India Backs Investment From Wal-Mart and Ikea

The following is an excerpt from an article in:


The New York Times
Saturday, September 15, 2012

India Backs Investment From Wal-Mart and Ikea

By GARDINER HARRIS

NEW DELHI — After years of intense debate, India’s government agreed on Friday to open the country’s retail sector to global behemoths like Wal-Mart and Ikea, pushing for a profound shift in India’s economic and political direction.

India is still mostly a nation of small shopkeepers and farmers, and its economy is heavily controlled by the government, a legacy from decades of socialist policies. But a sharp slowdown in economic growth and a sense of impending political collapse prompted the government to finally act on long-pending proposals to loosen market restrictions in hopes of luring more foreign investment and expertise.

“The time for big-bang reforms has come,” the prime minister, Manmohan Singh, said, “and if we go down, we will go down fighting.”

Mr. Singh is widely credited with helping bring about India’s first great bout of economic changes in 1991, when he was finance minister and India’s economy was in a crisis. But his reputation ebbed in recent months as the government’s economic agenda stalled and a growing chorus of critics described him as feckless, and worse.

A recent coal corruption scandal has also tainted Mr. Singh and led the country’s leading opposition, the Bharatiya Janata Party, to shut down Parliament in recent weeks with calls for his resignation.

“The cabinet has taken many decisions today to bolster economic growth and make India a more attractive destination for foreign investment,” Mr. Singh said in a statement. “I believe these steps will strengthen our growth process and generate employment in these difficult times.”

But the plans will continue to stir controversy, and it was not clear whether the government’s shaky coalition would hold together long enough to carry them out.

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