C. Rangarajan, Chairman of Economic Advisory Council to the Prime Minister, on Friday said the hike in diesel prices may trigger an immediate push in price index, but over the one year to medium-term period it is the best thing to do.
“The immediate impact of a rise in administered price could be a push in price index, but we have to take a long-term point of view. In the absence of such a measure, the fiscal deficit would have been higher,’’ he told media persons on the sidelines of a seminar on Modern Organised Retail.
He was hopeful that the current account deficit would come down to 3.5 per cent this fiscal with coal import set to come down and other factors. Growth rate would remain at 6.7 per cent this fiscal, with agriculture sector poised to do better and manufacturing sector expected to pick up in the second half of the year.
On FDI in retail, Rangarajan said the fear that this could result in large-scale replacement of small retailer is misplaced. In fact, this would lead to softening of prices as it could eliminate certain deficiencies in the existing marketing system, including storage and transportation.
In the same vein, he pointed out that once the share of overall modern retail reaches about 25-30 per cent, it was bound to affect the kirana traders first.
He suggested that these kirana stores could become a part of the modern retail change story by assimilating into organised retail, upgrading through infusion of capital and organising themselves through the franchising route.
“The existence of large retail chains even in advanced countries has not wiped out the small shopkeepers or what are called ‘Mom and Pop’ stores,’’ he said.
He put forth a strong case for removing perishables from the purview of the Agriculture Produce Marketing Committee (APMC) regulations as the nature of the commodity required speedy transaction to minimise wastage.