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Battle over reforms: Mamata Banerjee may withdraw support from UPA

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Sep 16, 2012 at 01:40pm IST

New Delhi: Rumours are rife that key UPA ally, the Trinamool Congress (TMC), may withdraw its Cabinet ministers and give outside support to the ruling coalition or not give support at all, forcing snap polls, if the Centre does not give in to its demand for rollback of fuel price hikes and FDI in multi-brand retail before its 72-hour deadline ends on Tuesday.

TMC chief Mamata Banerjee set a 72-hour deadline for the UPA on Saturday demanding a rollback after the Centre brought in big-ticket reforms, allowing 51 per cent FDI in multi-brand retail and up to 49 per cent foreign direct investment in the aviation sector.

At a rally organised in Kolkata, a furious Mamata accused the UPA of not consulting her before taking the decision to introduce the reforms. The Government, however, has refuted her claims. In an exclusive interview to CNBC-TV 18, Planning Commission Deputy Chairman Montek Singh Ahluwalia insisted that all allies, including the TMC, were consulted before introducing the reforms.

The Left, the Samajwadi Party (SP), the Telugu Desam Party (TDP) and the Janata Dal Secular party (JDS), meanwhile, have decided to hold a separate protest on September 20 against the reforms.

The main Opposition Bharatiya Janata Party (BJP) has announced a 'Bharat bandh' on the same date.

The numbers seem stacked in UPA's favour

The total number of seats in Parliament are 540, with 271 being the halfway mark.

The UPA's current strength in the Lok Sabha is 273.

If the TMC (19 MPs) withdraws support, the numbers come down to 254.

With the Bahujan Samaj Party's (BSP) and the Rashtriya Janata Dal's (RJD) support, the UPA numbers can touch 279.

Options before Mamata Banerjee

- Withdraw Cabinet ministers and give outside support to government

- Protest on the streets but stay in government

- Pull out from government, push for a snap poll

Centre unleashes 'big bang' reforms

In a major decision signalling the end of policy paralysis in the UPA government, the Cabinet Committee of Economic Affairs (CCEA) on Thursday accepted 51 per cent foreign direct investment (FDI) in multi-brand retail.

The government has, however, left the option to invite multi-brand retail on the states.

There is an opt out clause in the FDI in multi-brand retail, which has been the most contentious of the issues. According to the clause, "Retail sales outlets maybe set up in those states which have agreed or agree in the future to allow FDI in multi-brand retail under this policy. This is an enabling clause. This means that no FDI in retail will be allowed in any state unless the state explicitly agrees to come on board and agree to the policy."

Prime Minister Manmohan Singh said at the meeting that the time had come for big bang reforms. "If we have to go down, we have to go down fighting," he said.

Notably, the issue had been pending for quite long because of opposition from key UPA allies such as the Trinamool Congress.

The government also approved foreign direct investment in aviation, broadcasting and power exchanges.

The decision means that foreign airlines will now be allowed to invest as much as 49 per cent in the Indian carriers. Also, the FDI cap on various streams of broadcast services has been raised to up to 74 per cent.

In another important decision, the government approved the disinvestment of five Public Sector Units (PSUs), including Oil India (10 per cent), Nalco (12.5 per cent) and Hindustan Copper (9.59 per cent).

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