“The government is lying that companies like Wal-Mart will generate millions of jobs in India. What about the 50 million small traders and shopkeepers who will be ruined?” said Murli Manohar Joshi, a senior lawmaker with the opposition Bharatiya Janata Party, echoing arguments that have been made in American cities against the mega-retailer.
“Most of Wal-Mart’s goods are made by Chinese companies,” Joshi said. “This decision will mean that Chinese goods will enter India through the back door. It will not benefit Indians.”
The government backed down from allowing foreign supermarkets last year in the face of similar opposition, but it says it will not do so again. On Tuesday, a key member of Singh’s coalition withdrew from the government over the decision — the most politically risky decision Singh has made since India signed a civilian nuclear cooperation agreement with the United States in 2008.
Singh has been widely castigated for failing to push through reforms that the private sector desperately needs and for presiding over a sharp economic slowdown in the years since he came to power promising inclusive growth for the “common man.”
He first began liberalizing India’s economy in 1991, when he was finance minister. Moves to allow investment in sectors such as banking, insurance and telecommunications all generated a similar backlash — even though, analysts say, they helped generate unprecedented economic growth.
“Ultimately, the fundamentals lie in creating competitiveness in our economy. We must have the will to do that,” said R. V. Kanoria, president of the Federation of Indian Chambers of Commerce and Industry. “Progress has to happen. You have to give choice for the consumer.”
India’s retail market is expected to be worth more than $1.3 trillion by 2020, up from $500 billion now, as a growing middle class continues to spend, a recent report by the chamber says. Supermarkets and department stores now serve only 5 percent of the market.
Even so, the government has acted cautiously, stipulating that the decision on whether to let in foreign retailers ultimately rests with individual states and applies only to cities of more than a million people. Just nine of the country’s 28 states have indicated they would allow the retailers in. But those jurisdictions include New Delhi and Maharashtra, home to India’s commercial capital, Mumbai.
“What is everybody protesting about? If you have a problem with it, don’t implement it,” said Rajiv Shukla, minister for parliamentary affairs. “At least allow those states that agree with this policy to go ahead with it.”