India’s movement towards economic reform has been painstakingly slow and halting at times, but a vote Wednesday by the lower house of Parliament may be a good sign of things to come. After two days of debate, the lower house voted to allow foreign supermarket investment (read, Walmart) into India. While it is the upper house that will ultimately decide the matter, this is an important political victory for the ruling Congress party. The FT has the story:
The Congress victory on Wednesday is expected to clear the way for the government to make progress in long-pending reform measures, including modernising laws on banking, insurance and land acquisition.
“It’s symbolic,” Sonal Verma, an economist at Nomura, said of the government’s victory. “The Congress looks stronger. Other reforms that require parliamentary approval may also have some chance.”However, retail experts said the lower house verdict was unlikely to end the bitter national debate over foreign supermarkets, given the deep-seated political opposition to the measure.
Stagnating growth and a flagging economy have scared the Indian government into renewing its commitment to opening its markets. With this vote, the government has demonstrated that it intends to keep slogging ahead despite intense opposition, much of which has come from within its own coalition. If all goes according to plan, this non-binding but important and symbolic vote will clear the way for another round of Indian reforms.The alternative would be to enter next election with the country both angry about corruption and frustrated at slow growth. Painful reform looks like the less toxic option, if only by a nose.