FDI in retail: FDI Door For Retail Not Fully Closed Yet, Says FM.

NEW DELHI: India has not completely shelved the plan to allow foreign supermarket chains to set up shop in the country and is committed to push forward economic reforms that face stiff political resistance from opposition parties as well as government's allies, finance minister Pranab Mukherjee has said.

"Yes, we announced FDI policy in retail, but it could not be implemented. But that does not mean we have shelved it," Mukherjee said at the annual session of PHD Chamber of Commerce and Industry here on Friday.

Mukherjee said the government was attempting to build consensus on economic legislations including Pension Fund Regulatory Development Authority (PFRDA) and foreign direct investment in multi-brand retail. The government had decided to allow 51% FDI in multi-brand retail but had to backtrack and withdraw both the measures after stiff obstruction from its key allies including Trinamool Congress and DMK.

"Commitment to FDI, commitment to PFRDA and all other major legislations, which are part of new generation reforms, are very much in the mind of the government and we are working very hard to build up the con- sensus," Mukherjee said.

The Pension Fund Regulatory and Development Authority (PFRDA) Bill, which was expected to be passed in the current session of Parliament, has also been put off due to opposition from the Trinamool Congress, a key ally of the Congress party. The finance minister reiterated the government's view that growth in the current fiscal year could be between 7.25% and 7.75%, lower than the 9% budgeted earlier in the year.

Underlining the government's optimism that price pressures are beginning to moderate, he said end-March inflation could be 6-7%. Food inflation eased sharply to 1.81% in the year to December 10.

The finance minister said volatility in the global commodity prices and the high domestic inflation was adversely impacting the Indian economy. "Situation is difficult... (but) at the same time we have the capacity and resilience to overcome the difficulty collectively," Mukherjee said.

On the fiscal front, Mukherjee admitted to challenges but said the Indian economy is suffering a temporary setback. The mid year analysis of the economy, tabled in Parliament recently, had said the government would make all efforts to keep the slippage to minimal. India faces a challenging fiscal situation as slowing revenues due to slower growth have pressured government finances.

Though there are challenges on the fiscal front, he said, "the challenges are to be overcome collectively by appropriate polices, effectively implementing it..." Mukherjee said the health of Indian banks is good as their Tier-I (equity) capital is higher than the norms specified by the Reserve Bank.

Source : economictimes.indiatimes.com