FDI cap hike a panic reaction: BJP; links it to FM's US visit

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% to 100%. 74% is a dominant investment. If at 74% India is not able to get foreign investment then how can one expect this at 100%,' 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% 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%.

'Then why this panic reaction,' Prasad said.H