The Government today took a slew of bold decisions, including the politically contentious one of allowing majority foreign direct investment (FDI) in multi-brand retail.
Apart from throwing India open to foreign-owned and operated supermarkets, the Government also allowed foreign airlines to pick up equity in domestic airlines.
Now, foreign investors can buy into India’s nascent power trading exchanges, as well as cable and satellite distributors of broadcast television.
Staving off downgrade
That’s not all. To narrow the widening fiscal deficit and stave off a possible ratings downgrade, the Government also followed up Thursday’s diesel price hike and LPG subsidy cuts with an equity sell-off plan in four major public sector units.
‘In national interest’
Prime Minister Manmohan Singh said: “The Cabinet has taken many decisions today to bolster economic growth and make India a more attractive destination for foreign investment. I believe that these steps will help strengthen our growth process and generate employment in these difficult times.”
He urged all segments of public opinion to support the steps the Government has taken “in national interest”
Industry, which had been openly critical of the government’s ‘policy inaction’, welcomed the bold moves. But it angered the Opposition and infuriated allies, including key partner Trinamool Congress, whose leader Mamata Banerjee had stymied the previous attempt to open up FDI in multi-brand retail.
The Trinamool warned that it would “rethink” its support to the ruling UPA alliance, of which it is a part, unless today’s decisions and Thursday’s hikes are rolled back.
The UPA partner, Trinamool Congress, has given the Government a three-day deadline to withdraw FDI in multi-brand retail.
The Samajwadi Party has announced protests. The Left parties too condemned the Cabinet’s decisions.
But the Government said it was determined to negate what it called a “motivated campaign against the country.”
Meanwhile, Congress circles indicated that party president Sonia Gandhi fully backed the Prime Minister. The Congress believes that the Cabinet decisions will shift the focus from the ongoing campaign against the Government, particularly against the Prime Minister, on grounds of indecision and scams such as the coal allocation issue.
Protest planned
At the same time, the BJP has announced a nine-day protest programme against the various decisions of the UPA, including FDI in multi-brand retail. Party spokesperson and former Civil Aviation Minister Rajiv Pratap Rudy said the decision to allow FDI in civil aviation was to “please a failed businessman.”