FE Editorial : A reformed government

Expectations from the UPA government had gone so low that it took time to digest the slew of big decisions it unveiled in regard to foreign investment in multi-brand retail, aviation and broadcasting services, as well as those relating to divestment in PSUs. Coming as it did a day after the politically-sensitive diesel price hike, everyone wondered whether this was the same UPA which seemed to have gone into a slumber for so long. Clearly, Prime Minister Manmohan Singh and finance minister P Chidambaram are going for broke this time. And it was high time they did so. Whatever the outcome of the UPA's reforms gamble, it is a heartening development that economic reforms are back on the national agenda. Now every political formation will be forced to make its stand clear on issues that profoundly affect people's lives.

Politically, the government has done the right thing by announcing that every state is now free to implement the policy of FDI in multi-brand retail, as the license to open a retail establishment is given by state governments. At least six Congress-ruled states—Andhra, Haryana, Rajasthan, Delhi, Assam and Manipur—have expressed willingness to allow FDI in multi-brand retail. Interestingly, the ruling Akali Dal in Punjab, which is an NDA ally, has also said it will be good for the farmers. Politically, this FDI policy could create a farmers versus traders contest in several states. This will pose a serious dilemma to political formations. Regional parties who have farmers as a substantial support base may be forced to accept it sooner or later. BJP, of course, has a strong constituency among petty traders so it has opposed big retail tooth and nail. All in all, there will be a robust debate around real issues. The bogey of big foreign retail chains killing small grocers is not borne out by the experience of other emerging economies like China and Brazil. This bluff needs to be called in India too.

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