Government decision on FDI panic reaction to Rajan's exit: Congress

New Delhi: The Congress party on Monday termed the Narendra Modi government's decision to relax FDI norms in some key sectors as a "panic reaction" to Reserve Bank of India Governor Raghuram Rajan's announcement of not seeking a second term.

It also said that Rajan's exit was aimed to "protect" the loan defaulters and "those who have looted the banks". 

The Congress reaction came after the government on Monday relaxed its foreign equity norms further, notably in defence, aviation, pharmaceuticals and retailing.

"Today's announcement on FDI is a panic reaction. It is a reaction to show to the world that it's business as normal or business as usual even as Raghuram Rajan has announced his exit," said senior Congress leader Jairam Ramesh, newly-elected to the Rajya Sabha from Karnataka. 

"This government and the BJP has always opposed FDI. It is ironical that the BJP is today claiming FDI to be the answer to all of India's economic problems. Domestic Investment is far more important than FDI, and only by FDI we are not going to be able to solve India's problems," he added.

Ramesh said: "Fifty per cent of the FDI coming into India, is coming only into the e-commerce area. Fifty per cent of all the FDI that has come into India so far in the last two years has been in the services sector, and of that bulk has been in e-commerce. This fact the government will not say. Where is the FDI going, where is it coming from?"

"So, we do not believe that FDI is the answer; it is an important instrument for economic growth, but it is not the main instrument of economic growth," he added.

Ramesh also attacked the BJP president and Rashtriya Swayamsevak Sangh for "facilitating" the exit of Rajan.

"As Raghuram Rajan was shown the exit, Chetan Chauhan (cricketer) was welcomed (as National Institute of Fashion Technology - NIFT - chairman). It is clear that quality is not a priority with this government. Rajan's exit is a big signal that the Modi government would not allow clean-up of the balance sheets in the bank," said Ramesh.

"They will protect the defaulters of loans and mainly those who have looted the banks. This will become the government of suit, boot and loot. BJP president Amit Shah and RSS have been successful in sending Rajan away. This is a government of the capitalists who are looting the banks," added Ramesh.