People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 48

December 02, 2012




FDI in Retail Trade Sector Not an Executive Decision


Gross Fallacy


THE first four days of the current winter session of parliament remained disrupted.  The Congress-led UPA government, which was reduced to the status of a minority government after Trinamool Congress withdrew support,  allowed such disruption to buy time in order to marshal a majority in case they are forced by the opposition to take a vote on the floor of the House on the issue of permitting FDI in multi-brand retail trade sector. 


After the Bahujan Samaj Party and Samajwadi Party displayed their ambivalence at the all-party meeting, last Monday, and the Trinamool Congress reconfirmed its status as the B-team of the Congress party by not insisting on a discussion under Rules entailing voting, the Congress party convened a meeting of the UPA allies on Tuesday.   The DMK, which had supported the call for a national hartal given by the Left and some secular opposition parties against FDI in retail, turned-turtle and announced that it will not vote against this UPA-2 government as this may benefit the communal BJP.  Strange logic coming from a party that served on the union cabinet of a government headed by BJP’s Atal Behari Vajpayee for one full term!  Whatever may have happened behind the screen, with this decision of the DMK, the minority UPA-2 government has, once again, managed a  majority.


Coming out of the meeting, the prime minister proudly announced that his government has a majority to defeat any motion against FDI in retail.  Yet, there is no announcement so far, till the time of our going to press, that the government is prepared to discuss this issue under a Rule that entails voting.  The government’s spokespersons continue to maintain that they would not like to set a precedent by taking a vote in the parliament on an executive decision which falls within the mandate of the government.  Such a precedent has already been set when the Lok Sabha, on March 1, 2001, debated and voted upon the government’s decision on the disinvestment of Balco. 


That the decision to permit FDI in multi-brand retail trade is an executive decision is a gross fallacy. FDI in this sector is expressly prohibited under the Foreign Exchange Management Act (FEMA) 1999. Any decision now to permit FDI would require an amendment in these FEMA regulations which are made by the RBI.  When the RBI did not notify any such amendments to the relevant regulations, a writ petition was filed before the Supreme Court alleging that due legal processes were not followed in operationalising this decision.  When the apex court noted, on October 15, 2012, that the due legal processes have not been followed, the Attorney General of India gave an undertaking to the apex court that the RBI will issue necessary amendment to regulations within two weeks.  Accordingly, the RBI issued the amendment to the regulation allowing FDI in multi-brand retail and this was published in the Gazette of India on October 30, 2012. 


Now, Section 48 of the FEMA 1999 explicitly states that any amendment to the Rules and regulations under this Act made by the RBI must be tabled in both the Houses of the parliament “as early as possible”. And once tabled, any member of either House can move amendments to the RBI amendment and can even move for the annulment of the RBI amendment, within 30 days.  Any such amendments would have to be considered by the House and decided upon.  This can happen only through a vote. 


Therefore, the decision to permit FDI in retail is not an executive decision under existing laws but a decision that requires an amendment to the existing law.  Now, under our constitution, neither the executive (government) nor the judiciary can make or amend laws.  The sole authority for making laws, or, amending existing laws, is the parliament.  Thus, the decision to permit FDI in retail trade can only be taken by the legislature (parliament) and the authority to do so is beyond the mandate of the executive as decreed by our constitution. 


All efforts by the government to bypass, subvert or sabotage this process cannot be allowed to succeed.  It was only under the pressure from the Supreme Court that the government was forced to follow the procedure and amend the FEMA regulations.  When the petitioner expressed apprehensions that the government may not  table the amendments in both the Houses of parliament as per Section 48 of FEMA 1999, the Supreme Court advised the petitioner  to wait till the current winter session ends. In the event the government does not follow the provisions of Section 48 of FEMA 1999, then the petitioner was told that he could come back to the apex court.  It is clear that if the due process of law is not followed, then the apex court will, surely, invoke its constitutional authority of judicial review. 


Thus, there is no way that this UPA-2 government can avoid a vote in the parliament on this issue.  However, the Congress party displayed, repeatedly in the past, its capacity to maneouvre a majority by hook or crook. In 1993, the minority Congress government facing a CPI(M) sponsored no confidence motion managed to defeat it by such methods that were exposed by the infamous Jharkhand bribery case.  In 2008, when the Left parties withdrew their outside support to the UPA-I government in opposition to the Indo-US nuclear deal, reducing the government into a minority, they won the vote through shameless horse-trading which was exposed in the `cash for votes’ scam.  It will not be too long before the deals behind the current mustering of majority will be exposed before the nation. 


In any event, in the interests of our country, its economy and the livelihood of the vast majority of our people, the CPI(M) will press forward its demand for a discussion on permitting FDI in the retail trade sector under Rules that entail voting and will vote against allowing FDI in retail trade. 

(November 28, 2012)