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| Basu: Seeking change |
New Delhi, June 18: Kaushik Basu, chief economic adviser to the finance ministry, today said it was politically prudent for the government to push for foreign direct investment in retail.
Basu said reforms like these could more effectively address “negative investor sentiment” as opposed to specific policy instruments such as interest rate cuts, which were useful in tackling macroeconomic variables such as inflation or overall economic and industrial growth.
“There is a lot to be done and the next six months will be crucial,” he said.
The UPA government’s decision to allow 51 per cent FDI in multibrand retail has been put on hold because of opposition from allies, including the Trinamul Congress. The government has already allowed 100 per cent FDI in single-brand retail.
US secretary of state Hillary Clinton had also pitched for opening the segment at the India-US strategic dialogue last week in Washington.
Yesterday, civil aviation minister Ajit Singh said he was in favour of FDI in retail but cautioned that there had to be a regulatory mechanism to protect the interests of farmers.
The government is holding talks with allies to arrive at a consensus. The department of industrial policy and promotion has initiated consultations with stakeholders, including farmers, consumers and the food processing industry. The segment is dominated by small shops, and the Opposition fears that the entry of multinationals will lead to heavy job losses.
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