All developed countries have low rates of Inflation and lending and borrowing rates of around 2 to 3 per cent. Even China, which is a middle income country, has similar interest rates. Only if India can bring its inflation and interest rates to such levels, we can see the economy grow by 10 per cent annually. Almost all sectors of the economy are now open the privatisation. Many industries are open to foreign investment. Many reforms have been enacted after the process of liberalisation of Indian economy started in 1991. There is nothing left on the policy side which the central government can do in terms of opening up further. While some sectors such as multi-brand retail are closed to foreign companies, it is natural that there may be some acceleration in the economy if the norms are relaxed.

But in the event of foreign players entering, there are chances that both organised retail companies and small retailers will be affected. India must learn from what has happened in China. Since foreign Internet companies like Google and Facebook are banned in China, many local champions like Tencent, Alibaba and Baidu have emerged. So, India must continue to ban foreign direct investment (FDI) in retail. India may also consider two different classes of shares for domestic and foreign companies in companies where 100 per cent FDI is not allowed.

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