As the government tries again to push for foreign direct investment, we ask what is spurring massive social resistance.
|Inside Story, al Jazeera, 21 September 2012
|India’s coalition government is once again facing political turmoil over new economic reforms approved last week.The plan includes opening up the country’s aviation and lucrative retail sectors to international investors.|
The reform plan has sparked nationwide strikes supported by opposition parties and trade unions who say the move is a “betrayal of democracy”.Manmohan Singh, the Indian prime minister, has justified the decision to allow foreign direct investment (FDI) in multi-brand retailers.
He said: “I believe that these steps will help strengthen our growth process and generate employment in these difficult times… I urge all segments of public opinion to support the steps we have taken in the national interest.”
India has taken a number of steps to curb its rising budget deficit, starting with efforts to reform the retail sector.
The government wants to allow foreign investment in retail trade, allowing chain-stores like Tesco and Walmart to open megastores.
It has limited the amount of government subsidies on liquid petroleum gas, widely used for cooking, and cut diesel subsidies, causing the price of fuel to rise.
Retail is the largest industry in India, accounting for 14 per cent of the country’s gross domestic product and around eight per cent of employment.
The size of India’s retail sector is currently estimated at around $450bn. The country ranks fifth among the top 30 emerging markets for retail sales.
Inside Story asks: Are these reforms a shot in the arm for India’s troubled economy? Is the political fallout likely to overwhelm the shaky coalition that rules the country? And what are the motives behind this new series of retail reforms in India?
Joining presenter Darren Jordan to discuss these issues are guests: Chetan Sharma, an independent financial analyst; James Mayner, a professor of commonwealth studies at the University of London; and Radha D’Souza, an associate professor of law and development at the University of Westminster.