| NEW DELHI
NEW DELHI Nov 4 India's embattled Congress
party, led by Sonia Gandhi, sought to drum up support for the
contentious opening up of the country's vast retail sector to
big foreign chains at a mass rally on Sunday, saying
supermarkets would help farmers and consumers battling high
The left leaning Gandhi's new support for reforms is seen as
a shift in strategy b y Prime Minister Manmohan Singh's
government, which is tr ying to win over a population angry at
corruption scandals as it heads into a string of elections
including a northern state assembly on Sunday.
"FDI in retail will not only benefit farmers but also
unemployed youth and the common man," the Italian-born head of
the ruling Congress party told a capacity crowd of mainly rural
supporters in New Delhi's Ramlila Maidan ground, which holds
about 50,000 people. More stood outside.
A lack of cold storage and quality granaries means up to a
third of India's food production goes to waste. The government
says supermarket chains such as Walmart Inc will build
the infrastructure required to unblock supply bottlenecks and
bring down prices.
Critics including the leading opposition Bharatiya Janata
Party say foreign supermarkets will destroy millions of jobs in
small shops and will lead to lower prices for farmers in the
In October, Nobel Prize-winning economist Joseph Stiglitz
told an Indian newspaper that foreign supermarket investment
would not benefit India and could cost manufacturing jobs if the
retailers sourced from China.
Gandhi, who heads a dynasty that predates India's
independence from Britain in 1947 and who is seen as the
country's most powerful politician, last week promoted the new
retail policy with apple farmers in Himachal Pradesh before
Sunday's election in the mountainous state.
Her son Rahul Gandhi, expected to head the party's campaign
for a 2014 general election, also defended the policy at the
rally. The crowd, many wearing pink turbans and carrying
placards in favour of foreign investment, were mainly men and
women from the north Indian farming states of Rajasthan, Haryana
and Uttar Pradesh.
"We support the government's decision on FDI. The opposition
is only confusing the people," said Laxmi Devi, from the poor
state of Bihar.
The Gandhis favour widespread welfare schemes for India's
poor and had previously offered lukewarm backing to policies
Singh says are essential to generate the growth that funds
Seasoned economist Singh lifted a prohibition of foreign
supermarkets trading in India as part of a slew of reforms since
September aimed at reviving moribund economic growth and
tackling yawning deficits that led to a credit downgrade threat.
EAST INDIA COMPANY
India's mistrust of foreign merchants dates back to
Britain's East India Company, which used trade to colonize the
subcontinent. After independence in 1947 and until a first wave
of reforms in 1991, the economy remained largely closed and
But the Congress party is gambling that most opposition to
the policy now comes from small traders and middlemen who
traditionally support the BJP. Congress hopes to win over
farmers and middle class consumers, who are angry at inflation
and revelations of widespread graft.
Headline inflation in India has remained above 7 percent for
two-and-half years, and the prices of many food items have gone
up more than 50 percent during that period.
The first test for the new strategy is the election in
Himachal Pradesh where the Congress is trying to oust the ruling
BJP in a tight state race. Sonia Gandhi last week told farmers
in the state the demand created by supermarkets would help end
India is due to hold 10 state level elections next year and
must hold a general election by 2014, where a Congress party-led
coalition will seek a third consecutive term.
Before winning its second term in 2009, the government
launched a $13 billion debt-waiver for farmers, the traditional
backbone of Congress party support. This time, with the fiscal
deficit approaching 6 percent of GDP, the government has less
room for populism.
Under pressure to introduce long-stalled reforms after
ratings agencies Standard & Poor's and Fitch threatened to strip
India of its investment grade credit rating, the government has
raised fuel prices and announced several measures to attract
The leaders also defended the fuel price rise at the rally,
and lashed out at the opposition for being obstructionist and