12.4.12

Open up Multi-brand Retail , N-Power : RBI study

Making a case for opening up the multibrand retail and atomic power sectors to foreign investments, an RBI study said policy uncertainty is partly responsible for slowdown in FDI into the country. “The government should consider allowing foreign investment in sectors such as multi-brand retail and atomic power, a globally preferred FDI sector,” the RBI paper on ‘Foreign Direct Investment Flows to India’ said. The study suggested that “institutional factors, such as, policy uncertainty”, are causing the slowdown in FDI inflows to India despite robustness of macroeconomic variables. “An empirical exercise-...did suggest the role of institutional factors (government’s to implement quality policy regime) in causing the slowdown in FDI inflows to India despite robustness of macroeconomic variables,” it added. Following opposition, including by its own ally Trinamool Congress, the government had to suspend its decision to open the multi-brand retail sector to foreign investments. The paper said, “Given the international experience, it is argued that FDI in retail would help in reaping benefits of organized supply chains and reduction in wastage in terms of better prices to both farmers and consumers.”

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