Economic Survey Calls For Multi-Format Retailing

The Economic Survey has advocated sweeping policy changes such as foreign investment in multi-brand retailing and higher foreign stake in insurance companies.

The survey report card suggested the ceiling on foreign equity in insurance sector be raised to 49% from 26%.

According to the survey, the limit of foreign equity can even be 100 for health and weather insurance. "This may help dispel fears of foreign equity in insurance," the survey said.

In the area related to external reforms, the survey has favoured foreign investment in multi-format retailing starting with food even though there was lots of opposition.

"Foreign direct investment in multi-format retailing should start with food," it said. The survey has suggested that for five years these companies must also have wholesale outlets for small as well as unorganised retailers.

Other major initiative suggested by the annual survey was allowing foreign equity in the defence sector up to 49%.

The survey added that this limit can be stretched to 100% for high technology and strategic defence goods, services and systems which will help to eliminate the dependence on import.

The survey has also called for decontrolling sugar, fertilizer as well as drug prices.

But for life-saving drugs that have less than five producers, the prices will be controlled by government.

The survey also suggested several bills including the Pension Fund Regulatory and Development Authority Bill, Insurance Bill and Forward Contract Bill need to be passed.

For real estate and housing regulation, the survey mentioned that it should be kept under the control of state governments.

A single regulatory agency for the transport sector including highways, railways, ports and airport has to be present with representatives from subsectors.

The survey has called for the entry of private companies into passenger train operations and railway services for tourist destinations.

The survey has also advocated the new law for bankruptcy.