After months of discussion, the issue of FDI in retail is being deliberated in the Lok Sabha today. In September 2012, the Cabinet had approved 51% of FDI in multi-brand retail (stores selling more than one brand). Under these regulations, foreign retail giants like Walmart and Tesco can set up shop in India. Discussions on permitting FDI in retail have focused on the effect of FDI on unorganised retailers, farmers and consumers. Earlier, the central government commissioned the Indian Council for Research on International Economic Relations (ICRIER) to examine the impact of organised retail on unorganised retail. The Standing Committee on Commerce also tabled a report on Foreign and Domestic Investment in the Retail Sector in May, 2009 while the Department of Industrial Policy and Promotion (DIPP) released a discussion paper examining FDI in multi-brand retail in July, 2010. Other experts have also made arguments – both in support of, and in opposition to, the move to permit FDI in retail sales. The table below summarises some of these arguments from the perspective of various stakeholders as collated from the above reports examining the issue.
| Stakeholder |
Supporting arguments (source) |
Opposing arguments (source) |
| Unorganised retail |
|
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| Farmers |
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| Consumers |
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Source: ICRIER [1. "Impact of Organized Retailing on the Unorganized Sector", ICRIER, September 2008]; Standing Committee [2. "Foreign and domestic investment in retail sector", Standing Committee on Commerce, May 13, 2009]; Singh (2011) [3. "FDI in Retail: Misplaced Expectations and Half-truths", Sukhpal Singh, Economic and Political Weekly, December 17, 2011]; Reardon and Gulati (2008) [4. "Rise of supermarkets and their development implications," IFPRI Discussion Paper, Thomas Reardon and Ashok Gulati, February 2008.]; DIPP [5. "Discussion Paper on FDI in Multi-brand Retail Trading", Department of Industrial Policy and Promotion, July 6, 2010]
The Gujarat High Court is hearing an important case related to the appointment of the Lokayukta in Gujarat. The issue is whether the Governor can appoint the Lokayukta at his discretion or whether appointment can be made only upon obtaining the aid and advice of the Council of Ministers led by the Chief Minister. During the period 2006-2010, the Gujarat state government submitted names of two prospective appointees for the post of Lokayukta to the Governor. But no appointment was made during this period. On August 26, 2011 the Governor appointed retired judge R.A.Mehta as Lokayukta, whose name was not among those submitted by the state government. The Gujarat state government moved the High Court to quash the appointment on the ground that the Governor made the appointment without the aid and advice of the Council of Ministers led by the Chief Minister. Section 3 of the Gujarat Lokayukta Act, provides in part that “the Governor shall by warrant under his hand and seal, appoint a person to be known as Lokayukta”. The Governor acted under this section to make the appointment of Lokayukta. However, the state government has argued that section 3 has to be understood in light of Article 163(1) of the Constitution. Article 163(1) provides that the Governor shall be aided and advised in the exercise of his functions by a Council of Ministers with the Chief Minister at the head. Thus, as per this line of argument, the Governor violated the provision of Article 163(1) when she failed to take the aid and advice of the Council of Ministers led by the Chief Minister before exercising the function of appointing the Lokayukta. At the time of writing this post, news reports suggested that the two judges hearing the case are divided over the issue. It remains to be seen whether this issue will be referred to a larger bench. The outcome of this case could have wider implications on the constitutional role of governors if it sets guideposts on the extent to which they act independent of the advice of the council of ministers.
