Home / Politics / Policy /  Liberal FDI rules spark political backlash

Ahead of the crucial winter session of Parliament where the government hopes to push through key reforms legislation, national trade unions, including Rashtriya Swayamsevak Sangh (RSS) affiliate Bharatiya Mazdoor Sangh (BMS), criticized the government’s move to relax foreign direct investment (FDI) in several sectors.

Opposition from unions allied to political parties could spell trouble for the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA), which has faced criticism after its defeat in the Bihar assembly election.

On 10 November, the government relaxed FDI norms across 15 sectors, including defence, aviation, retail and broadcasting, to attract overseas funds and boost economic growth, signalling it will not allow the electoral debacle to stand in the way of economic reforms.

The BMS, an affiliate of the Hindu nationalist RSS, which is the ideological parent of the BJP, on Thursday wrote to Prime Minister Narendra Modi and finance minister Arun Jaitley, urging them to call a consultative meeting with all stakeholders before implementing the announcements.

“There are several assessments which say that the inflow of FDI is much less than the foreign direct outflow. And we believe that is not good for the economy," said Virjesh Upadhyay, general secretary of the BMS.

The union believes that while more investment is not bad, he said, but what the government is doing will lead to a loss of jobs. “If the government does not listen to our demand, then we will definitely hit the street," Upadhyay said.

The big-ticket FDI announcement by the NDA is a “Diwali gift" to multinational firms and big corporate houses in India, said D.L. Sachdeva, national secretary of the All India Trade Union Congress (AITUC).

He said that increasing the FDI limit to 49% in defence, broadcasting and transport will affect the “security of the country".

He said the central trade unions have been opposing government plans on FDI in strategic sectors and had expressed their protest in a nationwide strike on 2 September.

Besides, Sacheva said, “opening up plantation and retail sectors to FDI may adversely affect employment and common traders".

Upadhyay agreed, and said opening up the retail sector will hamper small traders and impact employment.

“Retail is the backbone of India’s economy as millions of people draw their livelihood from this sector. Opening this sector further will only hamper the domestic economy and livelihood of the people," he added. He said the government must come up with a white paper giving details of FDI proposals and their impact on the economy.

A.K. Padmanabhan, president of the Centre of Indian Trade Unions (CITU), a national union affiliated to the Communist Party of India (Marxist), or CPM, said central unions welcomed the BMS joining them in opposing the FDI relaxation move by the central government.

“The protest against FDI is a continuous effort and now that the Parliament session will start, there could be more confrontation between the trade unions and the government," Padmanabhan added.

AITUC’s Sachdeva said after the Bihar verdict that the central government would face a tougher time both inside and outside the parliament.

“Political parties affiliated to unions will certainly oppose the government in the parliament," he said. AITUC is affiliated to the Communist Party of India (CPI).

Ramesh Dixit, a Lucknow-based political analyst, echoed a similar sentiment and said the NDA may find it difficult to push through reforms legislation in the backdrop of a united protest by trade unions allied to political parties.

“They will not be able to push for several such reforms. The FDI issue has been going on since the Congress-led government. The retail marketers feel they will be out of work and so it will naturally be met with protest. I feel the two big issues that can lead to national mobilization in the coming days will be those by the trade unions against the so-called anti-poor, anti-labour laws, and by farmers," Dixit said, adding that efforts to garner legislative support for GST, too, will test the government during the winter session beginning 26 November. “Undoubtedly, it will be a difficult session for the NDA because after Bihar elections, apart from an internal debate within the BJP, the united opposition is strengthened and can cause more trouble. The earlier demoralized opposition has now got a fresh lease of life."

On Thursday, the CPM in a statement said the decisions have been taken on the eve of the winter session of Parliament.

“Worse, they have been taken even without cabinet approval. This licence... comes at a time when the majority of the Indian people continue to groan under newer economic burdens. Price rise of essential commodities continues unabated. The agrarian distress is deepening... This is accelerating the distress suicides of our farmers," the statement said.

On 10 November, former finance minister P. Chidambaram tweeted, “BJP govt liberalizes FDI in retail. Will the BJP tell us what it said when FDI was first allowed in retail?"

But Amitabh Kant, secretary at the department of industrial policy and promotion, tweeted the same day, “Today’s FDI reforms make India (the) easiest, simplest & the most open economy for Foreign Direct investment globally. Easy entry, Easy exit."

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