Was FDI Just a Smokescreen?

In New Delhi, much like in other capitals, political gossip is often dominated by theorizing about why politicians do the things they do. In Delhi, this theorizing often arrives at an intriguing answer: Indian politicians often do one thing in order to accomplish something else altogether.

Consider the theory that has been circulating around town in recent days as Prime Minister Manmohan Singh and his government have been pilloried over another seemingly self-inflicted political wound – in this case, the government’s clumsy handling of the ill-fated decision to allow foreign retailers into India. Political analysts almost uniformly describe the situation as a disaster.

But has it been?

According to the widely discussed theory, Congress Party leaders did not misplay the foreign direct investment issue in the slightest.

No, not at all.

True, Parliament was paralyzed for days in a logjam that blocked a host of important bills from being discussed, debated and voted upon. True, West Bengal chief minister Mamata Banerjee had threatened to bring down the coalition government.

But this was all by design.

What was actually happening, according to the theory, was a well-orchestrated diversion. Congress party leaders wanted a paralyzed Parliament and they wanted a huge political distraction (even though it made them look fairly incompetent). What they most wanted was to avoid having a parliamentary debate over a powerful Lokpal, the anti-corruption agency advocated by none other than activist Anna Hazare.

How to accomplish this? Shut down Parliament, of course.

And what of the foreign direct investment measure, upon which rode untold billions of dollars in anticipated investment, an initiative that many economists predicted could boost the sagging Indian economy?

According to the theory, it was a political smokescreen.

It had to be because otherwise the government surely would have been smart enough to wait until Parliament had adjourned before introducing the foreign direct investment measure, thus avoiding all the mayhem and gridlock.

One thing about such theories, of course, is they are rooted not only in an easy cynicism but also in the belief that politicians are actually far smarter and more skilled than they often appear.

Theory ran into reality on Wednesday, when Pranab Mukherjee, the finance minister and the Congress party’s top political fixer, stood in the floor of the Lok Sabha, or lower house of Parliament, and announced that the government would suspend any action on multi-brand foreign retail investment until a “consensus” had been reached on the issue.

In the meantime, Mr. Mukherjee said it was imperative that members of Parliament get back to work and address other key bills before the end of the winter session.

One can only hope he meant it.