FDI reforms a 'panic reaction' post Rajan exit: Congress

New Delhi: Congress on Monday dubbed the relaxation of FDI norms as a "panic reaction" by the government in the wake of RBI Governor Raghuram Rajan's decision to not opt for a second term.

"It is a panic reaction to show the world that it is business as usual even after Raghuram Rajan has announced his exit," party spokesman Jairam Ramesh told reporters.

The Modi government launched a second wave of Foreign Direct Investment (FDI) reforms allowing 100 per cent inflows in civil aviation and food processing sectors while easing norms in defence and pharmaceuticals.

Noting that BJP, when in opposition, had always opposed FDI, Ramesh suggested that after coming to power it is singing a different tune and was calling it a "magic wand" to turn around the economy.

"Domestic investment is far more important than FDI and, only through FDI, we are not going to be able to solve India's problems," Ramesh said. In fact, 50 per cent of FDI that is coming into India, is coming only into e-commerce sector, he added.

Besides, he said, the Congress does not believe that "FDI is the answer (to our problems), it is an important instrument for economic growth but it is not the main instrument of economic growth".

He alleged that the "suit boot ki sarkar" ensured the exit of Rajan as the RBI Governor had made a strong pitch for cleaning the balance sheets of banks and, therefore, those who "looted" the banks through huge loans were against him.

"The exit of Rajan is proof that the government is siding with those industrialists who have looted the banks and do not want to repay the money," he said, alleging that the Modi government was a "suit, boot and loot ki sarkar".

He said the state-owned Gujarat State Petroleum Corporation, which had taken loans when Narendra Modi was the state Chief Minister, owes the banks Rs 20,000 crore.

Ramesh alleged that Rajan's decision to not opt for a second term showed that those who owed banks a lot of money approached BJP Chief Amit Shah and RSS to put pressure on the RBI Governor. The Modi government, which has "good relations" with the trade and industry, also did not want to turn them away, he claimed.