FDI cap hike a panic reaction, links it to P Chidambaram's US visit: BJP

NEW DELHI: BJP today decried the government decision to increase FDI cap in telecom and insurance sectors, dubbing it as "panic reaction" at a time when the economy is going downhill and sought to know if it was a "fallout" of Finance Minister P Chidambaram's US visit.

"The panic decision taken by the government on FDI is not going to impact the Indian economy which is indeed in a terminal state. The story of India has come under a serious cloud under the leadership of Sonia Gandhi and Prime Minister Manmohan Singh," BJP Deputy Leader in Rajya Sabha Ravi Shankar Prasad told reporters.

The party predicted that these measures are not going to prove successful in bringing FDI to the country. It also raised eyebrows about the UPA depending heavily on FDI to save the economy and asked if it has no other solution.

"FDI in telecom sector has been increased from 74 per cent to 100 per cent. 74 per cent is a dominant investment. If at 74 per cent India is not able to get foreign investment then how can one expect this at 100 per cent," Prasad said.

He said that the Indian economy is in a bad shape and when even the Indian investors are not putting their money here, why will the foreign investors invest their dollars.

Prasad asked Chidambaram if this step is a fallout of his visit to the US where, the BJP alleged, he was "reprimanded" for the problems with the Indian economy. "His roadshow in Japan was a complete failure. Why is this government making the economy only FDI driven?" he said.

The main opposition maintained that the reasons behind the slowdown in the economy are stinking corruption, crisis of credibility, lack of transparency and state of uncertainty.

On the issue of allowing 49 per cent FDI in the insurance sector, BJP said the matter is already with the Parliamentary Standing Committees and an understanding had been reached- in which Congress was also a party- that the limit should be 26 per cent.

"Then why this panic reaction," Prasad said.

BJP said when the government had decided to go ahead with 100 per cent FDI in multi-brand retail, it had made a big issue out of it and completely ignored the opposition and the state governments yet it has nothing to show in terms of investment from abroad in this sector.

"We want to ask the Congress the exact foreign investment that has come to India in multi-brand retail. Our information is that there is not a single substantive investment," Prasad said. He claimed that foreign investment which came in the aviation sector was in the Jet-Etihad deal which is embroiled in a controversy.

"Has the Government of India run out of all options except FDI for managing the economy? Prime Minister Manmohan Singh is a renowned economist while Chidambaram is seen as a seasoned Finance Minister who has had the longest term as FM," Prasad said.

BJP said there is no hope of the UPA government reviving the economy before completing its term as only 6-7 months are left for the polls. "If in nine and a half years, they did not do anything it is not likely that they will be able to do anything in 6-7 months," Prasad said.

This government is plagued by a lack of trust, malgovernance and ad hocism, the opposition charged. "In this government only inflation and current account deficit are going up, all else is going down. The economy is akin to 1991 status," Prasad said.

He maintained that government talks only in terms of Wholesale Price Index and not retail inflation which is affecting the masses.