Indian government agrees to vote on key retail bill

Congress still expected to win over move to allow foreign store chains to trade in lndia.

NEW DELHI // The Indian government bowed to opposition pressure and agreed yesterday to a parliamentary vote on its controversial economic reform package.

Opposition parties have paralysed parliament for days in protest against an executive decision in September that will allow foreign retail giants to set up in India.

The vote is largely symbolic for the government's opponents because prime minister Manmohan Singh's coalition is expected to have the support to retain the bill.

But in taking it to parliament on December 4 and 5, Mr Singh and the Congress party hopes to take a step towards breaking the deadlock in parliament.

"We are confident of numbers," Mr Singh said on Tuesday.

The main opposition, Bharatiya Janata Party (BJP) and left-wing parties, have over the past week disrupted parliamentary business and forced adjournments. On Monday, some opposition members of parliament chanted, "take back FDI [Foreign Direct Investment]," referring to the name of the official bill that opens up the Indian economy to the likes of Walmart and Carrefour.

The Congress-led government had initially refused the demand to put FDI to a vote, but agreed after it negotiated with the Samajwadi party (SP) and the Bahujan Samajwadi (BSP) party. Both the SP and BSP have publicly opposed the FDI bill, and neither is confirming that they will vote for it.

But they may not need to vote. An abstention in parliament will allow Congress to win.

Some analysts say that the opposition's demand for a vote masks its actual ambition to force the government into early polls.

"The FDI is an issue to confuse us all about what the opposition really wants," said TVR Shenoy, a political analyst. "This is a fight between parties that want an election immediately and those who want one slightly later, maybe in a few months. If they lose the vote, it will be a symbolic defeat, but not a mortal blow for the Congress."

Mr Singh faced a backlash from ordinary Indians and the opposition when he announced his economic reforms in September.

The Congress party's largest coalition ally, the Trinamool Congress, left the government over the decision. But with India's economy growing at its slowest pace in a decade, manufacturing output falling and exports declining, Mr Singh argued he had little option but to implement new policies.

On Monday, the Congress party leaders, including Mr Singh and the chief of the Congress party, Sonia Gandhi and Kamal Nath, the parliamentary affairs minister, held meetings with their allies to lobby for support in anticipation of the voting on the bill.

The decision to liberalise India's foreign investment regulations was an executive order, not subject to parliamentary approval.

But Congress is reaching out to the opposition through the vote to get parliament back on track.

"I am worried that parliament must function and whatever be the demands if they are reasonable, we are willing to accept them because a majority of MPs are saying that they want parliament to run ... and that is going to be my endeavour," said Mr Nath, the parliamentary affairs minister, ahead of the announcement of the vote yesterday.

Since August, parliament has all but ceased to function as an intransigent opposition and unruly coalition often disrupted proceedings. The FDI bill, which will allow foreign companies up to 51 per cent investment in domestic supermarkets, is a last-ditch effort to ensure the Congress has something to show for its tenure, should an early election be forced.

The government is under pressure to revive a sluggish economy and narrow fiscal and trade deficits. Opponents of the bill say that it will destroy the livelihood of farmers and small shop owners.

* Additional files from Reuters