Going by newspaper reports, UPA-2 is taking one more shot at economic reforms with allowing foreign investment in multi-brand retail once more on the cards, the Pension Bill has been cleared by the Cabinet, the new nuclear power rules go a long way in allaying fears of equipment suppliers, the Mining Bill is listed among the Bills to be passed by Parliament ? on the day the new conditions for allowing FDI in multi-brand retail were reported, newspapers also reported clearances for three mega-infrastructure projects worth R25,000 crore.
Even assuming the government?s ill-conceived move to rope in the BJP in the telecom scam will not disrupt the parliamentary agenda, it is useful to keep in mind how long it takes to get a reform. The Pension Bill that hopefully Parliament will now pass was last cleared by the Cabinet six years ago! Multi-brand retail, it is true, doesn?t require clearing by Parliament, but the government has already gone back and forth on it, adding and subtracting riders from it. At one time, it was for restricting firms with FDI to just the 36 large cities with more than a million persons (whether they?d like to go to smaller towns is, in any case, doubtful); later on, a suggestion was made that 50% of investments made and jobs created should be in rural areas?how this squares with the large-city restriction is not clear. Another rider is that at least 30% of products must be sourced from firms with an investment of under R1.25 crore in plant and machinery! If the kind of bureaucracy that this involves isn?t mind-numbing enough, keep in mind that since retail is a state subject, no retailer can set up shop unless each state government allows it. Given how many years it takes to set up shops, large retailers will be setting up shop just around the time elections are due! How many local politicians will allow that?
So the proposal to allow FDI in multi-brand retail will continue to lurch around for some time to come. Keep in mind that none of the three infrastructure projects cleared on Friday were new ones. The L&T metro project in Hyderabad is at least two years old and is still struggling over land clearance, the Hinduja power project has been in the works since 1999 and the plain-vanilla 182-km highway project is something that should have got cleared as a matter of routine. Expect many more press notes on ?clearances? given to FDI in retail over the next few years.