November 29th, 2011
02:57 PM GMT
New Delhi, India (CNN) - India's federal government is facing ongoing disruption as the battle continues over its decision to allow foreign supermarkets into the nation's $450 billion retail market.
The uproar by lawmakers forced an abrupt adjournment of India's parliament for another day Tuesday. The impasse has also been stalling key legislative business, including the passage of an anti-corruption bill. An all-party meeting to end the deadlock has also failed.
Prime Minister Manmohan Singh, meanwhile, is defending last week’s decision to allow international supermarket chains into the country’s retail sector, saying it was “well considered.”
But he faces fiery protests, with those opposing the measures saying foreign competition will eliminate hundreds of thousands of small, family-run businesses.
Nitish Kumar, a widely-respected politician and chief minister of Bihar, one of India's most impoverished states, said he opposed it "tooth and nail... it will ruin retailers and will lead to a point of unemployment beyond imagination in the country."
J. Jayalalithaa, the chief minister of India's fast-growing, southern state of Tamil Nadu - where at least three big cities are located - says she will deny access to foreign retail companies at the outset. "My government will not allow multi-brand global players as permitted under the new policy to set up their hyper markets in Tamil Nadu," she said.
And the leader of the nation's most populous Uttar Pradesh state warned the new regulation would "bankrupt" her province. "If this in retail is allowed, Uttar Pradesh will become kangal (meaning bankrupt in Hindi) in the next five years as local traders will be forced to shut shop," said Mayawati, the state's chief who goes by one name.
Few regions in a country of 1.2 billion consumers have been supportive of the government's new retail policy, which triggered a full-scale political brawl in the national assembly in New Delhi.
The main opposition Hindu nationalist Bharatiya Janata Party, which is also in power in several states, is demanding an immediate reversal of the move.
"Allowing FDI (foreign direct investment) in retail is a lopsided decision," said BJP leader Murli Manohar Joshi. "Wal-Mart is not the solution to our economic problems. Why do you want to bring a U.S. ailment here?" the veteran lawmaker argued, referring to the American company as emblematic of global hypermarkets.
Even some within Singh's coalition were critical.
The Trinamool Congress Party, a federal ally that rules West Bengal state, echoed the widespread opposition. So did the Tamil Dravida Munnettra Kazhagam political grouping, another member of the ruling alliance.
Singh's government argues the move will free up a long-protected sector and – amid soaring prices – will help curb inflation. The country’s commerce ministry forecasts an increase of 1.5 million front line jobs over the next five years, with the additional back office jobs pushing that number up to 1.7 million.
And there are supporters outside government. The Confederation of Indian Industry (CII), the nation's top business lobby, hailed the move toward foreign investment in retail as a "360-degree advantage" for the country. "In a true potential scenario, opening up of FDI can increase organized retail market size to $260 billion by 2020," the group said.
But the many critics remain unconvinced and the parliamentary stalemate looks set to continue. Praveen Khandelwal, whose Confederation of All-India Traders has called for a nationwide market shutdown for December 1 , says the government’s claims are "hollow."
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