Rejecting Global Greed
India’s Congress party, led by Prime Minister Manmohan Singh, was forced to suspend its decision to open up India’s $450 billion retail sector to global supermarkets such as Walmart and Tesco. While some saw the Congress’s bowing to public discontent as a triumph of
democracy, others have analyzed it as a further political weakening of the party that is already in trouble. Though the foreign ministry announced that the Retail Plan would be suspended till consultations with various stakeholders were complete, few believe that the plan will be revived.
Indian retailers who were to partner with foreign firms had seen their stocks rise, following the announcement by Prime Minister Singh. However, the same stocks crashed as quickly as they rose. The idea of foreign firms retaining 51 percent of market share and 100 percent of single-brand retailers gave rise to public protests as many felt this would encroach and destroy small to medium enterprises, thus giving rise to massive unemployment and inflation. The government had initially supported foreign entrants into the market assuring local industry workers that foreign investment would be capped at $100 million and would be restricted to cities with a population of over 1 million, thereby guaranteeing security for small to medium enterprises. The government claimed that such measures would attract much needed foreign investment and would in turn generate more than 10 million jobs.
Such defenses fell on deaf ears and popular sentiment furthered by opposition party – BJP – succeeded in halting the plan. Economic analysts have labeled this move as disastrous and regressive for an economy like India’s that can benefit largely from reforms such as this.