PM is either naive 
or desperate?

By Narad

At the end of the year the UPA government, besmeared by a dozen scams, has only one option: to hide its face in shame for its poor record of government. On almost any issue it seems the government has back-tracked. It had the strongest support from Industry and Commerce on the FDI issue.

As the Economic Times (December 6) pointed out “veteran leaders of India Inc Deepak Parekh and Ashok Ganguly have spoken up in opening up multi-brand retail to foreign investment” and both “have done signal service to the cause of industry assuming its rightful role as a stockholder in the nation’s good governance”. “This is brave and admirable,” sad the paper which, however, pointed out that “it is remarkable that the Congress still does not have an institutionalised consultative mechanism to generate consensus or at least clarity on policy”.

The Times of India (December 6), another open supporter of the FDI, regretted that “serious dissension within the UPA ranks has forced the government to keep retail reform in hold” when “a whole host of critical reforms need to be carried out to push the economy forward”. “If the government looks weak, vacillating and vulnerable to attacks from all quarters, it will lack the authority to push through any of these,” said the paper.

Writing in Hindustan Times (December 7 ) Ashok Mitra argued that India should have allowed “American investors’ unrestricted entry into the luscious terrain of retail trade”  and once India’s credentials were firmly established with the Americans “why, even the sky will cease to be the limit for India”. Sadly the paper noted that “this government is now bereft of credibility both at home and among capitalists let down overseas”. Mitra damned “the shady goings-on over the allotment of the 2G spectrum and regretted the inability of the Prime Minister to intervene, when he was aware of what was going on behind his back”. “The credibility of the Prime Minister is not by any stretch enhanced,” he said.

Deccan Herald (December 8) said that while the “Congress always had the tendency to ride roughshod over its allies in matters of government “it has now eaten crow and been beaten and humiliated… (and) with its moral and political authority currently dented and questions arising about its decision-making abilities, it has almost been reduced to a caretaker status”. The paper said, “It will be extremely difficult for it to get out of the hole”.

Business Line (December 8) writing on the FDI fiasco said what it showed was “a government lacking confidence in its own decision”. It has “meekly caved in”, the paper said, noting that what happened was a expression of “self-inflicted helplessness”. The paper rightly pointed out that even if the FDI bill was passed, “its implementation was entirely upto the states”. “Would it have been difficult to communicate this simple point in Parliament, more so when the decision here was only an enabling one?” the paper asked.

The New Indian Express (December 8) ticked off the UPA government by saying that had it been “a bit realistic, the embarrassment it now faces and the unnecessary ruckus it created could have been averted”. “In no case should the Congress give precedence to its petty political interests over the national interest. If the government stands by its promises on FDI and other policy issues, it will stand the UPA in good stead,” the paper concluded, adding that the UPA “needs to seek in advance the opinion of each and every ally and, if there is divergence, it is its duty to sort it out before a final decision is taken.”

The Free Press Journal (November 29 ) called the FDI issue “a political disaster”. “Why did the Prime Minister act in such a hurry? Did he think he could push the decision by bypassing the internal and external opposition?… He was either naïve or desperate or both, to try and implement such a momentous decision with such supersonic speed…. The PM should know the pitfalls of ramming through highly contentious decisions on a reluctant people”. But who are these “reluctant people?”

Hindustan-Cfore had  carried out a survey, the results of which were published in the paper (November 30) and which are revealing. Question One: Do you approve of the government’s decision to permit 51 per cent FDI in multi-brand retail? Answer: 64 per cent Yes; 24 per cent No; 11 per cent Can’t say. Question Two: Have you stopped or reduced purchases from local stores because of a retail store close by? Answer: 31 per cent Yes; 64 per cent No; 5 per cent Can’t say. Question Three: Will you stop/reduce purchases from local store once a big MNC retailer comes in? Answer: 38 per cent Yes; 35 per cent No; 27 per cent Can’t say.  Question Four: Is the Opposition and some UPA allies justified in disruption of Parliament over the FDI decision? Answer: 26 per cent Yes; 65 per cent No; 9 per cent Can’t  say. Question Five: How will the entry of MNCs into organised retail impact farmers? Answer: Will benefit 23 per cent; Will lose out: 25 per cent, Will have no impact: 22 per cent; Don’t Know: 30 per cent. However, the feeling was that if the MNC entered into the organised retail sector as many as 62 per cent of local grocery stores will lose out and only 13 per cent will benefit. This questionnaire and the answers received raise some interesting issues.

Shouldn’t the UPA government have done a quiet research into the matter, check out public sentiment, discuss the answers received and structure a Bill that met objections? Was it arrogance on the part of Prime Minister Manmohan Singh to attempt to press forward a Bill in the belief that as an economist he knows everything? If that is so, he has paid for this folly. As Deccan Herald rightly stated, “the blame for the present contretemps has to be laid squarely at the door of the government which did not consult its own allies over a major decision”.

Interestingly, The Free Press Journal (November 28) was in favour of the FDI, claiming that the country needs “organised retail trade”. As it saw the matter, “foreign chains would invest wisely and bring about economics of scale hither to absent from the retail market” and “the street corner kirana stores will still have their uses and would not go out of work”. As the paper put it: “The large middle class which constitutes the support base of the BJP cannot be happy with the party’s opposition to the FDI in retail. The BJP leadership ought to realise that by opposing for the sake of opposition, it does not enhance its image. It should not betray its own beliefs merely because the Congress is yet again embracing them”. The issue is now kept in abeyance. Who knows when it will be taken up again? Has the last word on the FDI been said? Only time will tell.