• Honored at Shri Guru Ravidas Sabha, Montreal

• Brown seeks closer co-op with India in fight against terror
• Third front a `mirage`, no body should chase it: Congress
• CBI accuses Nanda of foreign remittance fraud
• Centre moots bill to create special fund for afforestation

• US is considering "deeper US military engagement" in Pak
• US Pacific Fleet chief meets Lankan President
• Parveez hoping for multi-party coalition government

• GDP Growth to be 8%
• HSBC open to taking Indian banks
• Big retail sector booming in India

• Rs 1 lakh car a threat to environment
• Chinese company takes Google to court

• High commission of India in Ottawa

Q&A by Jatin & Amita

• GDP Growth to be 8%
• Big retail's time has come in India
• HSBC open to taking over Indian banks

GDP Growth to be 8%

The Reserve Bank of India (RBI) expects to bring down the consumer price index and the wholesale price index which were impacted by the oil price and food grain price, said RBI Governor YV Reddy."We expect to bring it below five per cent," Reddy said, while speaking at a seminar organized by the Great Lakes Institute of Management in Chennai on Friday.

Stating that the RBI would ensure stable value for the rupee in India and in the global market, he said that people were confident of the rupee. India had become more or less a market economy but would be less affected by first order fluctuations triggered by global financial troubles, he added."India needs investments in social sectors like education and health sector to maintain fiscal stability and discipline at a higher level."

Stating that the people were confident of stability of the Indian economy, Reddy said that according to macro indicators the country was not performing well but "we should look at how the economy is managed."

Credit should go to the economic policy because the economy was being managed to ensure stability irrespective of the risks, he said and added that policy makers cutting across different political affiliations had ensured a macroeconomic policy that guaranteed stability. Reddy assured that the external sector was doing well in spite of fluctuations in exchange rates.

“The GDP rate is expected to be 8.5 per cent while inflation rate will be at 5 per cent for the year," said Y V Reddy, Governor, Reserve Bank of India. However, the rates were under review, he said.

Big retail's time has come in India

At present, India's retail sector is dominated by mom-and-pop stores. Organized or structured retail (chain stores, etc.) accounts for less than 5% of overall retail revenue in India. Compare that to the U.S., which has just fewer than 90% organized retail; the balance is in mom-and-pops and boutiques. I expect India to see tremendous demand from the retail sector for mall and strip mall buildout for at least the next five to 10 years.

It is clear that agriculture is not providing enough jobs for the economy and there is an unprecedented wave of migration to urban areas. The entry of retail chains, which buy straight from the farmer, is bound to benefit them and bring about greater purchasing power as the producer will get much better prices.

This has already been felt in parts of the country like Jharkhand where farmers have held demonstrations protesting the closure of Reliance Retail shops by the state government. Similarly, this gives a bonanza to the consumer who gets food products sourced directly from the farmer without having to pay the middleman's commission.

Some people are worried that the 15 million small retailers in the country may be forced out of existence. India has the largest retail economy in the world, according to a study by the CII (Confederation of Indian Industry) and AT Kearney. It pegs the size of the retail industry currently at about $270 billion with a growth rate of about six percent. Closure of the countless tiny retail outlets that dot the countryside can mean severe hardship for the families working in them.

At the same time, as the saying goes, no one can stop an idea whose time has come. And the time has certainly come for retail chains to enter this country. The process has been gradual, as mentioned earlier, but even so large retail has made a dramatic impact in the areas where it has been allowed to make an entry. The domestic retail chains of RPG and Reliance, among others, have lured consumers away virtually instantly from the traditional grocers. Small retailers in Uttar Pradesh, for instance, have made sufficiently noisy protests to ensure that Reliance Fresh had to close shop in the state.

In the long run, it is clear that the entry of large retail chains will benefit the agricultural sector, which is in dire need of resuscitation. They will also have a long-term effect on agricultural unemployment, which is the big worry for policymakers right now. Besides, Indian consumers are not likely to desert their neighborhood grocers en masse immediately. Therefore the hue and cry over loss of jobs is somewhat premature. Domestic retail chains have already been allowed to set up business and it is now merely a matter of allowing bigger foreign players into the country.

Multinational giants like Walmart and Carrefour also have deep pockets and their huge investment-ready funds are meant for sourcing products from rural areas, which in turn will provide more jobs.

The thinking in the commerce ministry right now seems to be that the existing policy of allowing only single brand retailing can be extended in a phased manner to multi-brand retailers. Single-brand retailing means that companies like Chanel or Sony can set up stores selling only their own brands. Even under this policy, foreign investors have to enter into joint ventures with Indian companies.

Multi-brand retailing means allowing companies like Walmart to sell a variety of brands under a single roof. The proposals now being considered envisage allowing multi-brand retailing initially in specific sectors such as apparel, footwear, stationery or electronics.

Speaking to journalists at an event organized by a newspaper, Commerce Minister Kamal Nath defended the proposal on the grounds that it would not harm neighborhood stores. He said about 70 percent of retailers in the unorganized sector lie outside the market economy and would not be concerned by allowing retail in electronics or apparel. Incidentally, as much as 96 percent of the Indian retail economy remains in the unorganized sector.

HSBC open to taking over Indian banks

HSBC, a leading foreign bank operating in India, is open to the idea of acquisitions subject to the regulatory regime and environment which would be in place in 2009 when the Indian banking sector opens up to overseas players.

Group general manager and country head of HSBC group companies in India. Naina Lal Kidwai said, "We are open to the idea of taking over Indian banks depending upon the environment and regulatory regime which would rule in 2009," she said.

When pointed out that foreign banks like HSBC would have to target private sector banks since public sector banks were controlled by the government, Kidwai wondered why only the private banks.

Kidwai was of the view that the government should also allow public sector banks to face the competition when the Indian banking sector was thrown open to foreign players.

At the moment, the main focus of HSBC would be organic growth. "We are keen on organic growth still now", she told reporters here on Friday. In India, the banking sector was controlled by public sector banks and the rest by private and foreign banks.

HSBC has 47 branches at the moment. Kidwai said that the optimum number of branches which HSBC was looking at was 200.