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FDI in retail: Row over FDI in retail escalates as state governments and UPA allies join opposition
-The Economic Times
 
The row over opening up of the retail sector escalated on Monday with Congress' Kerala unit backing the rollback demand of 12 Opposition-controlled state governments and UPA allies DMK and Trinamool Congress. 

The fissures within the ruling alliance and the potential of the issue to bring disparate Opposition groups together saw Congress president Sonia Gandhi intervening to cut political losses for her party. Sonia, who held consultations with Prime Minister Manmohan Singh, directed the government to assert that 30% of the products for hyper markets will be sourced from Indian micro and small industry. Sonia Gandhi stepped in after senior Congress leaders conveyed to her on Sunday evening the growing disquiet within the party over the government "reneging" on its initial commitment to make part of procurements from Indian SMEs mandatory. 

A five-page press backgrounder issued by the commerce ministry on Friday had said that sourcing will not be India-specific. "30% sourcing is to be done from micro and small enterprises, which can be from anywhere in the world and is not India-specific," the release from commerce ministry had said. After Sonia Gandhi's intervention, the government issued a clarification on Monday afternoon making 30% sourcing India-specific. "We have also stipulated mandatory 30% sourcing from small industry, which will encourage local value addition and manufacturing," the government clarified. But this has failed to cut ice with the Opposition which termed it as an empty assurance. They argued that it would be in contravention of WTO rules. 

Sonia Gandhi and senior party leaders met later in the evening to work out the government's strategy to face in-house rebellion and Opposition onslaught. The meeting decided not to go back on the decision. With the Opposition unrelenting on its demand for rollback, Parliament may not transact any business on Tuesday. 

Prime Minister Manmohan Singh has convened an all-party meeting on Tuesday to discuss the issue with the Opposition, which is insisting on a vote in Parliament on the matter. The government cannot afford to agree to the Opposition's demand as it would demonstrate erosion of support for its policy paradigm. Retail FDI decision has the backing of only NCP and National Conference. This translates into support of 219 Lok Sabha MPs. 

The growing isolation of Congress was on display in Parliament on Monday when Trinamool Congress leader and minister of state for health Sudip Bandopadhyay joined agitating members in the well of the Lok Sabha. The participation of a minister in an anti-government protest inside Parliament was rare. 

That Congress is uneasy over the decision came through when Kerala PCC chief Ramesh Chennithala addressed a press conference to amplify the party unit's opposition to the opening up of retail sector. In a letter to the prime minister, he said the decision was against the interests of small traders and farmers. 

Although Congress leadership has decided to back the Centre over the issue, lest it be seen as manifestation of differences between the party and the Centre, several leaders have been privately questioning the timing of the move. Defence minister AK Antony, who is known to air the party leadership's views in the Cabinet, had told the Thursday meeting that FDI in retail was "ill-timed". But his colleagues Pranab Mukherjee, Kamal Nath and Salman Khurshid had argued that the decision could dispel the impression of policy paralysis, besides boosting investor confidence. 

Congress may find it difficult to weather the retail FDI storm as its political rivals have outwitted it in the battle of perception. The "retail FDI is anti-trader and antifarmer" rhetoric of the Opposition could gain traction as every non-Congress political force of significance is flagging the issue inside and outside Parliament. The anti-retail FDI campaign has the support of NDA ruled Bihar, Gujarat, Madhya Pradesh, Chhattisgarh, Jharkhand and Karnataka. Himachal Pradesh and Uttarakhand - as well as chief ministers of Uttar Pradesh, West Bengal, Tamil Nadu and Odisha. 

UPA ally DMK chief M Karunanidhi virtually toed the Opposition line by seeking a rollback of this decision. "It is dangerous to allow FDI in retail trade as it will affect lakhs of small traders as well as the poor and middle-class consumers," he said in a statement issued in Chennai. This growing support is certain to embolden the Opposition in Parliament to go for the jugular. 

But what could sap Congress' enthusiasm to back the decision is the current campaign unleashed against it by its rivals in poll-bound Uttar Pradesh. Banias, who account for 6% votes, can make things difficult for the Congress, particularly in urban areas. "But as of now, there is no rethinking on the decision," said a Cabinet minister.