Stakeholders not consulted

Praveen Khan delwal(centre) and other CAIT members at Jantar Mantar in New Delhi on December 7. Khandelwal accused Commerce Minister Anand Sharma of having misled the Prime Minister and the Union Cabinet on allowing FDI in multi-brand retail by misrepresenting facts and quoting incorrect figures.-V.V. KRISHNAN Praveen Khan delwal(centre) and other CAIT members at Jantar Mantar in New Delhi on December 7. Khandelwal accused Commerce Minister Anand Sharma of having misled the Prime Minister and the Union Cabinet on allowing FDI in multi-brand retail by misrepresenting facts and quoting incorrect figures.

Interview with Praveen Khandelwal, secretary general of the CAIT.

A TRADERS association that has consistently opposed foreign direct investment in multi-brand retail is the Confederation of All India Traders (CAIT). Praveen Khandelwal, secretary general of the CAIT, was the first person to highlight the fact that one of the prerequisites to the entry of FDI in retail trade precluded the amendment of the rules and regulations of the Foreign Exchange Management Act (FEMA) through the Reserve Bank of India (RBI). The amendment was proposed by the RBI after it was pointed out by him. He had also pointed out that any proposal to amend the rules of FEMA would have to be ratified, annulled or further amended only by both Houses of Parliament. It is this issue which came up for discussion in the ongoing session of Parliament and which now has been delinked from the discussion on FDI. Khandelwal has also been relentlessly trying to convince political parties about the pitfalls of FDI in the retail sector. Excerpts from an interview.

The Union Commerce Minister has repeatedly said that he has consulted all the relevant stakeholders, including trader bodies, on building consensus on FDI in retail trade.

It is a blatant lie. We dont know whom he consulted. Even the majority of responses received by the Department of Industrial Promotion and Policy on the discussion paper on FDI released by the Ministry of Commerce were found to be against FDI.

It is a fact that credible organisations of traders, farmers, hawkers, MSMEs [micro, small and medium enterprises] and other sections of retail trade have not been consulted. We asked Mr [Anand] Sharma to disclose the names of those stakeholders he held consultations with. Let the country know. It is a falsehood to mislead Parliament and the people. If he is honest, let him disclose the names.

Do you think it is actually a lack of understanding on the implications of FDI in retail trade by political parties that is the problem? Or is it because of some other consideration that not all parties are taking a consistent position on the issue? You have spoken of jugaad ki raajneeti [politics of convenience] in the context of the flip-flops by certain regional parties on the issue.

I feel that since Members of Parliament have too much of a load in terms of documents that are laid on the floor on the House, it is difficult for them to study every document in detail. It is the duty of the government to insert advertisements in newspapers to explain the FDI policy for a meaningful participation and debate. We will get to know the final picture during the debate and after the voting. I have used the term jugaad ki raajneeti to say if MPs are guided by the politics of convenience and not by arguments and deliberations in the interests of the nation, then it is cancerous for democracy. If the FDI issue is decided on merit, it will be definitely defeated. I cannot speak in Parliament, but I expect representatives to raise the issue. I feel that the parties who are supporting it have not either seen or understood the notification. Maybe it is not a survival issue for them. The day they understand the seriousness of the issue, they will support our stand.

You were the first to raise the issue of amendment to FEMA. The Left picked it up and has decided to raise it on the floor of the House.

Before issuing any notification, the government should have amended the rules and regulations of FEMA though the RBI. Under Section 48 of FEMA, it is mandatory for the government to place any amendment in both Houses of Parliament. Both Houses may agree, disagree or modify the amendment. I raised it on October 31, but no one took it seriously.

I was convinced that without getting an approval of the rules and regulations of FEMA, the notification of the FDI issued by the government could only be a declaration of policy. The provision in Section 48 on Rules and Regulations to be laid before Parliament is explicit. It says: Every rule and regulation made under this Act shall be laid, as soon as may be after it is made before each House of Parliament, while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session. Either both Houses agree to make a modification or agree that it should not be made. There is no scope for any kind of discretion whatsoever.

I have contended that FEMA doesnt give any right to RBI to make an amendment. The interpretation of Section 6 of FEMA shows that the RBI does not have the authority to amend any rule though it can frame a new rule or regulation, which ultimately has to be passed by Parliament. I have checked the meaning of to make in the dictionary; it means to produce. RBI has a right to draft a new rule, but it cannot bring into effect an amendment. The word amendment is not written anywhere. Jurisprudence dictates that the authority that makes the law is the authority that has the right to amend. Any amendment done by the RBI will then be illegal and ultra vires.

The second issue is that any amendment to FEMA cannot be clubbed with a discussion on FDI. It is a statutory provision and has to be dealt with independently. There will have to be a discussion on FDI in both Houses and secondly the government will have to place the RBI amendments to FEMA in each House of Parliament and this has to be either passed or rejected. It is the right of each House.

The FDI issue has seen a consolidation of various parties across the political spectrum, especially the Left and the Right.

I foresee that political parties with diverse political views will come together on issues of national interest. FDI in retail is one such issue where parties from both sides have shared a common dais and they must be congratulated on opening their hearts for a larger cause. Other parties should take their example. I am grateful that despite strong ideological differences, these parties came together on our call.

The corporate sector has been rather supportive of FDI and has been pressuring the government not to go slow on reforms of which FDI in multi-brand retail is a crucial component.

It is because of their vested interests. Also, because the retail sector is not their core sector of competence, they are influencing the government for reasons best known to them. We sent a communication to all the industry bodies to join us on a public platform for a dialogue. None of them responded, not even the Retailers Association of India.