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Rajasthan scraps retail FDI

New Delhi, Jan. 31 (PTI) BJP-ruled Rajasthan has scrapped the previous Congress government’s clearance to FDI in multi-brand retail, following in the footsteps of Arvind Kejriwal-governed Delhi and prompting the Centre to complain that “states cannot retract unilaterally on such commitments”.

A senior Rajasthan official confirmed that a letter reversing the decision had been sent by chief minister Vasundhara Raje to Union commerce and industry minister Anand Sharma.

But the Congress leader, who criticised the step as unilateral, questioned the states’ authority to take reverse policies in such a manner. “If a duly elected state government formally notifies its willingness to implement the policy within its jurisdiction, it cannot retract unilaterally on such commitments,” Sharma said.

According to a senior official of his ministry, it will soon seek the law ministry’s opinion on such reversals.

“It is a settled matter that FDI policy falls within the remit of the central government...to say that a new government has the authority to withdraw its support to the FDI policy is bad in law,” the minister said.

“The FDI policy in the sector has been discussed, debated and voted on in both houses of Parliament and has reached a finality,” he added.

The aim of the policy, Sharma said, is not to create uncertainty, instability and unpredictability. He added that under the Shops and Establishments Act, state governments “are well within their rights to define their regulatory framework for all retailers, foreign or domestic.”

Former Rajasthan chief minister Ashok Gehlot had agreed to allow FDI in multi-brand retail. The state has become the second, after Delhi, to withdraw approval following a change of guard after the Assembly polls late last year.

Twelve states, mostly Congress-led, had agreed to allow global retailers to open supermarket chains under the policy. The others include Maharashtra, Karnataka and Andhra Pradesh.

The Centre had allowed 51 per cent FDI in multi-brand retail in September 2012 but left its implementation to states.