Foreign retail giants part of strategy to tackle food inflation: Top Indian Economist

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Chief Economic Advisor Kaushik Basu speaking to newsmen. Photo - PTI

India’s chief economist has warned suffering of country’s millions of poor people will continue if global supermarket chains are not let into Indian retail industry.

Speaking to the Times newspaper, Kaushik Basu, one of Prime Minister Manmohan Singh’s influential advisers, asserted India’s poorest people will have to pay more for staple foods like rice and vegetables and that there won’t be any respite from food inflation until foreign supermarkets step in.

“There is a lot of misunderstanding about these changes,” he said. “Without them, Indians will just have to get used to paying higher prices for food,” he insisted in the interview while adding that letting international supermarket chains like Carrefour, Tesco and Wal-Mart enter India would be an effective way of dealing with food inflation which is hovering around 10 per cent.

He attributed many of the rising food prices woes to poor infrastructure which includes sub-standard roads, hap-hazard electricity supply and lack of cold storage facilities and affirmed that more investment in India’s food industry will help keep prices down and improve the economy.

Indian government recently opened its $450 billion retail market to global giants allowing them foreign direct investment of up to 51 per cent in multi-brand retail segment. Manmohan Singh administration also removed FDI cap on international brands, enabling them to retain 100 per cent ownership rights.

Opposition parties and several consumer rights groups have condemned the decision and increased their pressure on the government to scrap the concessions recently given to multi-national retain chains that threaten livelihood of millions of traditional shopkeepers and small traders.

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