At the FDI crossroads
Nothing about India is predictable and it never fails to surprise. One would have thought that with the staggering and perceptible economic strides made by the country over the last two decades as a direct result of economic liberalisation and opening itself up to the rest of the world, there would exist a consensus on further economic liberalisation. However, the recent decision of the government to allow FDI in multi-brand retail has raised a virtual maelstrom. Interestingly, not all of the current cacophony can be attributed to politics—India is preparing for its next general elections in 2014. There are genuinely divergent views on the benefits or damage that FDI in multi-brand retail can cause to the economy.
One thing to be recognised and appreciated is that India has always been a noisy democracy with divergent philosophies and ideologies, and these have to be respected. Therefore, India has traditionally moved ahead slowly on significant economic reforms, such as in the pensions sector and FDI in multi-brand retail.
The last attempt by the government to introduce FDI in multi-brand retail met with significant opposition and the government, already weakened by severe allegations of corruption, had to backtrack on the policy. But in all that noise, one thing that managed to creep through without attracting much attention was an increase in the FDI limit in single-brand retail from the then 51% to 100%. So, some people argue, there is justice after