Ahead of PM Narendra Modi's trip to the UK, the Centre on Tuesday announced major policy changes aimed at easi... Read More

NEW DELHI: The Modi government seemed to show unusual hurry in clearing several amendments to the FDI policy. Unlike most policy changes, which are approved by the Union Cabinet, the government this time chose to use a provision that allowed the PM to decide on the announcements, which were rushed in before his departure to the UK and Turkey.

Although the department of industrial policy and promotion (DIPP) had been working on the proposals for the past few months - something that finance minister Arun Jaitley indicated in a Facebook post last month - sources said the government opted to use Rule 12 of the Transaction of Business Rules to usher in the changes. The clause allows for "departure from rules" and says: "The Prime Minister may, in any case or classes of cases, permit or condone a departure from these rules, to the extent he deems necessary."

Sources said that it was only after the Prime Minister's Office issued the instructions on Tuesday afternoon that the decision was announced "informally". Later in the evening, Modi tweeted about the decisions and Jaitley briefed media persons. But the decisions had been endorsed by both of them. The trigger was the lukewarm response to several opening up decisions, including those for defence , railways, construction and insurance. In fact, the prescription of "Indian ownership and control" in case of insurance is being seen as a step backward, given that the foreign investor exercised much greater control with the 26% FDI limit than the new rules that allow 49%. Similarly, the stiff conditions in construction were seen as a major deterrent, prompting the review.

Sources said the first round of discussions were held with the FM and the contours of "liberalization" were broadly discussed. This was followed by a presentation to Modi, who gave the go-ahead. Then came subsequent rounds of deliberations, including one on Saturday, with the FM where defence minister Manohar Parrikar and commerce and industry minister Nirmala Sitharaman were also present.

Discussions with other ministries such as urban development, including presentations to urban development minister Venkaiah Naidu followed. "The formal consultation process involving draft cabinet note, consultations and the final note was not followed. But, there were detailed discussions on all sectors. If we had followed that process, it would have taken 25 notes and a year to achieve this," said a source involved with the exercise.

