Prime Minister Manmohan Singh has proposed letting the retail giant into the country, but his populist opponents are threatening to bring down his government
Indian Prime Minister Manmohan Singh was written off in recent months as an underachieving failure for his inability to pass economic reforms that most Western economists say are necessary if India ever wants to be a major economic power. Plagued by corruption scandals and parliamentary infighting, Singh's government has left foreign investors with serious doubts, and the Indian economy is suffering as a result. So it was with some surprise that Singh this week introduced a raft of reforms intended to further liberalize India's economy, including measures to cut wasteful fuel subsidies, privatize state-owned enterprises, and relax restrictions on foreign investment — most controversially, in the retail industry. If passed, Singh's reforms would allow retail behemoths like Walmart to get a firmer foothold in the country, and opponents say smaller mom-and-pop shops will be put out of business. Singh is facing a mutiny from populist members of his coalition, and prominent parties have already dropped out, raising concerns that the government could collapse. Can Singh's government survive Walmart?
Yes. Singh must sell his reforms to the people: Singh "deserves to be complimented for taking hard decisions in the face of considerable opposition," says Chandrahas Choudhury at Bloomberg. And now it's time for Singh to "persuade the Indian electorate that these steps were necessary for the country's long-term health." If Singh can demonstrate a "genuine commitment" to his plans and "prove their intellectual coherence," the Indian voter — "whether farmer, trader, worker, consumer, or investor" — will support his government.
"Now, Singh has to sell Indians on liberalization"
And Singh smartly left it up to states to decide: Singh was "shouted down by populists" the last time he unveiled these reforms in 2011, but this time he has "all but dared them to call his bluff," says Jyoti Thottam at Time. Singh's proposals would allow states to opt out of the retail program, allowing opponents to sit on the sidelines if they want. In a country where Walmart's expertise in basic refrigeration and warehousing is crucial to building up India's non-existent retail infrastructure, smart state officials "will end up competing with one another for" foreign investment.
"How the entry of Walmart and big retail chains will change India"
But it won't be a shock if he retreats: Singh's reform proposals "constitute the boldest liberalization move since" Singh first came to power in 2004, but he "buckled under political pressure when he first announced" the reforms in 2011, says The Wall Street Journal in an editorial. So far Singh "seems unfazed by calls for nationwide protests and other threats," but "given his past performance nobody can be surprised if he backs down again."
"Indian reform, take two"
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