Double hazard: BJP, Left may get two chances to defeat FDI

The UPA’s vote challenge on foreign direct investment (FDI) in multi-brand retailing has become stiffer with its linkage to a more complex issue-approval of the relevant amendments to the Foreign Exchange Management Act (FEMA).

Given the political implications of the vote, the government would want the FEMA amendments clubbed with the FDI debate and vote, but the BJP and the Left want a separate debate and vote on FEMA amendments in order to have a second chance to embarrass the government.

[caption id=“attachment_542004” align=“alignleft” width=“380”]  The government faces serious trouble in terms of the numbers in the Rajya Sabha. PTI[/caption]

The FDI debate and vote is scheduled in the Lok Sabha on Tuesday and Wednesday and in the Rajya Sabha on Thursday and Friday. The Samajwadi Party’s conflicting positions on voting in the two houses is keeping the ruling Congress’s floor managers on tenterhooks.

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The government faces serious trouble in terms of the numbers in the Rajya Sabha but is of the view that a defeat in the Upper House does not mean a rollback of FDI even if it’s a political setback.

While the debate on FDI in retail is political, the FEMA issue is more technical.The FDI debate has acquired a sharper political edge in the context of the breach of parliamentary privilege alleged by the opposition, which claims former Finance Minister Pranab Mukherjee had promised consultations and consensus with all stakeholders in the house last year.

The amendments to FEMA were done by the government to create enabling provisions for FDI in multi-brand retail. So if the FEMA amendments are not approved by Parliament - if the government is defeated on this vote - FDI in retail will remain a dead letter.

The government yesterday tabled five amendments, notified by the Reserve Bank of India between May and October this year, in the Lok Sabha. The notifications were tabled as per section 48 of the 1999 FEMA Act which requires their acceptance by both houses of Parliament. The provisions under this section make it mandatory for the government to seek parliamentary approval within a specified period each time an amendment is made.

Section 48 of FEMA reads: “Rules and regulations to be laid before Parliament. Every rule and regulation made under this Act shall be laid, as soon as may be after it is made, before each house of Parliament, while it is in session for a total period of 30 days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both houses agree in making any modification in the rule or regulation, or the houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation.”

Using these provisions as the basic premise, a public interest litigation (PIL) was moved in the Supreme Court challenging FDI in retail. The government moved swiftly after that and on 30 October the changes were notified through a publication in the Gazette and then tabling it in Parliament for approval.

CPI(M) leader Sitaram Yechury has already made it clear that his party would move statutory resolutions in both the Rajya Sabha and the Lok Sabha to disapprove these amendments. The CPI(M) would use “all options” available in the rules of business in Parliament to thwart the government’s attempts to implement FDI in retail. The BJP is acting in tandem in terms of floor coordination in Parliament.

Yechury said “due to its obduracy, the government has agreed to have a vote on the issue twice” -once when the FDI issue comes up for vote after a debate and the second time after the RBI amendments are tabled in Parliament to amend FEMA and allow FDI in retail.

The government wants to avoid a double vote while the Opposition would like to have it that way and let strategists in the government go through the trouble of negotiating with the Samajwadi Party and Bahujan Samaj Party once again. Should the government falter on one of the two successive occasions, the opposition will have a field day, politically and otherwise.

Though the Confederation of All India Traders (CAIT) has been campaigning on the issue for some time, ever since it has been picked up by the mainstream opposition parties the political connotations have changed.

The floor managers and negotiators from the Congress side will have a tough task this weekend in persuading their outside supporters, SP and BSP, to vote for them (FDI) and not just abstain. They will also have to persuade the opposition to allow a vote on the FEMA amendments along with a discussion on FDI in retail. The opposition is unlikely to make the government’s task any easier.