Washington/New Delhi: In India, a new controversy has erupted over the decision to open up the vast retail sector to foreign supermarkets.
In the US, Wal-Mart has disclosed that it spent 25 million dollars or 125 crores in the last four years on lobbying for various projects including "enhanced market access for investment in India."
The main opposition BJP said today that because lobbying is illegal in India, an inquiry must be conducted on the basis of the US report. "It appears as if a bribe was given...who was bribed? The government must explain," said BJP leader Ravi Shankar Prasad in Parliament today.
Last week, the government won a vote in Parliament on its decision to allow Foreign Direct Investment or FDI in retail. That law was introduced by the government in September.
Parliamentary approval was not needed for the new policy, but the opposition refused to let Parliament function till the government's decision was tested with a vote.
The Prime Minister staked his government by allowing FDI in retail as a symbol of his commitment to major economic reforms. Key ally Mamata Banerjee quit the ruling coalition over his decision. Her Trinamool Congress and other parties said that FDI in retail was introduced as a law after the government was reduced to a minority, and must therefore be put to a test in Parliament.
The law on FDI allows individual states to decide whether they will allow in foreign retailers.
The policy, debated for years by political parties, will allow foreign retail chains to do business in India and enable the government to carry forward reforms that will shore up a slowing economy and bring in a fresh infusion of investment, which could also help farmers and small businesses.
Commerce Minister Anand Sharma has said that the measure would improve supply chains and would give Indian farmers new customers. At present, he said, 30 to 40 percent of fruits and vegetables grown in the country rot in the field because of a lack of proper procurement and cold storage facilities, causing an annual loss of nearly 500 billion dollars ( 27 lakh crores).
However, opposition parties say the new policy will crush small retailers who will not be able to withstand the competition from global giants.
India will become a country of sales girls and boys where shops run by American and British companies will sell mostly Chinese goods, warned BJP leader Arun Jaitley during last week's debate in Parliament.
Winning the vote on FDI will adrenalise the PM's initiative to drive a second wave of reforms through a fractious Parliament.
Parliament needs to vote on bills aimed at attracting foreign investment to the ailing pension and insurance industries, two measures seen by financial markets as important steps in further liberalising an economy in the midst of a slowdown.