Govt fails to clear any FDI proposal

It''s increasingly looking like the gang that couldn''t shoot straight. The government, eager to salvage its pro-reforms image, had scheduled a meeting of the Union Cabinet this evening to increase FDI levels in aviation, telecom and insurance. But it stumbled and fell flat on its face because of sheer lack of preparation, as two administrative ministries protested about due procedures not being observed and their being kept out of the loop.
As it happened, the need to observe procedures took up all the time, and the meeting ended without a single FDI proposal being cleared. The proposal will be taken up by the Cabinet again — probably next month and perhaps after a reference to the group of ministers on FDI.
In other words, the matter stands deferred at least till October. And when it meets, the Cabinet is expected to take up not only these three, but also liberalisation of FDI in other sectors recommended by the NK Singh Committee.
No minister came to brief the media, as they normally do when big-bang measures are to be announced. Instead, the principal information officer told journalists that the Cabinet discussed FDI proposals and VRS proposals for BPCL and ONGC, and both the issues will be taken up by the Cabinet again. Asked about the absence of aviation minister Shahnawaz Hussain at the meeting, she said, "Key ministers were not there."
Actually, barring Mr Hussain, all other ministers attended the meeting. But it was the aviation ministry''s objections to the “hasty� attempt to increase FDI in the sector, without consulting the ministry, which took up virtually the entire time of the meeting. The ministry representative asked what was the hurry for taking up the proposal to hike FDI to 49%, so much so that the ministry was not even asked about it?
The representative said that the NK Singh Committee had made certain recommendations, but these had to be discussed to assess their desirability.
The observation sparked off an animated discussion. As one minister after another either supported the view or provided clarifications, the meeting wound towards a stalemate.
It is learnt that one of the ministers suggested that GoM consider the proposals first. The proposals were then withdrawn for the Cabinet''s reconsideration, when it meets again.
The proposal to hike FDI in aviation from 40% to 49% and to permit foreign airlines to take equity in the domestic sector was made by finance minister Jaswant Singh at the meeting of the Cabinet Committee on Disinvestment on September 7.
He had also suggested that the FDI cap in telecom be raised from 49% to 74%. The divestment proposals for oil companies were shot down at this meeting, and Mr Singh''s suggestions were clearly aimed at retrieving some credibility for the government on the reforms front.