Tuesday, November 29, 2011

Rolling back FDI in multi-brand retail will only worsen matters for the Congress….

If the Congress rolls back the FDI decision, it will find itself in even more trouble than it does right now. Rolling back the decision may give it a few days relief; but the roll-back will make the party into a weakling that anyone could push over. In politics, daring the opposition is as important a part of the game as rolling back and fighting another day. The Congress needs to evaluate carefully the merits and demerits of both before deciding on anything.

The Congress must remember that the opposition to multi-brand retail FDI is purely political. It’s not based on any ideology or logic. There have been several reports that have clarified that the issues being raised by the BJP and other parties are misplaced. The reason the opposition has united against the government on this issue is to force a shutdown of Parliament. Today’s TOI mentions that the DMK (when part of the NDA) had floated a paper seeking 100% FDI in multi-brand retail. Today, it is seeking a roll-back of the proposed 51%. Before this issue cropped up, opposition parties were daring the government with a vote on price rise and black money. Frankly, as far as the opposition is concerned, it doesn’t matter what the issue is. The objective of the opposition is clear. It wants to give a stomping kick to the government’s knees; rendering it ineffective to run or even walk. That’s the trap they laid for the Congress a long time back. If the Congress reverses its decision, it will be walking into this trap.

Let’s play this out a bit. What happens if the government rolls back its decision? It will be a clear indication that it is unsure of its numbers and cannot muster support to pass important legislation. It might as well forget the legislation to enhance FDI in the insurance sector or introduce it in the pension sector. Those bills can be taken off from the agenda. Equally, the new rules of nuclear liability that the Executive (the government) has enacted won’t clear Parliament. Important pieces of legislation like the GST can well be taken off for the entire term of this House. The Land Acquisition Bill also has its opponents, and that can be removed as well. After having been an important part of the Standing Committee on Lokpal, the BJP will no doubt find some differences of opinion and block the passage of that bill too. In short, the government will not be able to function at all.

Basically, if the Congress rolls back the FDI decision now, it will be a dead government. It won’t be allowed to take executive decisions; it won’t be allowed to pass new legislation. It will be a government living on a ventilator. What’s wrong with the politicians in the Congress? Don’t they see the writing on the wall? I know many Congressmen will be thinking that it is better to fly to safety now and fight another day. But the impact of this blow will be so crippling that it will not survive to fight another day.

The likes of Mamata Banerjee will set the agenda for future discussions within UPA-2. There will of course be no more petrol price hikes; Mamata anyways doesn’t understand economics – how could she even know (or care) what the impact of not increasing petrol prices would be on the fiscal deficit? Now that she has absolute power in WB, she will feel that she has the upper hand in her relations with the Congress. When she wants a special package for WB, all she will need to is call Pranab Mukherjee. And dictate her terms.

That’s why the Congress should not roll back its decision. Instead, it must work hard on its allies. A little conceding ground here; a little pressure there should do the trick. The DMK is hardly in a position to exert pressure on the center. It’s only access to power is at the center. In its home state, Jayalalitha is leaving no stone unturned to arrest and prosecute DMK MPs. She is going to hurt Karunanidhi where it hurts the most – by breaking the cable distribution monopoly that the Marans (relatives of Karunanidhi) have enjoyed for decades. Recently, she’s won the Madras municipality away from the DMK, completing the rout at home. In such a situation, the DMK is literally at the mercy of the Congress. The Congress must call its bluff rightaway.

This is also the time for Sonia Gandhi to take charge of the matter and whip the party’s state units into shape. There is a much larger game being played here. For the sake of one assembly by-election in Kerala, the party there cannot be allowed to take an opposing stand. In the BJP, the strongly-pro-FDI Modi – sensing the opportunity – has closed ranks with his party leadership. Likewise, the Shiromani Akali Dal (SAD) strongly supports FDI in retail (and has said so), but has decided to support an adjournment motion in the House if the BJP brings it up. This is the time for allies to close ranks. The last place where there should be dissent coming from is within the party itself. If the DMK is pressured into withdrawing its opposition, the tide would turn; Mamata would come under pressure. While she can pull the strings at the center, it doesn’t harm her interests to be in the good books of the central government. She must also worry that her reputation as an ally is on the blocks – she had earlier ditched the NDA. Who’s going to trust her in the future?

