Re-tell retail

In his forceful address at an Indian Youth Congress meeting in New Delhi,Prime Minister Manmohan Singh said that the decision to open up retailing to foreign direct investment was well-considered and caused by the firm conviction that it would benefit our country. He went on to point out greater investment in retail supply chains would help upgrade rural infrastructure,reduce the spoilage rate of agricultural output and help farmers get a reasonable price for their produce. When food inflation is running at around 10 per cent,there is little option but reform of the way food gets from the farmer to our plates.

Given that this decision is the correct one to have taken,there is every reason for the government to ensure the argument is comprehensively won. Whatever political concessions it may have to make to ensure Parliament begins to run more smoothly should be accompanied by a reminder of the necessity of the actual reform. Of course,this is made difficult by the Congress partys apparent inability to unequivocally support its governments decisions. Yet the importance of using this fraught moment as a reminder that it remains a reformist party cannot be overstated. What is needed is to put forward the arguments as to why improving Indias retail processes matters,and to pitch those arguments to those that will benefit: Indias consumers and Indias farmers. The former have tired of endless price rises,and are willing to listen to what solutions their government has provided to the problem. The latter have consistently been treated as objects of compassion and handouts,rather than as what they are producers demanding better connections to their markets and final customers. The government needs to make it clear to both these disgruntled groups of people that a decision that allows for greater investment in retail is a crucial step towards increasing both groups welfare.

The prime ministers words,and the governments PR offensive,have been a good start. It will need,however,a sustained effort. UPA 2 knows by now that its first necessity is to tackle,head-on,the sense that it is paralysed and unable to take decisions. Now that it has partially addressed that by apparently taking one,it needs to make the case,repeatedly and effectively,that the decisions it takes are the right ones and that FDI in retail is just the start.