Friday, October 12, 2012

FDI in Retail - Will the decision last?

The Union Cabinet of India, under the leadership of Dr. Manmohan Singh, finally took the plunge. It has announced that FDI in retails will be allowed - with some riders.

The government which has been going through a decision crisis for more than a year finally appears to have found its spine. It has taken a decision - I am not challenging whether it is good or bad - and is sticking to it.

After a long time it seems that the government is seriously working to shed its roll-back image.

Well the immediate impact of this decision...

  1. The stock markets have given a thumbs up to the decision and the markets have started heading north since the day this decision was announced.
  1. The 2nd largest coalition partner of the UPA - the Trinamool Congress - has withdrawn its support to the government.
  2. DMK - another coalition partner of the UPA - has announced that it will vote against the government's decision on the issue of FDI in retail
  3. Though they have not said anything conclusive on the issue, the stance of Mulayam Singh and Mayawati on the matter has been anti-government.
  4. BJP - the largest opposition party of India - has also announced that it does not support the decision on FDI on retail.

Now, one can only wait and watch how things go on from here. One thing is sure the government is in for very rough time in the Parliament the next time it convenes.