The Indian Government announced its new set of economic reforms. It opened up the market for 51% investment in multi-brand retail and 49% stake in the aviation sector. It also decided to sell some amount of stake in four PSUs. The FDI cap on broadcasting sector is raised to 74% from 49% and also allowed foreign investment in power projects.
This move, which is cited as a major relief for the Indian economy by the economists, is facing severe opposition from not only the NDA but also from many UPA allies such as Trinamool and Samajwadi party. But the prime minister, after several discussions with the CCEA(cabinet committee on economic affairs), chose to take this step as he believes that this will change the face of the economy. This move may give a sigh of relief to certain organizations in the aviation sector such as kingfisher, but now allows retail chains such as walmart and Ikea to open up stores in India with a local partner which can be disastrous for several small time retailers.
Meanwhile the US dailies termed this as a major set of policy reforms in the past two decades. The Newyork Times stated that India is still mostly a nation of small shopkeepers and farmers, and its economy is heavily controlled by the government, a legacy from decades of socialist policies. But a sharp slowdown in economic growth and a sense of impending political collapse prompted the government to finally act on long-pending proposals to loosen market restrictions in hopes of luring more foreign investment and expertise.
Though this move will temporarily revive the economy or at least save from further collapse, the effects of these reforms can only be experienced in the long run.