Mamata derails UPA’s reforms plan Adamant On Not Allowing FDI In Retail, Aviation,Insurance And Pension

New Delhi: Political opposition to economic reforms grew as a key ally of the UPA government on Thursday raised the red flag to plans to open up the economy further to foreign investors. The political uncertainty in the aftermath of the national auditor's report on coal block allocations also triggered worries about the fate of the government's reform steps, which economists say are crucial to boost growth and sentiment.      The Trinamool Congress (TMC) chief and West Bengal chief minister Mamata Banerjee, who met finance minister P Chidambaram, said her party was opposed to any plans to allow foreign investment in multi-brand retail,insurance, aviation and pension sectors. "We are not in favour of FDI in retails and all this... insurance and pension. We are not in favour of FDI in aviation also. Always, we are in favour of common people," Banerjee told reporters after her meeting with Chidambaram.      "In our election manifesto what we raised, we will stick to it... Other countries all over the world are also saying if they allow FDI in retail market, then workers will die," Banerjee said. TMC has emerged as a major stumbling block for the government, forcing it backtrack on several reform proposals. More than 30 legislations are pending in Parliament. The move to raise the FDI limit in the insurance sector to 49% from 26% and open up the pension sector has faced political roadblocks for several years now.      The TMC chief had also forced the government to put on hold its decision to allow foreign investment in the multi-brand retail sector until a consensus was reached. The government is also unlikely to hike prices of fuel and fertilizers. "There is no proposal as of now to increase the administered prices of petroleum products and fertilizers," Chidambaram said in a written reply in the Rajya Sabha.      Drought in some parts of the country has also made the government's task of raising diesel and cooking gas prices difficult. The central bank and rating agencies have voiced concerns about the health of public finances due to the impact of unwieldy subsidies.      The Economic Advisory Council to the Prime Minister has said the large petroleum subsidy would greatly strain the fiscal system and would also have a significant adverse impact on the overall economy and eventually on inflation.      It has suggested a suitable increase in diesel prices in one or more steps and a cap on the level of consumption of subsidized cooking gas close to what is being consumed by poorer households, which is four cylinders.      But all is not lost yet for the government. It still has a window of opportunity to unveil some reforms after the Parliament session ends on September 7 and before the elections to some key states are announced. The government is likely to make a fresh bid to implement its decision to allow 51% foreign investment in the multi-brand retail sector, which would enable global retailers such as Walmart, Carrefour, Tesco and others to enter the lucrative Indian retail market. The government is likely to leave it to the states to implement the Cabinet decision to allow foreign investment. Several states have formally backed the moves while others have opposed it, saying it will lead to massive job losses and displace small neighbourhood stores.  TIME IS RUNNING OUT  äEconomists say reforms are crucial to boost growth and sentiment, especially when the fiscal deficit is high  äA poor monsoon means there is no hope of a rise in diesel and LPG prices, which could have cut the subsidy burden  äThe government may make one last bid to at least push through FDI in multi-brand retail after the monsoon session and before the elections to key states are announced