Government Has Our Support On GST, War On FDI


As we approach the monsoon session of Parliament, the Trinamool Congress remains optimistic that the Goods and Services Tax constitutional amendment will be passed this time. The GST reform has been one of the consistent demands of Trinamool for several years, of course with due protection for state governments and small businessmen. While we will support the move towards GST, in the coming session, we are equally vehemently going to announce our opposition to the new FDI limits announced by the government in a slew of sectors.

There is no basic difference in the character and economic outlook of the BJP and the Congress. The positive side to this has been that both the UPA and NDA governments have worked towards GST, though both the BJP and the Congress have opportunistically sabotaged GST while in opposition. The negative side to this consistency is the policy on FDI, which is aimed at winning praise and thumps on the back from bigwigs in the West and ignoring genuine job-creation challenges in India.

In June, the BJP-led government enhanced FDI limits in domestic airlines from 49 to 100 per cent, in existing airports from 74 to 100 per cent without any need to seek permission from the Foreign Investment Promotion Board or FIPB, in food retail from zero to 100 per cent, in food processing up to 100 per cent, in private security agencies from 49 to 74 per cent (I wonder what great technology and know-how is needed to provide security guards?), in existing pharmaceutical companies up to 74 per cent through the automatic route (again without need for a reference to the FIPB).

These are serious and far-reaching changes that need to be discussed in parliament and across the country. If the two food sector-related FDI caps are considered, it is clear that a vast segment of the farm-to-fork supply chain can now be entirely owned by foreign companies. Their deep reserves will crowd out Indian investment, entrepreneurship and job creation opportunities, particularly in the small and medium sector. A similar disservice has also been done in the case of single-brand retail, where the 30 per cent local sourcing requirement has been relaxed for eight years (earlier it was three years).

The retail chapter is particularly sordid. In 2009, the Parliamentary Standing Committee on Commerce had submitted a report urging that majority FDI in retail not be permitted. In September 2012, the UPA government permitted 51 per cent FDI in multi-brand retail and 100 per cent in single-brand retail. Many parties, including the BJP, protested.

For Trinamool, this was the final assault by the UPA’s economic managers. Six of my party colleagues resigned as ministers on September 21, 2011, and Trinamool withdrew from the UPA and became part of the opposition. In November 2012, the government was forced to agree to a voting discussion in parliament on the FDI in retail issue.

The UPA government had argued that a vote had never been conducted on an executive decision. After pointing out precedents, the opposition forced a voting discussion under rule 184 in the Lok Sabha and rule 167 in the Rajya Sabha. This time too, that option remains for us, though the government and the actors have changed. The script, of slyly pushing through multinational corporation interests, is still the same.

Changes in FDI regulations can be made only by the Reserve Bank of India (RBI), in turn changing regulations in the Foreign Exchange Management Act (FEMA) of 1999. From time to time, the RBI issues notifications making such changes or amending the regulations. Section 48 of FEMA mandates that all such changes be laid on the Floor of the House; such changes are called “subordinate legislations” as per the Constitution of India.

Rule 234 of the Lok Sabha rules has laid down that every regulation made under any legislation – and this includes “subordinate legislations” – should be placed on the Floor of the House, if so required by the legislation, as soon as it is made. So far every regulation and amendment made by the RBI under FEMA has been placed before Parliament.

Under rule 235 of the Lok Sabha any member can seek an amendment to the regulation and ask for a vote. This is the right of the House. As such a vote can be demanded under rule 235. This too remains a theoretical option.

My interest in pointing out all this is that the BJP-led government, like its predecessor, is being dishonest when it claims the executive has the right and the authority to ram through all sorts of proposals and bypass parliament. Our democratic system and our Constitution give Parliament the right to question, to amend, to express its displeasure and at the very least to debate executive decisions, especially if they have long-term and fundamental socio-economic implications.

The FDI giveaways that the NDA government has done in the past few days, aimed at pleasing its friends abroad and constituency in Big Business, will be taken up strongly by Trinamool in parliament. This is a matter of principle for us. We will not give up without teaching the government a lesson.

Derek O’Brien is leader, Parliamentary party Trinamool Congress (RS), and Chief National spokesperson of the party.


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