FDI in multi-brand retail will help curb inflation: Basu

May 27th, 2011 - 6:20 pm ICT by IANS  

New Delhi, May 27 (IANS) Kaushik Basu, chief economic adviser to union finance minister, Friday favoured opening up multi-brand retail sector for foreign investment, saying it would reduce price gap and help curb inflationary pressure in the country.

“We are taking a very clear position on FDI (foreign direct investment) in multi-brand retail. It should be opened up,” Basu told reporters here.

Basu, who is also the chairman of an inter-ministerial group set up to review inflation, said foreign investment in multi-brand retail would reduce current account deficit and help reduce gap in wholesale and retail prices.

He said the inter-ministerial group has recommended that multi-brand retail should be opened up for foreign investments.

However, he said it was just a “recommendation and not a policy”.

India allows up to 51 percent foreign investment in single-brand retail. In multi-brand segment, foreign investment is restricted only in cash-and-carry or wholesale outlets.

Inflation remains stubbornly high in India despite the central bank’s aggressive monetary tightening measures.

Inflation based on wholesale prices was recorded at 8.66 percent in April. Food inflation rose to 8.55 percent during the week ended May 14.

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