Despite bluster, govt lacks numbers to push FDI bills in Parliament

While there is growing concern about big ticket reforms in the Congress, it's a different story in the government, says Renu Mittal.

Moving one step up the ladder on implementing big ticket reforms, the Union Cabinet has decided to hike foreign direct investment in insurance to 49 per cent and allowed 26 per cent FDI in pension. Both the bills would need to be cleared by Parliament to become law, and in the current political atmosphere there is uncertainty over whether the government has the numbers to push through the two bills, particularly in the Rajya Sabha.

But the hyperactivity over reforms is basically to send the message that the government led by Dr Manmohan Singh is not in the grip of a policy paralysis as has been suggested and written about by not only the national but the international media also. What hit Dr Manmohan Singh hard was the international criticism, which many sections have averred was deliberate and calculated. It was meant to publicly humiliate him and send a strong message from the US establishment that the time had come for him to deliver on the reforms agenda.

Whether the bills are passed in Parliament or not is not a matter of great worry for the government, said a senior minister. What is important is that the pro-reforms lobby in the government has managed to pass it in the Cabinet and send the clear message that they have done their job.

While the impact of these initiatives will be seen over a period of time, maybe in the state assembly polls, what has become a problem for the government is the increase in the price of non-subsidised LPG cylinders which would cost Rs 900 per cylinder. With almost all sections -- whether the poor, the middle class the government servant or the private entrepreneur spread over a number of states -- criticising the government over the decision to cut subsidy, the poor red cylinder has become "a symbol of the anger of the people against a government which has no sensitivities when it comes to price rise," said a Congress leader who hails from Haryana. 

It's almost as if the government has lost the battle of perception even before it could fight it, and while the government is categorical there would be no rollback, senior leaders in the Congress are looking at various methods by which there can be damage control and the anger of the people arrested.

While there is growing concern in the party, it's a different story in the government. Pro-reformers like Montek Singh Ahluwalia are giving interviews demanding that subsidies on diesel and petrol should be cut further. Along with this Finance Minister P Chidambaram has made it clear that reforms are the only way to bring India back to the 9 per cent growth trajectory and enhance the India growth story. After the Cabinet meeting, P Chidambaram said that if 49 per cent FDI is cleared in insurance, then 49 per cent FDI would also be cleared in pension.

With Mamata Banerjee off its back, the government cleared a large number of items in the Cabinet meeting and is determined to clear the remaining reforms agenda, said a senior minister.

Mamata, on the other hand, has let out a huge war cry against the government, accusing it of selling out the country and the interests of the people. She has asked political parties to join hands to oust the UPA government as it is working against the interest of the people and the 'aam aadmi'. She said she would be meeting President Pranab Mukherjee to ask him to oust the minority UPA II government. Mamata has begun the process of talking to other political parties to get support for her no-trust motion which she wants to move against the government in the winter session of Parliament.