Decision On Foreign Equity In Multi-Brand Retail In Six Months.

India's Chief Economic Advisor Kaushik Basu feels the cabinet will take a decision within six months on allowing foreign investment in multi-brand retail trade and believes he has the backing of Finance Minister Pranab Mukherjee.

Basu, who chaired an inter-ministerial group on inflation that recently gave its report to the government, had recommended the opening up of the retail trade sector to foreign investment to mainly narrow the gap between the farm gate and retail price of produce.

'Yes, there will be some constituencies against it. But I do believe there will be a large number of Indians, a majority, who will like what is being proposed. So it's also politically good,' Basu told Karan Thapar's India Tonight programme for CNBC TV18.

Asked further if the finance minister was also backing the proposal to open up retail trade industry to foreign investment, the chief economic advisor said: 'I believe he does. That 'I believe' is important. I believe he does.'

Basu, who holds a doctorate in economics from the London School of Economics, also felt the government would take a decision soon on the subject -- since the country currently permits 100 percent equity in only wholesale, cash-and-carry business.

Foreign direct investment in multi-brand retailing as of now is completely banned, while 51 percent such equity is allowed for single-brand retailing. That's the reason why some global majors like Tesco and Carrefour are keenly awaiting the government's nod.

'The reason I'm hesitating is that I'l be simply trying to guess a cabinet of the future,' Basu said, when asked by when he thought the cabinet will take a decision, and added, when pressed further: 'I hope within six months. I really strongly hope within six months.'

Basu, who has also taught at Cornell, Princeton, and the Delhi School of Economics, said by opening up retail trade not only will the farmer in an good economy like India get a higher price, it will also add millions of jobs, going by the Chinese experience.

'If you look at the farmers getting 33 percent in well functioning economies farmers should actually get 66 percent of what the retail people are paying. So this gap is enormous in India,' he said.

'China allowed -- opened up this sector in 1992. Over the next nine years, this sector's employment in China grew by 26 million. We are talking of serious numbers. Twenty-six million jobs created in this retail sector.'

Source : in.news.yahoo.com