Govt shrugs off protests, notifies FDI, plans more

PM May Address Nation Today To Explain Situation New Delhi: The government on Thursday notified the rules to permit the entry of foreign chains in the multibrand retail segment and overseas airlines in the aviation sector, cocking a snook at Mamata Banerjee and opposition parties and boldly advertising its freshly summoned resolve to carry on with its reforms agenda.      The notification came on the day  of a countrywide shutdown jointly organized by the Congress's own allies, the BJP, Left and regional parties and on the eve of the Trinamool's formal pullout from the UPA. The defiant assertion is likely to be amplified on Friday amid indications that Prime Minister Manmohan Singh may address the nation to explain the "tough times" which have triggered the burst of reform measures.      Sources said the address may have an echo of the budget speech he made as finance minister on July 24, 1991, heralding economic reforms which changed the country's face.      The address is expected to chime with the dire message of the Kelkar report on the country's finances.  BITTER PARTING TODAY GOVT GOES AHEAD  Notifies rules for FDI in multi-brand retail, aviation, power exchanges & broadcasting  Firms up plans for 1.2 lakh cr loan restructuring for power sector. This will help broke state electricity boards to raise new loans      Holds discussions to increase levy sugar price      PM may address the nation today to explain current fiscal stress necessitating the reforms measures DIDI DIGS IN      Accuses Union home ministry of tapping her phone. Shinde denies this      Mamata says there's now no going back; says UPA is 'selling' country in the 'name of reforms' Govt may hike price of levy sugar next  New Delhi: The Kelkar committee report has justified the need for belt-tightening measures like a diesel price hike and charting out new avenues of investment, like allowing FDI in multi-brand retail.      The PM has also asked the ministerial panel on land acquisition to thrash out a consensus when it meets next week. Besides policy measures, the government is planning to raise the price of levy sugar—the one that it pays to sugar mill owners for maintaining adequate stock—by Rs 3 a kg, the first such increase in almost a decade. With fiscal prudence being in vogue, the burden is likely to be passed on to those buying sugar from ration shops.      The boldness is significant also because it seems to underline the irrelevance of Mamata and naysayers. For a government which kept puttingoff urgent measures at the Trinamool's instance, the sudden shift into aggressive gear is stunning and has raised the estimate that it may press ahead on the road of fiscal correction in order to show munificence when the budget is presented in February, in what will be this government's last full-scale financial statement.      Congress circles are already agog with the expectation that improved coffers may help Chidambaram unwrap a mega-populist package in the budget. Speculation is focused on the food security law. Designed to be the kind of game-changer that the Rs 70,000 crore farm debt waiver turned out to be in 2009, the proposed law entails an annual expenditure of roughly the same amount: something the cash-strapped exchequer is in no position to support.      In November, the government had succumbed to pressure from the TMC and held back notification of rules permitting 51% FDI in multibrand retail that will enable the likes of Walmart and Carrefour to sell directly to customers. Even in the case of aviation, the government did not move for months due to Mamata's apparent grandstanding.      This time on, it is a different story; one that is defined by decisiveness. In fact, the government is already into the post-Mamata phase, all set to regain control of the crucial infrastructure portfolio of railways after a gap of 16 years. Congress sources maintained that the party would not part with the railways this time.      The FDI notifications formally clearing the way for the entry of global supermarket chains come along with the likely decision not to curb FDI in pharmaceuticals, although it was not clear whether the government was ready to dust off the long-pending proposal to raise the cap on FDI in insurance and open up the pension business. On the infrastructure front, the government is ready with a Rs 1.2 lakh crore loan restructuring programme which will help loss-ridden power distributors clean their books.      The policy activism has been goaded by the risk of a possible ratings downgrade that will throw India back into the league of countries issuing junk grade bonds. Apart from averting a possible downgrade, a reduction in the subsidy bill is also seen as a step towards preparing the ground for the Reserve Bank of India to cut policy rates. RBI has made monetary easing contingent upon a clear fiscal consolidation plan.      Following the increase in diesel price by Rs 5 a litre and an annual cap of six subsidized cooking gas cylinders—which will prune subsidies by Rs 20,300 crore— RBI limited itself to reducing the cash reserve ratio, or the amount of cash that banks set aside, by a quarter of a percentage point to inject Rs 17,000 crore into the banking system and signal a rate reduction.