'Why shouldn't FDI be allowed in retail?'

Ahead of US President Barack Obama’s maiden visit to India in his official capacity, Planning Commission Deputy Chairman Montek Singh Ahluwalia has firmly supported foreign entry into multi-brand retail in India.

Currently, only 51 per cent foreign direct investment (FDI) in single-brand retail is allowed in India. The Department of Industrial Policy and Promotion (Dipp) has floated a discussion paper exploring the probability of also opening FDI in multi-brand retail and the Planning Commission, along with the agriculture ministry, has supported the proposal.

“Today the policy of the country allows modern retail formats. We are not opposed to that. Therefore, in my view, there is absolutely no reason why FDI (in multi-brand retail) should not be allowed,” said Ahluwalia at the Economic Editors’ Conference.

Stating the medium-term macroeconomic prospects as robust, Ahluwalia further said India needed to sustain its demand-driven growth to complement the growth on the supply side. “On the supply side, we can grow by over 9 per cent, but we need to create demand to complement the growth,” added Ahluwalia.

He said investments, particularly in the infrastructure sector, needed to be enhanced to sustain growth in India, given the fact that there were anticipation of slack external demand as the global economic recovery was fraught with uncertainties.

On two issues, the Planning Commission is expected to move the Cabinet in the coming months. One is the Integrated Action Plan for stimulating development in districts affected by Naxal violence and the issue of lag in environmental clearances for key infrastructure projects.

“We are preparing recommendations for the Cabinet Committee on Economic Affairs for environment clearances, especially for the coalfields. We have asked for the views of the ministries concerned, after that we will give our final recommendations on the issue,” Planning Commission member B K Chaturvedi said on the sidelines of the conference.

On the issue of lack of storage space for essential foodgrains, which led to rotting of around 50,000 tonnes of wheat in Punjab recently, Planning Commission member Abhijit Sen conceded that the government had not done much on the storage front, while stating that “a certain amount of caution” had resulted in excessive procurement by the government leading to acute shortage of storage.

Sen further said agricultural growth for the Eleventh Plan period (2007-12) will marginally fall short of the target of 4 per cent at 3-3.5 per cent.