The Congress Wednesday denied Prime Minister Manmohan Singh or the government has lost face following decision to pause Foreign Direct Investment in retail, and said more consulations were required to get allies on the board on the issue.
Party spokesman Manish Tewari said the move to pause FDI decision was "demonstration of coalition senstivities".
"I don't think there is loss of face for the prime minister or the government. Extra consultations are required to get allies on board. Different parties have different understanding of the same issue,” Tewari said.
Answering queries, he said FDI in retail was “definitely a good idea".
"Good economics often does not make good politics...there is different understanding (of issues). In coalition politics (one has to) walk that extra mile.”
Tewari also denied there was an error of judgement on the part of government.
"No, it is not an error of judgement. There was consultation process with states, political parties, allies. Also, in a coalition, enough consultation may not be enough... We hope to arrive at some constructive resolution.”
Finance Minister Pranab Mukherjee announced in parliament after an all-party meeting that the decision to permit 51 percent FDI in retail trade has been suspended till a consensus is developed through consultation among various stakeholders.
Congress allies Trinamool Congress and DMK, apart from the Bharatiya Janata Party (BJP) and the Left, were opposed to allowing FDI in retail. The Trinamool Congress refused to come on board despite the prime minister talking to party chief and West Bengal Chief Minister Mamata Banerjee. A few Congress leaders also raised questions over FDI in retail and its timing.
Tewari said concerns of the Trinamool Congress will be allayed.
Congress leaders, speaking on the condition of anonymity, however, admitted there was a loss of face for the government over the decision but said it was a better option than to hurt the ego of a key ally when the United Progressive Alliance (UPA) government had completed only half its term.
“It was a choice between getting temporarily wounded than causing a permanent strain in the relationship,” a party leader said.
However, he agreed that the decision to pause FDI in retail was likely to impact moves of the government on foreign equity in insurance and aviation.
The leader said if the government had pushed through the decision for FDI in retail, it would have been accused of being "insensitive and arrogant".
Though the Congress leader said that the government could have mustered alternate support as it did after the Left parties withdrew support over the Indo-US nuclear deal, there were concerns in the party over support to the FDI in retail decision on the floor of the house.
Apart from the Trinamool Congress and the DMK, outside supporters of the UPA such as the Bahujan Samaj Party (BSP), the Samajwadi Party (SP) and the Rashtriya Janata Dal were also firmly opposed to the decision.
The Congress could not have banked on the SP and the BSP in view of the upcoming assembly polls in Uttar Pradesh where it has decided to go alone.
Congress leaders insisted FDI in retail was not over but said it was difficult to set a timeline for it to be implemented.
They also said that pause should not be linked to the Uttar Pradesh assembly elections and there was “no timeline in that sense.”
Party sources said allies were likely to become more assertive vis-a-vis Congress after Banerjee virtually forced the government to pause FDI in retail decision and there could be demands for a coordination mechanism in the UPA.