The government’s bid to engage the main Opposition BJP into supporting amendments to allow foreign investment cap in the insurance and pension sector up to 49% has hit rough weather.
A day after finance minister P Chidambaram said he would convince the opposition parties to back the government proposal, a top BJP leader has conveyed to an interlocutor that his party’s support for FDI in insurance and pension hinged on the government’s finding consensus first on FDI in multi-brand retail sector.
Leader of opposition in Rajya Sabha Arun Jaitley told Union minister of state for parliamentary affairs Rajiv Shukla on Tuesday that the government must implement first then finance minister Pranab Mukherjee’s “assurance” in Lok Sabha on December 7, 2011 that the Centre would proceed on FDI in multi-brand retail only after a “consensus is developed through the process of consultation amongst all stakeholders”.
BJP sources quoted Jaitley as saying Mukherjee had himself defined in Parliament that the “stakeholders” included chief ministers of different states but the UPA government had gone back on its word and introduced FDI in retail “unilaterally”.
Jaitley also conveyed to Shukla that, in the present atmosphere, the BJP could not be expected to overule the “political logic” (when the government was in a confrontation mood with opposition CMs and parties) with “economic logic” on insurance and pension, the sources added.
Jaitley told his interlocutor the BJP could have cooperated with the govenment on FDI in insurance and pension as per the recommendations of Parliament’s standing committee headed by BJP leader Yashwant Sinha. “But the government lost an opportunity for consensus with the BJP on insurance and pension by unilaterally pushing for FDi in multi-brand retail,” he is said to have conveyed to the government.
In fact, West Bengal CM and Trinamool Congress chief Mamata Banerjee had withdrawn support to the UPA, citing Mukherjee’s assurance on FDI in multi-brand retail. With Mamata threatening to bring a no-confidence motion, the BJP was now pressing on Mukherjee’s “assurance”.
But the government is in no position to put FDI in multi-brand retail on hold when it had even turned down the request of its allies, official sources said.
Also, Chidambaram had said the amendments for FDI in insurance and pensions would be presented in the ensuing winter session of Parliament even though top officials do not rule out the possibility of its curtailment due to the “political situation” and polls in Gujarat and Himachal Pradesh.
On October 8, Chidambaram had brushed aside political opposition to FDI in multi-brand retail, saying this was an executive decision that did not require parliamentary approval.
On FDI in insurance and pensions, Chidambaram said that though the Yashwant Sinha-headed parliamentary standing committee had recommended retaining FDI cap at 26%, the government went for the higher cap so as “to meet the growing capital requirement of insurance companies”.
A day ago, Chidambaram told economic editors the first comprehensive cabinet paper on FDI in retail was prepared by the NDA government in 2002.
He said the NDA cabinet note endorsed the advantages of allowing FDI in retail and said the idea was never rejected. “So, why should there be a controversy when the government announced its intention to lay down guidelines in order to enable FDI in retail?” he asked.