The enemy within: Why Manmohan can't go for broke this time around

With the government and opposition locked in eyeball to eyeball confrontation on the issue of FDI retail and neither side showing signs of backing down, the big question is whether the Prime Minister is willing to stake it all on this issue like he did on the India-US nuclear deal.

The parallels are too striking to miss.

The government was as much –if not more— on the mat in 2008, and were completely isolated under the combined attack of the BJP led NDA and the left front which was supporting the UPA from the outside.

Cut to 2011 and the situation, if anything, is even more precarious.

The BJP led NDA is in the opposition again. So is the left front. Both have made common cause on the issue to embarrass the government which would have still managed the show easily but for the cracks and divisions within its own house. A big, though not entirely unexpected, letdown is the TMC which has made its opposition quite vocal and seems to be itching for a showdown with the Congress. And it could not have got a better political stick to beat the government with. Some of the Congress’ other allies may not be as vocal as the TMC, but parties like the DMK have also expressed reservations on the subject and advised more caution and dialogue before moving forward.

Then there are parties like the SP and the BSP which have on different occasions in the past bailed out the UPA. That scenario too looks unlikely this time around. Mayawati has already upped the ante in the poll bound Uttar Pradesh dubbing the decision as a move to help Rahul Gandhi’s “foreigner friends”. However outrageous the charge may sound to the urban slick, it assumes different proportions in the heat, dust and grime of a no holds barred electoral battle in Uttar Pradesh. In the tit for tat politics of SP & BSP, Mulayam Singh is now left with no other option than to raise the red flag against the proposal as well.

The Prime Minister and his core team—which in this case ( interestingly!) includes both the finance minister, Pranab Mukherjee, and the home minister, P Chidambram, would have still preferred to brazen it out but for a key difference. There is a powerful section in the cabinet which is repeatedly voicing its reservations on both the policy contours as well as the timing of the decision. It’s not without significance that this group includes cabinet ministers like A.K.Antony and Jairam Ramesh who are seen as not only the left of centre voices within the cabinet, but also as the party high command’s “preferred choice” even within the government. Some others like the Rajasthan Chief Minister, Ashok Gehlot, have expressed guarded reservations on the issue, with Gehlot saying his government would examine the proposal before implementing it, so that the interests of Kirana store owners and small shopkeepers are not affected.

This opposition from within is what is turning out to be a crucial differentiator between what Manmohan Singh may decide in 2011 as against the non compromising stand he took in 2008.

The dilemma is not just confined to FDI in retail. According to a cabinet ranking senior source in the UPA, there is real divergence of views on quite a few issues between the government and the party, which need to be addressed soon if the perception of policy paralysis in this government is to be addressed.

“There are real issues of ideological divide which make taking policy decisions a difficult and onerous task. There are just too many contradictions with one side ( the party) quite clearly being left of centre while the other side wants to press ahead with measures which dispel the impression that the government is no longer keen on second generation of economic reforms.”

So what happens now? Will the Prime Minister be willing to stake everything on FDI at a time when there are rumblings that he may not be carrying an influential section of the party with him on this issue? It does not look very likely though nothing can be completely ruled out. Manmohan Singh may just make it a prestige issue to reassert his authority on the government, but doing so will be difficult. On the Indo-US nuclear deal he had the unequivocal backing of both Sonia and Rahul Gandhi. One is not sure if that is the case this time. Already there is an impression that the clarification on 30% outsourcing to only Indian SME’s was issued by the government only after Sonia Gandhi’s intervention on Monday.

At the same time too much of the government’s and Prime Minister’s prestige has now been vested on this subject of FDI in retail for there to be any imminent rollback. Some ideas are already doing the rounds. One is to refer the matter to an empowered group of ministers (EGOM). Or an all party parliamentary working group can take everyone’s suggestions and present the same to the government for a final decision.

A couple of things appear more likely at the moment. One: the way forward is going to be rough for the government. And two; the chances are that Manmohan Singh will not go for broke this time around as he did in 2008.