Retail fiasco, wholesale embarrassment: Congress lost in blunderland

It’s a holdback, not a rollback, the Congress has finally said. If holding back was always an option then what was the whole fuss over FDI in retail about? The decision could have been made much earlier so that Parliament could function normally and take up other important bills.

The idea to build consensus, at least among the allies, should have come earlier too, not as an afterthought.

It’s more egg on the face of the beleaguered Congress. For the party which has been jumping from one embarrassment to the other over the last two years, perhaps it does not matter anymore. But what the FDI episode brings out clearly - besides its garbled thought process and ridiculous crisis management skills - is the isolation of the party at all levels.

[caption id=“attachment_148583” align=“alignleft” width=“380” caption=“The government has proposed allowing 51 percent foreign investment in multi brand retail and a 100 percent in single brand retail. Reuters”]  [/caption]

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When the UPA decided to allow 51 percent FDI in multi-brand retail and 100 percent in single-brand retail, its aim was to break free of the policy paralysis it is in and kick-start the stalled economic reforms process.

To be fair to the government, it was a praise-worthy move - the farmers would have benefitted from it, the unwieldy agriculture sector would get more disciplined and the fledgling organised retail sector in the country would have got a much-needed financial boost. It had enough built-in safeguards to protect small retailers too.

The opposition to it was based more on political reasons than economic. None of those objecting to the move has come up with a valid argument against the move so far. The attack from the BJP-led NDA and the Left was only expected.

In ordinary circumstances, the government would have found it easy to handle that. But it failed to garner support from its allies, apart from the dissent in its own ranks. The corporate sector which should have been gung ho about the move was silent as well.

Caught off-guard, the government has thrown in the towel, if Finance Minister Pranab Mukherjee is to be believed, for the moment at least.

How did the government walk into such a predicament? It has to be trust deficit. From all indications, it has lost trust everywhere - right from the man on the street to the corporate sector to the political fraternity.

It was not long ago that corporate chieftains, once the most enthusiastic supporters of Prime Minister Manmohan Singh, wrote him a letter expressing alarm over widespread governance deficit almost in every sphere of national activity covering government, business and institutions.

Azim Premji, chairman of IT major Wipro, told the Economic Times that the country’s growth could suffer if quick corrective actions were not taken to address the absence of decision-making and governance issues.

A strong section of the corporate sector has been effusive in it praise of Gujarat Chief Minister Narendra Modi and has been advocating that his model of development be replicated everywhere. What stops them from backing the Manmohan when he shows the intention to restart the reforms process?

Clearly, there’s something that does not meet the eye. FDI in retail is something they should have backed whole-heartedly. But no strong corporate voice, barring a few isolated ones, has come out in the open yet. It is possible they have lost faith in the government. They would prefer to wait and watch for sometime till they got convinced of the government’s seriousness. The Congress is yet to gauge the mood.

The party does not have support from the other end of the economic spectrum either. The farmers and small retailers would easily buy the argument that they would suffer if big retail brands from abroad entered the Indian market in a big way. There was no serious effort from either the Congress and the UPA to convince them otherwise.

Why did the Congress not think it fit to involve its allies in the FDI debate before jumping into a decision? There is reason for Trinamool Congress chief Mamata Banerjee to feel slighted. The same is the case with the DMK. Both have the numbers to stall any decision. The Congress was forgetting basic courtesy in this case. It was trying shove what was basically a Congress decision down the throats of its allies.

If it has backfired, it does not surprise. The allies have fought back not so much against the FDI move, as against an arrogant Congress. The party has not learnt its lessons from all the troubles it is in now.