There can be no liberty unless there is economic liberty…
- Margaret Thatcher
After the spate of wrenching scams, unruly policy paralysis, untenable inflation, Dr. Manmohan Singh has struck a raw nerve by unveiling the Animal spirit as the Centre has sanctioned the move to direct FDI in retail and aviation. Undoubtedly this can be ticked off as a much needed breakthrough for the economy leading to growth and investor sentiment .Centre has allowed 51% investment in multi brand retail sector while above 51% in single brand retailing. Moreover, the foreign airlines can hold 49% of the stakes in the domestic ones with liberalized sourcing norms. While mulling over the retail sector, diversified India may attract upto $16 billion FDI in the next two to three years in which $10 billion is expected to be a back end investment. The prospective surge in the investment could be a harbinger for our debt laden economy. The policy is expected to foster employment by creating a single job per 250 sq feet in retail.
Multi-brand retailers like Wal-mart, Carrefour, Tesco etc can all be viewed as a boon to the farmers as these will initiate the investment in farm required to store supply chains leading to the "positive negation" of the middlemen in the entire process. In fact, this has plagued the nation so far from achieving higher skies. However, a single morass that could infuse a sting in the sorts of many is that multi brand retailers will only be able to set their stores in less than 20 cities because of the indifferent support in the backdrop of the murk political play by BJP.
The beleaguered magnate of our country can finally take a sigh of relief as even after all the loopholes; they still maintain their position as the benefitted lot. They can finally look forward to tap the strategic as well as financial investment to revive the companies out of the blues. Hitherto termed as the raising of adequate capital in the mercurial and fragmented market was not a pushover but now that the push has finally come to shove, the entrepreneurs can stride to raise the much needed capital. The foreign investors who have had their eyes glued to the novelty of Indian market will be requires to invest in the back- end infrastructure that would lead to the reduction in waste of farm produce, improve livelihood of the farmers, lower prices of the produce & mollify the supply-side inflation. This has also helped the single -brand retailers like IKEA and H&M get an inch closer to the Indian market. While talking about the aviation sector the move can be hailed as a last ditch attempt to fake the crash as the foreign investment in domestic airlines can pop the airlines out of the collective debt of Rs. 90,000 crore and an accumulated loss of Rs.42,700 crore. In order to actually lay down the red carpet for the foreign carriers, the centre has to address the baggage of several cost reduction contrary to the 350% hike in jet fuel and the rationalization of the slew of airport charges. It is expected that both sectors put together can generate
employment for about $1 million. The raft of bogeys that could actually lead to the roll back of the glistening red carpet is a bit political as well as economical. On the economic front, the financial crisis, poor governance & policy flip-flops could play a major havoc along with the broad contours of the proposal. The analysts as well as the foreign investors are gazing at it quite cautiously as that is of utmost importance before any steps are undertaken. There are definitely no doubts about the richness of the consumer base India is proud to have in its pocket.
On the political front, the recalcitrant opposition& the forsaking allies has dealt with a final blow to the UPA's positive sentiments. The in-door mudslinging, strikes & the royal disorders have much to do with the advent of FDI as BJP is upping the ante against the move, not just for the sake of local kirana shops but also for the sake of backtracking political gains. Both the allies as well as the virulent opposition have been successful in cascading the support and appreciation for FDI to some extent by their much hyped indefinite strikes.
To conclude, if something good has to be jotted down in the papers, the centre should relentlessly slide the FDI forward to finally make a deep impact amid the animosity.
Picture Credit : eurobransindia.com