Chief Economist of World Bank Kaushik Basu welcomed the difference in opinion among States on allowing foreign investors into the domestic retail industry .
Though he described the move by the Union Government as a “good” reform initiative, the former Chief Economic Advisor to the Government felt that the autonomy of State governments in implementing it offers India an opportunity to weigh the pros and cons of allowing 51 per cent FDI in retail.
“I like giving States the autonomy on this decision, because it will be almost like a laboratory experiment on whether it is worthwhile or not,” Basu told newspersons on the sidelines of Indian Finance Conference at the IIM Calcutta campus.
“I understand that different States take different views on that and are hesitant… In a few years, we will see whether the States allowing FDI are doing well or battling.
“If we see that they are doing well, then presumably States that were hesitant earlier will open up,” he said.
He said that if instead those that opted for foreign investment in multi-brand retail are seen to be “doing bad”, it would be a “lesson for everyone”.
Basu also added that opening up the retail sector will benefit farmers, while the “biggest beneficiaries would be small-scale producers (enterprises)” as they can access international markets. Stating that every policy has negative fallout, Basu said, “We need to have regulatory authority for this.”