'FDI in multi-brand retail a bold step by PM'

Sources said the decision taken at a cabinet meeting Nov 24 indicates the prime minister's resolve in not letting the whims of UPA allies block the process of economic reforms.

Sources said the move is also significant as some sections of the Congress too had reservations on the issue being discussed since 2010.

Agreeing "some ministers had reservations" over the proposal, Commerce Minister Anand Sharma Friday said at a media briefing: "It was a unanimous decision of the cabinet."

According to sources, Railways Minister Dinesh Trivedi said the move would add to "rural distress" and complained that Trinamool Congress chief Mamata Banerjee was "not consulted" over the proposal.

Sources said Defence Minister A.K. Antony, Rural Development Minister Jairam Ramesh and Small and Medium Enterprises Minister Virbhadra Singh too expressed concern about the move saying it might affect the interests of small retailers.

However, the proposal got full support from Finance Minister Pranab Mukherjee, Urban Development Minister Kamal Nath and Commerce Minister Anand Sharma.

Downplaying Trivedi's remarks, Sharma said "ministers should not have discussed cabinet matters outside".

"Any decision of the cabinet reflects a sense of the cabinet," said Sharma.

Stating Mamata is "for development", the commerce minister said he addressed her concerns related to "interests of the farmers" and the "role of the states" in allowing FDI in multi-brand retail.

"The issue falls in the concurrent list of Constitution. While the centre has power to frame policies, the states have the authority to allow an FDI proposal, subject to clearance from the central government," said Sharma.

While reservations against FDI in multi-brand have come from West Bengal Chief Minister Mamata Banerjee (where Congress is part of ruling coalition) and National Democratic Alliance government in Bihar headed by Nitish Kumar, Congress ruled Kerala and Rajasthan too have said the move could affect the trader community there.

Experts see the cabinet decision as a bold step by Prime Minister Manmohan Singh who has also managed to allay complaints of "policy paralysis" and "governance deficit".
"It is a bold step because it gives a signal that economic reforms are on track," political analyst Amulya Ganguly told IANS.

According to Ganguly, the prime minister "realised he has been dithering for too long and inviting criticism from the corporate czars of policy paralysis."

"This is a major landmark in India's economic reforms process," said Rajan Bharti Mittal, chairman of Bharti Walmart, which is eyeing entry into multi-brand retail segment.

However, Marico chairman Harsh Mariwala termed it just the first step. "Seeds have been sown but the fruits will be seen only if other policy initiatives are implemented immediately like adoption of model agriculture produce marketing committee act by all the states, and timely implementation of goods and services tax," he said.