Basu pitches for FDI in multi-brand retail to tame inflation

Concerned over rising inflation, the Inter-Ministerial Group (IMG) today suggested opening up multi-brand retail to foreign investors and changes in agriculture marketing laws to check the rate of price rise.

“We are taking a clear position on Foreign Direct Investment (FDI) in multi-brand retail. Of course, it is a recommendation, not policy,” said chief economic advisor and IMG chairman Kaushik Basu.

The IMG, he added, favours formulation of a model Agriculture Produce Marketing Committee (APMC) law, which could be adopted by the states to remove supply bottlenecks at the local level.

“There is a need to revise the AMPC Act to reduce the price gap between farm gate and consumer prices. We need a model act to be adopted by states,” he added.

Concerned over high inflation, the government in January had appointed a high-level inter-ministerial group to suggest steps to tame the rate of price rise.

Headline inflation stood at 8.66% in April, much above the Reserve Bank's comfort level of 5-6%. Food inflation was 8.55% for the week ended May 14.

Inflation continues to remain firm despite the host of steps taken by the government as well as the Reserve Bank of India (RBI) over more than a year.

The RBI recently raised key policy rates for the ninth time since March, 2010, to tame inflation. The government, too, had banned the export of some essential commodities to increase their supply in the domestic market.

Both the government and the RBI, Basu said, are acting in tandem to check the rising prices.