NEW DELHI (TIP): Like the Cabinet meeting that cleared FDI in multi-brand retail, the one on October 4 was brief, with finance minister P Chidambaram saying foreign investment in insurance was the need of the hour and the government should not bother about the Bill being defeated in Parliament. The decision was smooth, like knife through butter.
For the rare display of unanimity among Congressmen on historically contentious moves, the nod to FDI in insurance and pension provided the best evidence that the ruling party had embarked on an irreversible reforms agenda, a sharp departure from political sensitivities that influenced such decisions in the past.
Observers and insiders underlined that Congress was approving FDI decisions in the middle of elections in Gujarat and Himachal Pradesh, which can have serious implications for its future, mired as it is in a cycle of defeat and in desperate search for victory.
“It shows that the leadership has calculated that opening the market to foreign retail marts or insurance firms to foreign investment will not influence the voters, irrespective of BJP’s campaign,” a leader said citing that supremo Sonia Gandhi defended FDI in retail during her Gujarat campaign launch.
The gung-ho reforms mode has been attributed to the economic crisis but it would be a leap of faith for the Congress if governance imperatives are delinked from their political implications.
That has made observers see a “renewed Congress conviction in reforms”, with possibly the Prime Minister having convinced the leadership about the gains of 1991 liberalization he authored as finance minister.
Samajwadi Party leader Mohan Singh said his party has traditionally been opposed to such proposals but stopped short of spelling out SP’s stance on insurance reforms. Clearly, Samajwadis are not too sure if the tradition holds true for the future.
The UPA will be closely watching Bahujan Samajwadi Party chief Mayawati’s rally in Lucknow on October 9 when she will spell out her views on the recent reforms decisions by the Cabinet. Finance minister Chidambaram told reporters, “Legislation is a matter of negotiation and we will talk to the principal opposition party.”