FDI Reforms: Policy Paralysis End, But Results Awaited

Bangalore: The government has encountered the Opposition attacks with the economic policy measures announced in the last couple of weeks, which are looking forward to economic growth, though these new movements are not been fully accepted.

The government has repeated that in a democracy that involves coalitions, there is a need to argue and discuss issues before taking decisions. Thus, it says that whatever has been done is not really anything new; those are old issues that got sorted out recently, according to Firstpost.com.

As the market has reacted positively, there will more to follow, the government said. And more measures would be taken, till the overall mood and sentiment improves. However, these policy measures are also interpreted as moves to alleviate the sentiments of various rating agencies.

What should be the Next Moves from the Govt?

With these moves, the government has gone ahead and the Trinamool factor has been gotten over. But the government should make sure to fulfill all its announcements so that the political bricks do not get deconstructed, as these political constituents have different ideologies over these reforms already.

It should also do some introspection in terms of its own budget processes. According to the current budget details, the fuel subsidy for the year will be 43,500 crore based on an average crude oil price of $115 per barrel. And since the budget has been announced, this number has not been exceeded and has also dipped below the $100 mark for quite a period. It is expected that the budgetary exercise should make more realistic assumptions.

In the case of FDI in retail, the retailers should not be much affected. The states are given authority to take decisions over it and the Wall-Marts are restricted to the big towns etc. are playing safeguard. In our nation, domestically organized retailers even are facing crisis, thus any foreign entry could meet with high opposition from the masses.

The domestic shops’ proximity to the customers and their ability to provide short-term credit, to supply in small quantities and to build strong relationships with their customers; all these are the advantages they have over the foreign retailers. The customers visit the organized retailers only in a weekly basis, not daily. Moreover, the organized retailers need space, which is a challenge even in bigger Indian towns. In that way, the movement should be slow and measured.