New Delhi:NDTV: Today, Mamata Banerjee will make what she has described as “hard decisions”- the West Bengal chief minister will consult her party leaders to finalize whether she should quit the Prime Minister’s coalition over a menu of splashy reforms announced last week. Ms Banerjee has described those reforms as against the interest of the people. But she is equally aware that if she parachutes out of the government, other regional powerhouses will prop up the coalition, and so little will change in the political landscape at the centre, other than her own absence. Her party acknowledges that is a reality. “We have to take a decision which proves that we do not bark without a bite… we are ready to make tough sacrifices,” said Saugata Roy, a union minister from her party, the Trinamool Congress. The government says it’s confident that its allies will come around.
On Thursday, the government raised the price of diesel by 12% or Rs. 5, and ruled that households will be entitled to six subsidized cylinders of cooking gas or LPG every year. After that, they will have to pay market rates or Rs. 750. Ms Banerjee’s party said it had not been consulted about the decisions and demanded a rollback. A day later, the government decided to open up India’s retail sector to foreign investors – a cabinet committee said a proposal to allow 51% Foreign Direct Investment or FDI in multi-brand retail would be implemented. That policy, approved in November, had been blocked single-handedly by Ms Banerjee who threatened to opt out of the UPA if super-chains like Wal-Mart are allowed to sell directly to Indian customers. Though she has reissued her warning, the government says this time around, it won’t back down, and stresses that states are not obliged to allow FDI in retail, but must not stop others who wish to do so. “It is imperative to keep growing economically…We will convince our allies that what we have done is necessary…there is no threat to the government, it is stable,” Finance Minister P Chidambaram said yesterday.
Ms Banerjee’s colleagues in the Trinamool Congress say she is evaluating three options – divorcing the government altogether, pulling her six ministers and providing external support, and asking her ministers to boycott work as a sign of protest. Her plans will be guided by the fact that her state is in financial distress -she has been urging the centre for a moratorium on 22,000 crores that she owes on loans -a request that will resonate more if she is a part of the union government. The Congress admits to back-channel talks. Sources say the party hopes to appease Ms Banerjee by allowing more subsidized cooking gas than decided last week – eight cylinders instead of six per family, for example.
Ms Banerjee with her 19 MPs is the second-largest member of the UPA after the Congress. That has emboldened her to demand policy changes in the past. But the PM has been confronting vast international criticism for a lymphatic economy, and the prospect of having its credit rating downgraded to junk. Determined to dissipate the perception that theirs is a lame-duck government fettered to allies that call the shots, the Prime Minister and senior Congress leaders are in the mood for reforms.
Bolstering them is the fact that Mulayam Singh Yadav’s Samajwadi Party has not threatened to withdraw support over the issue of FDI in retail. Mr Yadav does not participate in the UPA, but provides external support. He has 22 Lok Sabha MPs against Ms Banerjee’s 19. Additionally, Mayawati’s Bahujan Samaj Party or BSP has 21 MPs and remains a close ally of the UPA.
Parties like the Trinamool, the BJP and the Left say that allowing foreign giant retailers into India will hit thousands of farmers and cornershops. The government has championed the reforms in retail as a way to unclog supply bottlenecks that cause a third of fresh produce to rot before it reaches an Indian table. It is hoped global chains will offer better prices to farmers by cutting out middle men, while also pumping investment into cold storage facilities.
State governments will have the freedom to decide whether to allow the supermarkets on their patch and the minimum investment will be $100 million, Commerce Minister Anand Sharma has said. Half of that investment must be in rural areas.