Now’s also the time for the Congress to get into alliance discussions with the Samajwadi Party. In all likelihood, the SP is not going to be able to win the elections in UP on its own. Neither is the Congress. By combining their forces, they may be able to give the BSP a run for its money. Instead of forging an alliance after the elections, they may want to do so right now. Is this an acceptable compromise for the Congress to make? It has been eyeing UP for a very long time. It believes that if it can put UP in order – by 2014 if not right now – it can hope to form its own government at the center yet again. It’s certainly not going to be an easy decision for the Congress to make. The point that the Congress may want to remember is that it’s only in UP that the party has this opportunity to align with a local party as it is not in the “top 2”. It cannot ally with the Biju Janata Dal (BJD) in Orissa, because it’s the main opponent of the BJD. It cannot ally with the JD(S) in Karnataka for the same reason. There is one other state where it has very little strength. That’s Bihar, but the JD (U) is a strong ally of the BJP – so that’s not possible at all.

The SP has come to the rescue of the Congress in the past as well. The Indo-US nuclear deal was passed by Parliament because of the support that the party extended. Even today, it supports the Congress from the outside. Can this relationship be made stronger?

Either the Congress builds an alliance with SP or it chooses to run a weak government. The Congress is in a difficult position. The only other alternative is for it to call for early general elections – but that would be stupid – at least at this point in time. Team Anna – allied as it is with the BJP/RSS – is threatening to start its agitation all over again. As expected, it is blaming the Congress alone for the “weak” Lokpal Bill – even though the all-party Standing Committee has drafted the new bill. Calling for mid-term elections would be political hara-kiri.

The Congress has to choose between an SP-alliance (sacrificing UP) and running a weak government (and losing the General Elections in 2014). It’s not an easy choice. Fight hard now; or withdraw to fight another day. That’s what the party needs to decide.

My own view is that no government should exist if it cannot hold its head high. A weak government gets maligned at every turn. It is not allowed to take decisions; but is held responsible for the logjam. It loses its political clout with every passing day. Continuing for the sake of sticking to power (what power?) is what gives politicians and political parties a bad name. The PM is a noted economist. He has to stick his neck out and explain to the people why the FDI decision is right. This is not for Anand Sharma to do. It is for the PM to do. If the PM talks to the nation, the people are bound to take note. He can brandish statistics; reports; expert comments; share experiences of countries like India. He has to take the bull by the horn. This is the time for the PM to do what he did during the Indo-US deal debate. And then he has to dare the opposition to a fight…..and be prepared to go to the people with the head held high if he loses.

Before I end, it’s worth spending a couple of minutes on the state of affairs in our country is at present. I have complained about this in the past; politics has started to rule every part of our life now. There was a period of time between 1991 and 2009 – when both the BJP and the Congress largely supported reforms. People believed that irrespective of who was ruling at the center, the economic policy of the country would remain on-course. That brought us rapid economic growth. That’s fundamentally changed now. What does the BJP expect if it gets to rule next and the Congress is in the opposition? That the Congress will forgive and forget; and let BJP have a free run? That won’t happen. The Congress will pay the BJP back in the same coin. And if that happens, we will see the next 20 years turn into a period of complete instability. India and Italy are similar in more ways that one. Both are the third biggest economies in their respective continents. Both are run by Italians (haha – that’s a joke!). Let us now not become similar in terms of the political instability also (Italy has had 12 Presidents in the last 20 years). Political instability led to Italy’s ruin. We don’t want the same to happen to India.

The real truth is that Congress has no option but to fight. It cannot surrender. It cannot become a weak government. Also, the India story will end if the Congress pulls back its FDI decision. Equally, the Congress story will end if India pulls back the FDI decision. For the sake of India, the government must not surrender.…..

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