Govt. allows FDI- it’s a welcome for foreign Investors.
By Vikas jaiswal NOIDA | Fri Sep 14, 2012 8:45pm IST
A day after sharply increasing the price of heavily subsidized diesel, the government said it was opening up its supermarket sector to foreign chains and would allow more foreign investment in airlines and broadcasters. It also approved the sale of stakes in four state-run industries. Facing the threat of having its credit rating downgraded to junk, the Indian government has been running out of time to show it is serious about fixing an economy that has been hard-hit by a global economic crisis and political gridlock at home. Underscoring the need for speed, India's inflation rate jumped to 7.55 percent in August, mainly from higher food prices, data showed on Friday. "I believe that these steps will help strengthen our growth process and generate employment in these difficult times," Prime Minister Manmohan Singh said via Twitter. Infighting in the fragile coalition government led by Singh's Congress party had earlier forced it to shelve the retail and aviation reforms, casting a shadow over India's aspirations to join the world's leading economies. Signalling that trouble still lies ahead, two major allies - the Samajwadi Party and the Trinamool Congress party - demanded a reversal of the retail reform and diesel price hike. The government has backed down when faced with such pressure in the past. The retail reform allows global firms such as Wal-Mart Stores to hold a majority stake in a local partner and sell directly to consumers for the first time, which supporters say could transform India's $450 billion retail market and tame inflation.
In less than 24 hours, the government announced more measures to liberalise the economy than in the past eight years - a sign of the urgency felt in New Delhi after high spending and low growth battered India's finances in recent months.