Business, Finance & Economics

Retail "rollback" speaks volumes about India's democracy


Members of The Indian National Association of Street Vendors shout anti-government slogans during a protest against Foreign Direct Investment (FDI) in multi-brand retail in New Delhi on November 30, 2011. A large number street vendors took part in the protest to air their demands that the government review a deal struck with the EU, India's biggest trading partner, since June 2007 to liberalise trade in goods, services and investment through a free trade agreement. Confederation of All India Trader (CAIT) leaders said that the FDI in retail trade will directly hit the livelihood of more than 20 million people including traders, framers, and other sections of society.



The Indian government officially suspended its plans to allow greater foreign investment in the retail sector Wednesday, with at least one opposition party insisting that the freeze was tantamount to a "rollback" of the policy, reports NDTV.

The move was expected since the weekend, when Trinamool Congress head Mamata Banerjee leaked the substance of her phone call with Finance Minister Pranab Mukherjee.  But observers are now looking to Manmohan Singh to see if he can pull a rabbit out of his hat as he did with the U.S.-India nuclear deal in 2008.

Writing for the BBC, Singapore-based economist Prasenjit K. Basu argues that India's vibrant democracy has always made economic reforms a push-and-pull tussle, so it would be foolish to expect smooth sailing for the retail trade.  It's a good recap of some of the historical wrangling in parliament, and suggests that Wednesday's freeze (or rollback) is only the latest salvo in the scrap.

More interesting, perhaps, was legislator Jay Panda's editorial for the Indian Express yesterday, in which he argued that it's actually absurd that the parliament has only two modes: self-abasing agreement and the nuclear option of a no-confidence vote.  Instead, votes on issues like the reform of rules on FDI in retail should be normal, everyday affairs, and the government shouldn't panic if it loses something as simple as an adjournment motion, he argues.  The culprit, as usual, is the British Raj, when the stiff-upper-lip blokes tried to devolve some power to the Indians but didn't want to give them any real authority.  Turns out, nobody has really changed the rules.