Not So Fast: India Reverses Its Multibrand Retailer Decision
For college football fans out there, we thought a Lee Corso reference was appropriate for this update to last week’s post. This decision also highlights the governmental and legislative risks that tend to crop up more often in emerging markets.
India suspended its decision to allow overseas retailers including Wal-Mart Stores Inc. (WMT) to open supermarkets, dealing a blow to Prime Minister Manmohan Singh’s efforts to boost foreign investment and end a policy paralysis.
The government reversed its decision amid protests by the opposition and its allies that forced repeated adjournments of parliament for the last two weeks. Both houses resumed today with 10 days left of a crucial session when the government is looking to pass laws including one setting up an anti-graft body.
“This is political suicide on the part of the Congress government,” said Surjit Singh Bhalla, chairman of New Delhi-based Oxus Fund Management. “The only conclusion one can draw is that this government has lost any moral authority to lead. It is completely inexplicable.”