India's plan to allow foreign retailers wins parliament backing

 

Delhi, India

The Indian government won an important symbolic victory Friday, securing Parliament's backing for its decision to allow in foreign supermarkets such as Wal-Mart and Britain's Tesco.

The vote will boost morale within the government of Prime Minister Manmohan Singh as it strives to push through reforms to reinvigorate India's flagging economy and reduce a bloated fiscal deficit. It also makes it more likely the fragile coalition will last out its full-term, until 2014.

It was a two-stage victory for the government, winning votes in the lower house of Parliament on Wednesday and then in the upper house Friday, after four days of acrimonious debate and considerable horse-trading behind the scenes.

"This is a victory for more reforms," Parliamentary Affairs Minister Kamal Nath told reporters shortly after the vote, adding that it clears the way for bills to allow more foreign investment in financial services to be introduced in Parliament.

Although the votes were nonbinding, defeat would have raised pressure on the government to roll back its decision to allow foreign direct investment in department stores and supermarkets, a move that has attracted significant opposition from small shopkeepers who dominate retailing here.

The government's hand is now strengthened as it seeks to allow more foreign investment in pensions and insurance sectors, but it will need to do more cajoling of reluctant coalition partners and other fence sitters to get either bill passed.

Time is also running out in this session of Parliament; only nine business days remain, and not a single bill has passed. The retail debate ate up a large chunk of proceedings.

During the debate, opposition parties said the entry of Wal-Mart and other big retailers would put India's vast network of neighborhood stores out of business, raise unemployment and lead to a flood of cheap imports from China.

Some speakers asked whether the reforms instituted in India since 1991 had benefited the nation, while others asked whether the entry of companies such as McDonalds and Pepsi had helped or harmed farmers here. Parallels were drawn with the British East India Co. and the exploitation of Indian workers under colonial rule.

"You would eventually have stores owned by the Americans, the French and the British selling Chinese products," said Arun Jaitley, leader of the Hindu nationalist opposition Bharatiya Janata Party (BJP) in the upper house. "Our children would be employed as sales boys and sales girls."

The government contended that foreign investment in supermarkets and cold-storage warehouses would raise prices paid to farmers and increase choice for consumers, as well as cut down on the huge proportion of farm produce that is wasted on its journey from the field to the table.

But victory had as much to do with political management of the coalition as it did with ideological differences, political analysts said.

Some parties said they disagreed with the decision to expand foreign investment in the retail sector but walked out of Parliament before the vote rather than side with the BJP.

Even the two main parties, Congress and the BJP, have swapped sides over the issue in the past decade, depending on whether they were in government or in the opposition.

"It reflects the state of much of Indian politics," said Vinod Mehta, editorial chairman of Outlook magazine. "The way the parties changed their mind . . . it's all a lot of theater."

The BJP claimed the government had threatened leaders of small parties that corruption charges against them would be pursued if they had voted against foreign investment. Analysts said some parties with significant levels of Muslim support also appeared reluctant to side with the Hindu nationalist opposition.

The outcome is good news for the government as it tries to keep its unruly coalition together during the remainder of its term.

Mehta said any further moves to liberalize India's economy under this government were likely to be balanced by further, more "populist" efforts to expand social welfare plans during the countdown to elections in 2014.

Opening the door to Wal-Mart and other big-box retailers is unlikely to make as much of a difference to India's economy as either side claimed during the debate, economists said. Much more important would be administrative reforms to clear away the bottlenecks to domestic investment, including a maze of environmental clearances required for many projects, the slow pace of government decision-making, and huge problems in displacing people to acquire land.

"There is a bit of unwarranted euphoria being conveyed over the reforms push," said Bibek Debroy, a professor at the Center for Policy Research in New Delhi, adding that he saw nothing on the horizon to push economic growth significantly higher.

The decision to allow in foreign retailers will be left to individual states, and many have said they will not give permission. Foreign investment will be limited to 51 percent, and stores will only be allowed in larger cities.

- - -

Washington Post special correspondent Suhasini Raj contributed to this report.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Life and Style
fashionThe supermodel on her career, motherhood and Cara Delevingne
News
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvSeries 5 opening episode attracts lowest ratings since drama began
News
i100
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Sport
Greg Dyke insists he will not resign as Football Association chairman after receiving a watch worth more than £16,000 but has called for an end to the culture of gifts being given to football officials
football
News
people
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Arts and Entertainment
Rachel, Chandler and Ross try to get Ross's sofa up the stairs in the famous 'Pivot!' scene
tv
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

C# asp.net Developer - West Sussex - permanent - £40k - £50k

£40000 - £50000 Per Annum + excellent benefits package: Clearwater People Solu...

SQL Report Analyst (SSRS, CA, SQL 2012)

£30000 - £38500 Per Annum + 25 days holiday, pension, subsidised restaurant: C...

Project Manager (infrastructure, upgrades, rollouts)

£38000 - £45000 Per Annum + excellent benefits package: Clearwater People Solu...

Project Manager (App development, SAP, interfacing)

£50000 - £60000 Per Annum + excellent company benefits: Clearwater People Solu...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments