi-brand retail FDI to be kept in abeyance.

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The Samajwadi Party (SP), the Bahujan Samaj Party (BSP) and the Dravida Munnettra Kazhagam (DMK), otherwise sympathetic with the government, said the decision was unwise but also admitted they did not want to be on the same side as the Bharatiya Janata Party (BJP), the prime mover of the motion.

Bahujan Samaj Party: We need to be convinced that the livelihood of small traders will be protected. How will this move impact the little guy who sells peanuts on a pushcart? We don’t think this is a good move but we don’t support communal forces either 
Samajwadi Party: If the govt is so convinced this is going to benefit India, why not roll it out on an all-India scale? This move won’t get you votes in the next election. But we don’t want to see communal forces gaining either. 
Dravida Munnettra Kazhagam: We think a very large number of traders will lose their only means of sustenance. But we are forced to go with the government on this.

SP chief Mulayam Singh Yadav warned UPA of a political fallout in the next Lok Sabha elections if it continued to press the issue. The Trinamool Congress (TMC) said the government was selling its soul for a few pieces of silver.

Trying to defend the government, IT & Communications Minister Kapil Sibal charged the Opposition with vacillation and opportunism. He said FDI in retail was being introduced in only 18 cities and it was not as if a wave of conquerors was charging to attack the Indian markets and steal the livelihood of poor Indians. Only 53 cities met the one million population criterion and, of those, only 18 had governments that permitted FDI, he said.

The minister opened the debate from the government side after Leader of the Opposition in the Lok Sabha Sushma Swaraj said small retailers would lose business if big retail chains came into the country. The debate began with Swaraj asking the government to withdraw its decision to allow FDI in multi-brand retail.

Simultaneously, TMC’s Saugata Roy, and Hassan Khan, an independent member, moved two amendments under Section 48 of Fema that allows both Houses of Parliament to force changes in a government notification within 30 days of it being tabled.

Countering Swaraj’s argument that trade agreements would not allow the conditions imposed by the government on foreign investment to be a success, Sibal said the retail FDI would not fall under the bilateral investment protection agreement with any country. Besides, since retail was a service, it would not attract any regulation under the World Trade Organization, as India was not a signatory to the services agreement under the General Agreement on Tariffs and Trade.

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