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Chidambaram defends FDI hikes, gets UPA backing
The FM told captains of industry that he would stand by the budgetary policy of raising the cap on FDI.
Finance Minister P Chidambaram on Monday told captains of industry that he would stand by the budgetary policy of raising the cap on foreign direct investment (FDI) in the civil aviation, telecom and insurance sectors at meetings organised by Ficci and CII. At a meeting of UPA MPs nobody opposed the budgetary policy.
Balancing his act, Chidambaram said he had tried to reconcile the demands of the left, UPA allies and industry.
No ideology
At the UPA meet, MPs sought clarifications from the finance minister on various budgetary provisions, including the FDI issue, though there was no opposition. Another meeting and further clarifications are likely.
Chidambaram told the MPs that the FDI hike should not be looked at through ideological lenses, but should be viewed purely as an instrument of financial accounting. He also said he was confident that he would be successful in convincing the left.
After the meeting, Congress spokesman Anand Sharma also stressed that the difference between the left and the UPA were only matters of "approach and perception" that could be resolved through discussion.
"These are budgetary proposals and until the Finance Bill is debated the proposals will remain as such. No rollbacks were discussed,” Sharma added.
Left pressure
The left, however kept up its pressure for a rollback of the hike in FDI caps. After a meeting on Monday of the CPI(M), RSP and CPI, it announced the formation of a six-member committee that would discuss budget proposals against which it had reservations with the government.
In defence
At the Ficci and CII meetings, the finance minister defended the FDI hike in the telecom sector saying he had merely made formal provisions for what had been possible indirectly, even though the NDA government had not cleared 25 per cent stake for foreign institutional investors over and above 49 per cent FDI. "What I have done is to make policy transparent and clean," he said.
In the case of civil aviation, Chidambaram argued that "there would be no difference between 40 and 49 per cent FDI", pointing out that the Cabinet had already approved 49 per cent FDI in airports, with the support of allies.
As far as insurance was concerned, Chidambaram said Indian entities that were part of joint ventures had supported an FDI hike to mobilise greater resources.
