India's finance minister on Friday blamed "narrow" politics for the storm over plans to open the nation's huge retail sector to global competition that paralysed parliament for a second week. The move to allow foreign investment by Wal-Mart and other supermarket giants in India's estimated $470 billion retail industry was announced by the Congress party-led government last month.
Mukherjee said "narrow political interests" were blocking the plan as opposition lawmakers shouted "down with foreign investment" and forced parliament to suspend business for a ninth day since the winter session began. "I am practically begging" lawmakers to let parliament function, he said. "Let us do legislation and let us fight each other outside parliament." The main opposition Bharatiya Janata Party - a staunch free enterprise advocate when in power - has been co-ordinating protests with shopkeepers who staged a nation-wide strike Thursday.
Critics say foreign supermarkets would swamp small family-owned shops which dominate the retail landscape but Mukherjee told a media conference: "It's the farmers and consumers who will suffer" if the plan is not implemented. Under the scheme, foreign retailers will have to invest in modernising India's dilapidated cold storage and other back-end infrastructure to end the 40 to 50 percent spoilage of perishable goods.
The Confederation of Indian Industry said opening retail would create 34 million direct jobs and 46 million new indirect jobs in areas like "logistics, distribution and repackaging by 2020". Mukherjee said he was seeking to break the parliamentary logjam. "I am not saying I will be able to do it but the process is on," he told a media conference. Even some of the government's coalition allies have called for shelving the retail reform, which the cabinet passed by decree, and the opposition has insisted there should be a parliamentary vote. The row prompted IKEA chief executive Mikael Ohlssun to end a visit to India without making a long-awaited announcement about the Swedish home furniture giant's investment plans in the country. "We expect that we will be able to present more information shortly about our intentions," spokeswoman Josefin Thorell told AFP.
The furore is the latest to hamstring parliament, gridlocked for months by protests over corruption and high inflation. It looks set to derail the government's legislative plans for the session including bills to broaden food subsidies as well as key anti-corruption legislation.
Despite the legislative deadlock, Mukherjee predicted India's economy would grow by "over 7.5 percent" this financial year, powered by demand from its 1.2-billion population. The forecast came after data this week showed second-quarter growth skidded to a two-year low of 6.9 percent, hobbled by a string of interest rate hikes that have failed to tame inflation, still close to 10 percent. Mukhjerjee's projection is far more rosy than some private economists who expect expansion this year to be as low as 6.5 percent and believe the country is shifting to a new, slower growth trajectory.
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