FDI in multi-brand retail will help increase productivity, claims RBI

     Deputy Governor of Reserve Bank of India (RBI), Subir Gokarn, has said that the Central Government's decision to allow Foreign Direct Investment (FDI) in multi-brand retail will help increase productivity and ensure an efficient foodgrain distribution network to tackle high food prices.

Pointing out that the ultimate solution to high food prices is more production of things that people consume more, Gokarn said: "You might debate the merits and demerits of FDI in (multi-brand) retail. But let's focus on the basic problem. We need to increase productivity and distribution efficiency." Gokarn, who was speaking at a function here, also pointed out that if food prices keep on increasing, it would impact wages and lead to inflationary pressures.

The TMC, the biggest partner of the Congress Party-led United Progressive Alliance (UPA) government, had earlier pulled out over big-ticket economic reforms, reducing coalition to a minority government and bringing even more instability to an already volatile political landscape. The government took some decisions earlier, including the hike in diesel price, cap the supply of subsidised LPG cylinders to six per household and approving 51 percent Foreign Direct Investment or FDI in multi-brand retail.

Trinamool Congress, which has 19 members in the Lok Sabha, withdrew support to the Congress-led UPA Government and pulled out its six ministers from the government on September 21 after being disappointed with the announcement government's new reforms.

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