By Nigam Prusty
NEW DELHI Dec 5 India's fragile ruling
coalition won a vote on allowing foreign supermarkets to operate
in Asia's third-largest economy in a test of support for Prime
Minister Manmohan Singh's minority government and his flagship
The victory gives Singh a much-needed boost at a time when
he is trying to drive a second wave of economic reforms through
a fractious parliament. The debate over retail reform has proved
a costly distraction for the government and has already eaten up
two weeks of the month-long parliamentary session.
The vote now clears the way for voting on bills aimed at
attracting foreign investment to the ailing pension and
insurance industries, two measures seen by financial markets as
important steps towards further liberalising an economy in the
midst of a slowdown.
Expectations the government would win drove India's stock
market to a 19-month high on Wednesday.
The vote in parliament's lower house - which the government
won thanks to abstentions by two powerful regional parties - was
non-binding. However, a loss would have made it harder for Singh
to defend the policy to bring global chains such as Wal-Mart
Stores Inc. to India's $450 billion retail sector.
Under threat of losing India's investment grade credit
rating, and facing the prospect of fighting a general election
during the worst growth slump in a decade, Singh launched the
policy amid a flurry of long-delayed reforms in September.
Money has flowed into India's capital markets since, and
Goldman Sachs last week upgraded India's outlook, but formidable
hurdles remain to get the economy back on track.