Govt should not rescind FDI policy in multi-brand retail: Srinivasan

Adds that RBI chief Rajan should remain at the helm

Noted economist T N Srinivasan has advised the newly elected government not to rescind the current FDI policy of allowing foreign investment in multi-brand retail.

"Not to allow FDI in multi-brand retail is against the logic of Prime Minister Narendra Modi's economic agenda," Srinivasan, who is a Professor Emeritus of Economics at Yale University, USA, told PTI.

His comments came amidst new Commerce and Industry Minister Nirmala Sitharaman indicating that foreign players will not be allowed to open mega stores in the country.

"At this stage the party's position is very very clear. We have explained about FDI in multi-brand retail (MBR) that it probably is not best opened up now because medium and small sized traders or small farmers have not been adequately empowered ... If you open up the flood gates of FDI in MBR, it may affect them," she said yesterday.

The BJP's manifesto had said, "Barring the multi-brand retail sector, FDI will be allowed in sectors wherever needed for job and asset creation, infrastructure and acquisition of niche technology and specialised expertise."

Although the previous government had allowed Foreign Direct Investment (FDI) in multi-brand retail, only one investment proposal of UK-based Tesco was cleared by the earlier government.

The noted economist also put his weight behind Reserve Bank Governor Raghuram Rajan, advocating that he should remain at the helm.

"Not to retain Rajan would be wrong and would send a wrong signal to the financial markets," he said.

There has been speculation that the Modi-led government could change the RBI governor.

Rajan had recently asserted the independence of the central bank.

Yesterday, within hours of Arun Jaitley taking over as finance minister, Rajan had discussed macroeconomic issues, including inflation, during his 50-minute meeting with the FM.