Government wins FDI in retail war in Parliament

The ruling UPA government got a much-needed boost as it won the vote in the Rajya Sabha on foreign direct investment (FDI) in retail, paving the way for Prime Minister Manmohan Singh to press ahead with more reforms, including freeing up a cash-strapped insurance sector.

Getting support once again from the combination of Mulayam Singh Yadav's Samajwadi Party (SP) and Mayawati's Bahujan Samaj Party (BSP), the government won the day in the Rajya Sabha by 14 votes.

In the house, the opposition-backed motion got 109 votes and the government 123 votes. One member, cricketer Sachin Tendulkar, was away playing a match against England in Kolkata.

While the Rajya Sabha vote was symbolic, the government's victory is a boost for its push to implement an economic reform agenda that is seen as crucial to reviving growth and reducing a bloated fiscal deficit.

Minutes before the voting process began, the SP walked out of the house with its nine MPs, bailing out the ruling United Progressive Alliance (UPA) -- as it had Wednesday when the Lok Sabha voted on the issue.

On Thursday, day one of the debate on the issue in the Rajya Sabha, Mayawati had said in the house that 15 MPs from her party would be voting with the government.

Both the BSP and SP support the government from outside.

The government had already won a vote on retail reform in the Lok Sabha two days earlier. The policy will allow global retailers such as Wal-Mart Stores Inc to set up shop in the country's $450 billion retail sector, and is aimed at drawing more overseas investment and taming inflation.

Although both votes were non-binding, defeat would have piled pressure on PM to roll back the measure.

Moreover, the main opposition Bharatiya Janata Party (BJP), having seen its motion to block retail reform defeated, is likely to obstruct moves to allow foreign direct investment (FDI) in the insurance sector. The BJP wants a 26 percent cap set on investment, against the government's proposed 49 percent.

"We will oppose any move by the government against the recommendations of the standing committee on finance which has said it should be 26 percent," Prakash Javdekar, a BJP leader and spokesman for the party, told Reuters on Friday.

Money has flowed into India's capital markets since, and Goldman Sachs last week upgraded India's outlook, but formidable hurdles remain to get the economy back on track.

India's economy is set to grow at its slowest pace in a decade in this fiscal year, and the government's overspend on subsidies on fuel and food has prompted global ratings agencies to warn of a downgrade.

FDI win is rejection of politics of BJP: Kamal Nath

The government Friday termed its winning of the FDI vote in the Rajya Sabha as a "rejection of the politics of the BJP".

"It is a rejection of the politics of the BJP (Bharatiya Janata Party), I wish they were better losers," Parliamentary Affairs Minister Kamal Nath told reporters outside Parliament House minutes after the United Progressive Alliance (UPA) government won the vote in the upper house. 

Asked how the Congress managed to work the numbers in its favour in the upper house where it is in a minority, Kamal Nath said: "The content (of the issue) was political political parties decided in our favour."

"I appealed to parties to recognise the BJP's political agenda and vote accordingly, and they did that," he added.