MUM­BAI, In­dia-In­dia's rul­ing par­ty faced a po­ten­tial­ly dam­ag­ing set­back yes­ter­day af­ter an im­por­tant coali­tion al­ly said the gov­ern­ment had re­versed its de­ci­sion to throw open the coun­try's huge re­tail sec­tor to for­eign in­vestors. The gov­ern­ment has not of­fi­cial­ly an­nounced a change in its pol­i­cy on for­eign di­rect in­vest­ment, but a re­ver­sal would be an em­bar­rass­ment for the Con­gress par­ty, which has been scram­bling to re­assert its lead­er­ship and kick-start in­vest­ment in the de­te­ri­o­rat­ing econ­o­my.

The furore over whether to al­low chains such as Wal-Mart to open su­per­mar­kets in ma­jor cities has dead­locked Par­lia­ment, with many politi­cians slam­ming the de­ci­sion as a job killer for In­dia's small re­tail shops. Pro­po­nents say it would bring need­ed in­vest­ment in­to In­dia's in­fra­struc­ture that would bring high­er prices to farm­ers sell­ing their pro­duce and low­er prices to con­sumers buy­ing it. An about-face on such an im­por­tant de­ci­sion would raise se­ri­ous ques­tions about the abil­i­ty of In­dia's rul­ing par­ty to ef­fec­tive­ly gov­ern. "(Fi­nance Min­is­ter) Pranab Mukher­jee has in­formed me the gov­ern­ment is sus­pend­ing the FDI is­sue un­til a con­sen­sus is evolved," Tri­namool Con­gress par­ty chief Ma­ma­ta Baner­jee told re­porters in Kolkata late Sat­ur­day, ac­cord­ing to a trans­la­tion of her com­ments by CNN-IBN tele­vi­sion news sta­tion.

The Con­gress par­ty would nei­ther con­firm nor de­ny Baner­jee's as­ser­tion. "The of­fi­cial an­nounce­ment will have to be made in Par­lia­ment," Mukher­jee told re­porters. On Sun­day, Con­gress spokesman Man­ish Tewari said the par­ty "wel­comes any steps which can lead to a con­ducive res­o­lu­tion of the is­sue and break the dead­lock." An­a­lysts and busi­ness lead­ers slammed the Con­gress par­ty for po­ten­tial­ly bungling a cru­cial pol­i­cy change that has been a decade in the mak­ing, and be­moaned the weak lead­er­ship of Prime Min­is­ter Man­mo­han Singh in the face of a par­lia­men­tary re­volt.

AP