M A I N   N E W S

Govt goes ahead with ‘big bang’ reforms
Allows 51% FDI in multi-brand retail, 49% in aviation
Sale of equity in four PSUs cleared
Key ally TMC, Opposition furious
KV Prasad/TNS

New Delhi, September 14
In a clear attempt to shrug off its “policy paralysis” image, the UPA Government today re-started the process of big-ticket reforms, allowing foreign direct investment in the controversial multi-brand retail trading and aviation, enhancing foreign investment in broadcasting sector, diluting local sourcing condition for single-brand product retailing and off-loading a portion of its shares in four public sector undertakings.

Shrill protests from UPA partner Trinamool Congress and the Opposition Left, notwithstanding, the Prime Minister emphasised these steps were taken to boost economic growth and attract foreign investment and sought support for the measures.

"The Cabinet has taken many decisions today to bolster economic growth and make India a more attractive destination for foreign investment. I believe that these steps will help strengthen our growth process and generate employment in these difficult times. I urge all segments of public opinion to support the steps we have taken in national interest,'' Dr Singh said.

Union Commerce and Industries Minister Anand Sharma insisted the Centre made an enabling policy of FDI in multi-brand retailing with the states having the choice to implement it or not. While Anand Sharma chose to criticise the Left for having "ideological blinkers on any forward looking'' policy, neither Kerala, a state where the Congress-led UDF is in the government, shared the enthusiasm nor did the governments of Bihar, Karnataka, Madhya Pradesh, Tripura and Odisha.

Sources privy to proceedings in the Cabinet said even Ministers from Kerala preferred not to participate in the discussion on the issue while TMC representative Mukul Roy was conspicuous by his absence. Sharma said he had personally spoken to TMC chief Mamata Banerjee on the subject but did not elaborating upon her response.

The UPA Government was forced to put its November 2011 decision on multi-brand retailing on hold following stiff opposition from parties like TMC and Samajwadi Party but decided to cruise ahead now. The Commerce Minister said the process was paused to carry elaborate consultation with stakeholders, stating "let us not confuse consensus with unanimity, for which we will have to wait in eternity".

Sharma's remarks characterised the mood to re-start the stalled process of reforms that received adverse ratings for India from international agencies.

Underlining the advantages in the form of creation of jobs in urban and rural areas, Sharma said while India is the second largest producer of fruits and vegetables between 2.25 to 2.35 million tonnes, the conservative estimate of losses of perishable items is anywhere between 35 to 40 per cent, which could be utilised through cold-storage facilities for back-end operations and remunerative prices for farmers and growers. Already international giants like American Wal-Mart and French Carrefour have tie-ups in India and operate wholesale cash-and-carry operations.

The series of steps come a day after it announced a hike in diesel price and limiting supply of subsidised cooking gas cylinder to six per household. The Government permitted foreign airlines to make foreign investment up to 49 per cent in scheduled and non-scheduled air transport services. The move should benefit airlines like Kingfisher that his facing financial problems.

As for single-brand retailing, the Government approved dilution of mandatory to preferably sourcing of 30 per cent from India from micro, small and medium enterprises, village and cottage industries and craftsman "where feasible". Swedish furniture giant IKEA that plans to invest nearly Rs 10,500 crore to open 25 stores across India was seeking relaxation of the condition.

In another decision, the Cabinet Committee on Economic Affairs allowed enhancement of foreign investment from 49 per cent to 74 per cent in broadcasting sector for setting up teleports, direct-to-home, multi-system operations and mobile television to bring uniformity in limits for companies engaged in the activity of providing broadcasting services.

It also permitted 49 per cent investment in Power Trading Exchanges, which provides an organised platform for fair, neutral, efficient price discovery and price risk management for generators, distributors, traders, consumers and other stakeholders in the sector.

Disinvestment is yet another facet of the reforms with the CCEA clearing offloading of 9.59 per cent equity in Hindustan Copper, 12.51 per cent in National Aluminium Company, 10 per cent in Oil India and 9.33 per cent in MMTC.