Opposition to retail FDI cannot go on, says Pranab

Finance Minister Pranab Mukherjee said that the government will have to find some solution to the feisty issue of opening up of retail sector for FDI, which has been vehemently opposed by the Left, the BJP as well as the UPA government's coalition partner Trinamul Congress.

"It has never happened before that a party, which is part of the coalition government, has opposed its policy and that is why the problem has become complicated," Mukherjee said alluding to TMC which has been opposing the proposal of retail market opening for FDI.

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"I think we will find some solution. This cannot go on. We will have to politically persuade and see what happens. We are trying," Mukherjee said in a brief interview from the JFK airport just before leaving for India on Sunday.

Kaushik Basu chief economic advisor to the Government of India seemed to agree with the minister. In response to a question Basu said that he feels sad about opposition the retail opening.

"If we could open the retail sector, it would have given India much more advantage. But that somehow has not happened," he said.

Both Mukherjee and Basu were upbeat about the Indian economy's growth prospects. Mukherjee admitted that India's GDP growth rate has not been comparable to the one in earlier years.

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But that is the worldwide phenomenon and India could not remain totally immune from the trends. Still, he said that India has the second highest growth rate after China.

"I believe that because of the steps we have taken growth will come back to eight to nine per cent a year in the next two or three years.

"There are two or three immediate problems which we are addressing .The first is that our fiscal deficit is going up which we need to reduce. We have to bring it down to four and half percent. The GDP growth has to be in the nine percent. These are our targets and I think the steps that we have taken, will help us achieve our goals. It should be possible," Mukherjee said.

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He said that there is no pessimism about the outlook of the Indian economy. "I am quite hopeful because the fundamentals are very strong. Income is rising and so is savings. So development has to take lace. There is no reason why it would not," Mukherjee said.

Basu, who was reported to have said at the Carnegie Endowment for International Peace that major economic reforms in India would hit a roadblock were unlikely to happen before the 2014 parliamentary elections told this correspondent that he was completely misquoted on the issue.

"My talk was on the possibility of year another European crisis in 2014 and had nothing to do with India. I was completely misquoted," Basu clarified in response to a question.

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"What I mentioned was that there is likely some slowdown in terms of decision making and that is all. I think next year will see a slow turnaround and after that it will be very good. I expect that from 2015 India will be in the top growth chart, perhaps even ahead of China. That is what is expected." Basu said.

Basu, however, admitted that there is certain amount of pessimism, especially in the media, about growth in Indian.

"But that pessimism is everywhere around, whether in Europe, America or China. So it is very easy to say that this is happening with India, but there is a general mood of despondency across the world. But, if anything, it is less in India than in other countries," Basu said.