Indian government wins second vote on retail; more reforms eyed

Fri Dec 7, 2012 4:52am EST
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By Nigam Prusty and Satarupa Bhattacharjya

NEW DELHI (Reuters) - The Indian government won a second parliament vote on Friday on allowing foreign supermarkets into the country, paving the way for Prime Minister Manmohan Singh to press ahead with more reforms, including freeing up a cash-strapped insurance sector.

While the upper house vote was symbolic, the government's victory is a boost for its push to implement a controversial economic reform agenda that is seen as crucial to reviving growth and reducing a bloated fiscal deficit.

The government had already won a vote on retail reform in the lower house two days earlier. The policy will allow global retailers such as Wal-Mart Stores Inc to set up shop in the country's $450 billion retail sector, and is aimed at drawing more overseas investment and taming inflation.

Although both votes were non-binding, defeat would have piled pressure on Singh to roll back the measure.

Once again, Singh's fragile coalition government relied on Friday on the outside support of two parties based in the state of Uttar Pradesh, underscoring the extent to which it is at the mercy of powerful regional groups to push through legislation.


In the shrinking window before a general election that is due in just over a year, Singh's minority government wants to push reforms such as allowing more foreign investment in its insurance and pension sectors, and simplifying tax laws.

But these are likely to run into a wall of opposition from rival parties that say such market-friendly reforms will come at the expense of domestic businesses.   Continued...