Two days ago, on Wednesday, the UPA government scored a notable victory in the Lok Sabha. Despite being in minority, the UPA comfortably managed to defeat the Opposition-sponsored motion on disallowing FDI in multi-brand retail. Alongside, it also got the house to reject the amendments proposed by two other MPs to the new regulations under the Foreign Exchange Management Act (FEMA). These changes in regulations had been made by the Reserve Bank of India to give effect to the September 21, 2012, notification of the central government to permit up to 51% FDI in multi-brand retail.
The twin victories in the Lok Sabha have prompted many a political manager within the UPA and even sections of the press to claim that FDI in multi-brand retail is now a ‘done deal’. Many Congressmen have hailed it as a historic victory for the party and demonstrated much exuberance over the development. Getting the house, consisting of directly-elected representatives of people, to support the government’s executive decision is no doubt a shot in the arm for the beleaguered government. But such celebrations are somewhat premature since RBI-made amendments must also pass the hurdle of getting a similar approval from the Rajya Sabha where the numbers stack up much more against the government. This, in fact, is a mandatory requirement and must be secured by the government to implement the revised policy for FDI in retail.
Section 46 of FEMA prescribes the process for rule-framing by the Union government and for regulation-making under FEMA by RBI. Its Section 48 stipulates that all rules and regulations made by the designated authorities must be laid in the ensuing session of the two houses of Parliament. Either house of Parliament is free to either accept the changes made by the executive or altogether reject them or even propose modifications therein within 30 days of the new rules or regulations being brought before it.
In the instant case, the revised RBI regulations were tabled on November 30 and the members of either house had the right to move amendments for 30 working days from that date. The Speaker of the Lok