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Curing motion sickness
With India as the dominant theme at the World Economic Forum summit at Davos this year, it was imperative that the UPA government send out a strong pro-reform message.
With India as the dominant theme at the World Economic Forum summit at Davos this year, it was imperative that the UPA government send out a strong pro-reform message on the eve of the departure of a high-powered delegation led by Finance Minister P. Chidambaram, Commerce Minister Kamal Nath and Deputy Chairman Planning Commission Montek Singh Ahluwalia. The timing was excellent, coming as the announcement did after the Congress plenary in Hyderabad, which featured a resolution spelling out the coalition dharma of collective responsibility. As it is, there have been doubts over this government’s will to go ahead with next generation reforms because of roadblocks put up by coalition partners, especially the Left.
Circumventing all this, the Commerce and Industry Ministry decided to rationalise and review the entire gamut of foreign direct investment ball using the instrumentality of an empowered Group of Ministers under the stewardship of Sharad Pawar. Based on its recommendations, the Union cabinet on Tuesday cleared a whole slew of foreign direct investment measures, including airports, mining and inserted the thin edge of the wedge by permitting FDI in some parts of retailing.
Another engaging development is the government’s clearing of 100 per cent FDI in wholesale trading and sourcing for exports. The government has now put it on the automatic route which means investors don’t need to route their queries through the Foreign Investment Promotion Board. This will allow more chains like Metro of Germany to come to India. Maybe the retail big boys, WalMart, Tesco, Carrefour et al will now think of opting for this route, as it allows buying in bulk and selling to small retailers. Ease of doing business appears to be a subject that has become a matter of concern to the powers that be. All in all, the government has clearly signalled that its reform agenda will steam ahead, despite the fact that a number of state assembly elections are imminent.
